Use the Lexology Getting The Deal Through tool to compare the answers in this article with those from other jurisdictions.

Mining industry

Standing

What is the nature and importance of the mining industry in your country?

Mining is Australia’s largest goods-producing industry, representing 7.4 per cent of GDP in 2016-2017 and directly employing approximately 226,500 people. The sector was one of the major contributors to GDP growth. According to the Office of the Chief Economist, resources and energy represented 68 per cent of Australia’s goods exports in 2016-2017, and 2017-2018 resources and energy export earnings are expected to increase by A$21 billion to A$230 billion.

Target minerals

What are the target minerals?

Key minerals in Australia include iron ore, metallurgical coal, thermal coal, gold, crude oil, copper, alumina, nickel, aluminium, zinc and lead. Reported 2016-2017 financial year export values and volumes are set out below.

Commodity

Export value 2016-2017

Production quantities 2016-2017

Iron ore

A$63.9 billion

818 megatonnes

Metallurgical coal

A$36 billion

177 megatonnes

Thermal coal

A$19.3 billion

202 megatonnes

Gold

A$18.4 billion

334 metric tonnes

Crude oil

A$5.6 billion

221 kilobarrels per day

Copper

A$7.7 billion

920 kilotonnes

Alumina

A$6.8 billion

18,230 kilotonnes

Nickel

A$2.3 billion

175 kilotonnes

Aluminium

A$3.2 billion

1,329 kilotonnes

Zinc

A$2.7 billion

1,008 kilotonnes

Regions

Which regions are most active?

Mining is widespread across Australia. In New South Wales, the main mining areas include the Hunter Valley region (primarily coal) and the Broken Hill region (silver, lead and zinc). In Queensland, there is the Bowen Basin (coal), Mount Isa (lead, silver, copper and zinc), Mount Morgan (gold, silver and copper) and Western Cape York (bauxite, required for aluminium). The main mining region in Victoria is the La Trobe Valley (coal and gold). South Australia’s Olympic Dam Mine is a large source of copper, and also has one of the largest known single deposits of uranium in the world.

However, Western Australia, with its Goldfields-Esperance (gold and nickel), Peel (aluminium) and Pilbara (iron ore) regions, produces the majority of the country’s mining exports.

Legal and regulatory structure

Basis of legal system

Is the legal system civil or common law-based?

Australia’s legal system is common law-based. Legislated law, which interacts with decisions made by an independent judiciary, is passed at three levels of government: federal, state or territory, and local. Mining regulation is primarily state- and territory-based.

Regulation

How is the mining industry regulated?

Mining regulation in Australia is primarily state and territory-based. The starting point is that most minerals are owned by the state or territory in which the minerals are located (although there are some areas where private landowners hold title to certain minerals). State and territory governments also have certain taxation powers, for example, to collect resource royalties and stamp duty.

Mining proponents within Australia should also be aware of the interaction between state and territory legislation and commonwealth legislation affecting their projects. For example, even if mining exploration and production operations are conducted within a state’s boundaries under state mining legislation, there is a significant overlap of commonwealth laws, which may potentially be relevant. Significantly, the commonwealth has certain powers in relation to native title, employment, the environment, access to infrastructure, taxation and foreign ownership.

What are the principal laws that regulate the mining industry? What are the principal regulatory bodies that administer those laws? Were there any major amendments in the past year?

Mining regulation in Australia is primarily state- and territory-based. The key mining regulations and regulators applicable to each state and territory are set out in the table below.

State/Territory

Key mining legislation

Key mining regulator

New South Wales

Mining Act 1992 (NSW)

Department of Industry (Resources & Energy)

Northern Territory

Mineral Titles Act 2010 (NT)

Mining Management Act 2001 (NT)

Department of Primary Industry and Resources

Queensland

Mineral Resources Act 1989 (Qld)

Mineral and Energy Resources (Common Provisions) Act 2014 (Qld)

Department of Natural Resources, Mines and Energy

South Australia

Mining Act 1971 (SA)

Department of State Development

Tasmania

Mineral Resources Development Act 1995 (Tas)

Department of State Growth

Victoria

Mineral Resources (Sustainable Development) Act 1990 (Vic)

Department of Economic Development, Jobs, Transport and Resources

Western Australia

Mining Act 1978 (WA)

Department of Mines, Industry Regulation and Safety

As mentioned in question 5, there is also commonwealth legislation that may affect a project in relation to native title, employment, environment, access to infrastructure, taxation and foreign ownership.

Major amendments to existing mining legislation have occurred in recent years, particularly the manner in which proponents must provide financial assurance to the state to cover the risk if they fail to comply with their environmental obligations. These are detailed further in question 37.

