In brief

  • The Federal Government has released a copy of the Hawke report (report) into mining operations in the Woomera Protection Area (WPA) in South Australia and has endorsed the conclusions of the report.
  • The report recommends a new management framework be implemented to improve access to the WPA for mining operations and increase transparency in the application process.
  • The announcement does not affect the Federal Government’s current position on foreign investment within the WPA which will continue to be assessed against Foreign Investment Review Board requirements.

Introduction

The Woomera Protection Area (WPA) in South Australia is home to a weapons testing facility operated by the Department of Defence (Defence). The WPA is also considered to be highly prospective for gold, copper, uranium and iron ore mineralisation which has led to considerable dissatisfaction within the mining industry over access arrangements to the WPA as well as the uncertainty around the current application process for exploration licenses and mining permits.

Under the current system applicable to the WPA, miners are required to finalise a negotiated access deed with Defence before gaining access to the area. Details of the application process, selection criteria and conditions attaching to approved permits are not publicly available. In late-2009, the South Australian Chamber of Mines and Energy (SACOME) requested that Defence outline exactly which areas of the WPA could be accessed for exploration and mining after two high profile cases saw proposed mining operations within the WPA come under scrutiny, namely:

  • China’s Minmetals Resources Limited’s takeover bid for OZ Minerals which was blocked by the Foreign Investment Review Board citing national security concerns over the location of OZ Mineral’s Prominent Hill copper mine within the WPA. Prominent Hill was ultimately excluded from the transaction in which Minmetals purchased the remainder of OZ Mineral’s Australian assets. 
  • WPG Resources Ltd’s proposed Hawks Nest iron ore project which Defence indicated in September 2009 it would block on ‘safety, operational and national security grounds’. A deed of access granting WPG limited access for exploratory purposes was later agreed between the parties.

Given the growing dissatisfaction with Defence’s approach to mining activity within the boundaries of the WPA, former Defence Minister John Faulkner commissioned a review in April 2010, to be undertaken by Dr Allan Hawke, into the mining operations conducted within the WPA. On 3 May 2011, Defence Minister Stephen Smith and Mining and Resources Minister Martin Ferguson released a copy of the report and endorsed the recommendation that a new management framework for mining and exploration activities within the WPA be implemented.1

Key elements of the framework

The proposed framework will see the WPA divided into three different zones (red, amber or green)2 depending on the level of sensitivity of Defence operations in or near the area. A timeshare model would operate with respect to the two zones considered least sensitive to Defence operations (the amber and green zones).

Defence’s Core Area of Operations would attract either a red or amber zone categorisation with no new non-Defence organisations (excluding a South Australian government sponsored geological survey) being granted access to the red zone.

New non-Defence users would be granted access to the amber zone under the framework, however Defence would retain the discretion to exclude users for either 10 or 20 windows of seven days every year (10 windows of seven days for the area to the West of the Stuart highway and 20 windows of seven days for the area to the East of the highway). New non-Defence users would be entitled to a presumption of access in the green zone however Defence would retain the right to exclude users for up to eight windows of seven days every year.

Transition arrangements

The report also calls for the Commonwealth and South Australian Governments to form a WPA Coordination Office to oversee the development of the detailed financial, legislative and regulatory arrangements necessary to implement the new framework. As part of the transition arrangements, a six-month moratorium on the processing of new applications would be declared where only non-Defence users who are close to settling outstanding access arrangements to an amber or green zone with Defence would have their applications processed. Following the moratorium, a transitional period would occur where applications are determined on a case-by-case basis prior to the steady state phase where the timeshare model outlined above would prevail.

Foreign investors

The proposed framework will not involve any substantial changes to current policies on foreign investment within the WPA. The Federal Government will retain the right to reject foreign investment within the WPA on national interest grounds. The requirements of the Foreign Investment Review Board will continue to be used as the reference point for consideration of applications by a foreign entity to acquire an interest in an entity with operations within the WPA.

Although the government’s endorsement of the report signals a clear push towards greater cooperation between Defence and the mining industry in the utilisation of the WPA, the key recommendations of the report relate primarily to the clarification of land use within the area rather than resolving uncertainty surrounding foreign investment in the area.

A final word

The WPA is highly prospective for gold, copper, uranium and iron ore. The endorsement of the report is likely to be of principal interest to companies looking to exploit opportunities within these resources. There are 120 active exploration licenses inside the WPA, the holders of almost all of which have been waiting for clarification of land use within the area before proceeding with exploratory activity or an application for mining permits.

The government’s endorsement of the report marks a significant step towards providing the mining industry with the certainty it has craved with respect to the acceptable use of land within the boundaries of the WPA. The situation relating to foreign investment in the area is less clear and the retention by the government of the right to reject foreign investment on national interest grounds means that the government’s pre-report position has not been definitively altered by the endorsement. A further risk from the mining industry’s perspective will be that the framework ultimately adopted in legislative and regulatory form diverges from that proposed in the report in a material way. This could potentially see the uncertainty which has frustrated the industry up to this point continue.