Classification system

What classification system does the mining industry use for reporting mineral resources and mineral reserves?

The JORC Code, produced by the Australasian Joint Ore Reserves Committee, sets minimum standards for the public reporting of minerals exploration results, mineral resources and ore reserves. The code provides a mandatory system for the classification of a report according to levels of confidence in geological knowledge, and technical and economic considerations contained in the report. The current edition of the code was published in December 2012.

The code applies to annual and quarterly company reports, press releases, information memoranda, technical papers, website postings and public presentations of exploration results, mineral resources and ore reserves estimates, among other things.

Mining rights and title

State control over mining rights

To what extent does the state control mining rights in your jurisdiction? Can those rights be granted to private parties and to what extent will they have title to minerals in the ground? Are there large areas where the mining rights are held privately or which belong to the owner of the surface rights? Is there a separate legal regime or process for third parties to obtain mining rights in those areas?

While the details vary from jurisdiction to jurisdiction, in general, minerals are owned by the state or territory in which the minerals are located. Private parties can apply for a mining tenement, which gives the holder the exclusive right to explore for minerals in, or extract minerals from, the area specified in the tenement in accordance with its conditions. The tenement overlays the underlying land title and generally enables the tenement holder to obtain access to the land for the prescribed exploration and mining purposes, subject to the payment of compensation to the landholder. Other tenements may also be required and may be granted to permit construction of infrastructure ancillary to a mine, such as roads, bores, pipelines and power lines. On the satisfaction of relevant conditions, they may be granted over land that is subject to an existing interest, such as a mining lease or any other interest (and third party interests can, in some cases, be granted over the top of existing licences).

There are some limits on the access that a mining tenement holder can obtain over private land without the agreement of the relevant landowner. These circumstances tend to be very limited. The mining legislation of each state and territory prescribes these limits.

In certain limited circumstances where private landowners do hold mineral rights in the land, a private landowner must still obtain a mining tenement prior to exploration or mining. In some states, the government can grant mining tenements to explore for and mine privately owned minerals if this is not being done by the owner of those minerals.

Publicly available information and data

What information and data are publicly available to private parties that wish to engage in exploration and other mining activities? Is there an agency which collects mineral assessment reports from private parties? Must private parties file mineral assessment reports? Does the agency or the government conduct geoscience surveys, which become part of the database? Is the database available online?

The laws of each state and territory appoint an administering department and minister to maintain registers of mining titles and interests. Some of this information is available to the public. The information that is publicly available varies considerably between jurisdictions; however, it generally includes information and maps about tenements, areas considered to be strategic resources areas and known mineral deposits.

A list of the key databases for the relevant states and territories is set out in the table that follows.

State/Territory

Online database

New South Wales

www.resourcesandenergy.nsw.gov.au/miners-and-explorers/geoscience-information/services/online-services/minview

Northern Territory

http://strike.nt.gov.au/;jsessionid=zfv88xs5rvzk9w9y3ad2gkl6

Queensland

www.business.qld.gov.au/industries/mining-energy-water/resources/online-services/qdex-data

South Australia

http://minerals.statedevelopment.sa.gov.au/online_tools/free_data_delivery_and_publication_downloads/sarig

Tasmania

www.mrt.tas.gov.au/portal/en/database-searches

Victoria

www.energyandresources.vic.gov.au/earth-resources/maps-reports-and-data/geovic

Western Australia

www.dmp.wa.gov.au/Mineral-Titles-online-MTO-1464.aspx

With respect to records about mining and exploration tenements, the entry of a tenement or interest in a tenement on a register is generally not conclusive proof of title to that interest or tenement, but failure to enter a dealing on the register may make a transfer of an interest or tenement ‘of no force’. This means that a party can generally rely on the register to take title free of unregistered interests. Various jurisdictions permit the registration of some (but not all) dealings with respect to a tenement. The limit on the types of dealings that can be registered means that a search of the tenements register may not provide a complete record of all interests affecting the relevant mining tenement, as there may be various unregistered interests that are not recorded.

The Australian Stock Exchange (ASX) imposes disclosure obligations on listed resource companies. The obligations include reporting on exploration results, mineral resources and ore reserves. The Corporations Act 2001 (Cth) also imposes reporting obligations on companies.

Geoscience Australia is an agency of the Australian government. It collates and publishes data annually as well as carrying out its own geoscientific research. Geoscience Australia’s data and mapping tools are available online.

Acquisition of rights by private parties

What mining rights may private parties acquire? How are these acquired? What obligations does the rights holder have? If exploration or reconnaissance licences are granted, does such tenure give the holder an automatic or preferential right to acquire a mining licence? What are the requirements to convert to a mining licence?

Mining tenements are regulated by each state and territory under separate legislative regimes, and the rights and obligations of tenement holders vary accordingly. However, most states and territories have three classes of mining tenements: exploration licences, mining leases and retention licences.

Set out below are the general characteristics of each of the main type of tenements.

 

Exploration licence

Mining lease

Retention licence

Purpose

Exploration for mineral sources, drilling for core samples.

Development and production of minerals from lease area.

Title over mineral discovery where mining is currently impracticable.

Coverage

Designated area; limited extraction rights.

Designated area taken out of the exploration licence.

Area sufficient to cover the identified mineral resource, plus additional land for future mining operations.

Period

Usually granted for five years (may be renewed); often subject to surrender of a portion of the area during each year of the term of the tenement.

As specified in the relevant state or territory law (eg, the period approved by the minister in Queensland, and 21 years in WA). May be renewed.

Usually granted for five years (may be renewed).

Rights

Land entry.

Drilling surveys and recovery on an appraisal basis.

Usually confer a priority right to apply for a mining lease over minerals discovered within exploration area.

Land entry.

Mining operations to develop and extract minerals from mining lease area.

Operation of production facility (usually subject to obtaining additional licences).

Disposal of minerals recovered subject to royalty payment.

Exploration and recovery on an appraisal basis.

Protects interests of the licence holders where production is likely to become commercially viable.

Obligations

Rent.

Expenditure commitments.

Reporting obligations.

Security deposit.

Restrictions on amounts of minerals that can be extracted.

Some landholder compensation obligations.

Rent and royalties.

To develop and commercialise discovery.

Reporting obligations.

Security deposit.

Landholder compensation obligations.

Rent.

Licensee may be required to carry out works programme to establish nature, extent of resource and commercial feasibility.

Security deposit.

Tenements may be granted subject to conditions, mainly to regulate the manner in which activities may be conducted. Exploration licences will typically have ‘minimum expenditure’ conditions, as well as time limits on exploration, while mining leases will require a certain level of expenditure. There will also be reporting obligations, which may exist under legislation and conditions attached to the tenement. These obligations require the tenement holder to provide regular reports to the relevant government department.

Tenement obligations

Tenement type

Obligations

Exploration licence

Rent, expenditure commitments, reporting obligations, security deposit and restrictions on amounts of minerals that can be extracted.

Mining lease

Rent and royalties, to develop and commercialise discovery, reporting obligations and security deposit.

Retention licence

Rent, licensee may be required to carry out works programme to establish the nature and extent of resource and commercial feasibility, and security deposit.

Tenement holders are usually required to submit a development plan to the relevant government department to obtain approval to develop a mine. Tenement holders are also often required to lodge security deposits when licences are granted to ensure the performance of environmental and rehabilitation obligations.

Annual rental payments are generally required under each tenement based on area, and royalties must be paid based on the amount of the mineral extracted under a mining lease.

If a tenement holder does not comply with the conditions of a licence or obligation set out in legislation, including the rental or royalty obligations, various compliance or enforcement tools (depending on the state or territory legislation) may be used. These include cancellation of the licence or imposition of a penalty on the holder of a tenement. Most jurisdictions also provide for third parties to seek forfeiture (and be rewarded with the tenement) or fines, depending on the level of under-expenditure or non-compliance. Forfeiture is the ultimate sanction and a pillar of the ‘use it or lose it’ system in Australia.

The relevant state and territory laws set out the requirements regarding mining lease applications. Generally, applications are made to the relevant state mining department and may involve a process of public notification and objections. The relevant state mining department will generally require evidence of agreement being reached with the landholders underlying the mining tenement.

In most states and territories, an exploration licence is a prerequisite to a mining lease, but does not provide an automatic right to acquire the same.

State agreements

A feature of Australia’s resources law is the use of agreements between governments and project proponents that facilitate the implementation of large-scale resource projects (state agreements). State agreements are written contracts between the state and a project developer ratified by an Act of Parliament to provide a detailed framework for the development and operation of a specific project. This includes specifying the rights, obligations, terms and conditions for the development of a project. These agreements are particularly prevalent in Queensland, South Australia (where they are called indentures) and Western Australia (where there are around 65 state agreements currently on the state’s books).

The key benefit of a state agreement is the process of statutory endorsement outlined above. Typically, this process may grant the project proponent certain ‘dispensations’ from the law that would otherwise apply in respect of the relevant project.

The terms of each state agreement are drafted much like an ordinary contract, but as alluded to above, a peculiar feature is that they are ratified by an Act of Parliament. The content of a state agreement must be reviewed on a case-by-case basis, because the rights, obligations, terms and conditions for the development of a project depend on what has been negotiated, and what is ultimately agreed, between the state and the relevant project proponent.

Some of the key features commonly negotiated by a project proponent under a state agreement include the following:

  • proposal mechanisms: a ‘proposals’ regime, whereby the proponent is required to prepare detailed proposals for the establishment of the mining operations under the state agreement;
  • undertaking to grant tenure: an obligation on the state to make tenure available for the project, upon approval of development proposals;
  • infrastructure: the right to construct critical infrastructure, such as ports and railways;
  • superior tenure rights: the grant of mining tenements on a ‘successive’ renewal basis over larger areas than otherwise would be possible; and
  • concessions and protections: concessionary or fixed royalty rates, limited exemptions from duty liability and specific protections against adverse state interference.

While a state agreement may override certain laws under the state’s mining legislation, the agreement will not typically grant the project proponent a dispensation from environmental protection laws or aboriginal heritage processes. The state agreement also cannot override a commonwealth act, so processes under the Native Title Act 1993 (Cth) will generally now apply.

Renewal and transfer of mineral licences

What is the regime for the renewal and transfer of mineral licences?

The details of the regime relating to renewal of mining tenements varies from jurisdiction to jurisdiction. However, some general observations are provided in the table below.

Tenement type

Renewal options

Exploration licence

Usually granted for five years, often subject to surrender of a portion of the area during each year of the term of the tenement.

Exploration licences may generally be renewed at least once.

Mining lease

Granted on the terms specified in the relevant state or territory law (eg, the period approved by the minister in Queensland, and 21 years in WA).

Mining tenements may generally be renewed.

Retention licence

Usually granted for five years, and may be renewed.

State and territory mining legislation prescribes the requirements for the transfer of mining tenements. Generally, the transfer of a mining lease will require ministerial approval. The application will typically need to be accompanied by the agreement effecting the transfer, details of the transferees’ technical and financial capability, and the consent of any person holding a mortgage or caveat interest in relation to the tenement. Some jurisdictions impose restrictions on transferring tenement applications.

Duration of mining rights

What is the typical duration of mining rights?

The duration, renewal and cancellation procedures in regards to mining tenements for each state are outlined in the table below.

State/Territory

Tenement

Duration

Renewable?

Revocation or cancellation by the government

New South Wales

Exploration licence

Maximum six years

Application for renewal must be made in the approved form and be accompanied by a fee.

Must make application for renewal within two months before licence ceases.

If applications have been refused for granting of the licence or a renewal within two years and applicant applies within that two-year period, it will be refused.

The licence may be cancelled if:

  • licensee makes a request for cancellation; or
  • licensee has contravened legislation or condition of the licence being granted; or
  • licensee is convicted of any offence relating to mining or minerals; or
  • licensee has failed to use the land for the purposes of which it was granted; or
  • the land is required for a public purpose.

Written notice must be given to the licensee of the cancellation.

New South Wales

Mining lease

Maximum 21 years

Application for renewal must be made in the approved form and be accompanied by a fee.

Must make application for renewal within two months before lease ceases.

If applications have been refused for granting of the lease or a renewal within two years and applicant applies within that two-year period, it will be refused.

The licence may be cancelled if:

  • lessee makes a request for cancellation; or
  • lessee has contravened legislation or condition of the lease being granted; or
  • lessee is convicted of any offence relating to mining or minerals; or
  • lessee has failed to use the land for the purposes of which it was granted; or
  • the land is required for a public purpose.

Written notice must be given to the lessee of the cancellation.

Northern Territory

Exploration licence

Must not exceed six years

The maximum renewal term is two years and licence may be renewed more than once. Licensee must apply for renewal before the end of the prescribed licence term.

The licence may be cancelled if:

  • licensee breaches a condition of the licence; or
  • fails to make a required payment; or
  • has not used good work practices in conducting the authorised activities; or
  • licensee no longer has financial resources to carry out the work for which the licence was granted; or
  • the licensee has for a continuous period of two years not conducted any authorised activities.

Minister must give notice of cancellation to the licensee.

Northern Territory

Mining lease

Period determined by the Minister

Licence may be renewed more than once. Licensee must apply for renewal before the end of the prescribed licence term.

The lease may be cancelled if:

  • lessee breaches a condition of the lease; or
  • fails to make a required payment; or
  • has not used good work practices in conducting the authorised activities; or
  • lessee no longer has financial resources to carry out the work for which the licence was granted; or
  • the lessee has for a continuous period of 2 years not conducted any authorised activities.

Minister must give notice of cancellation to the lessee.

Queensland

Exploration licence

Maximum five years

Renewable on application, accompanied by renewal fee and a statement from the licensee outlining the proposed work and resources to be used.

Must apply for renewal at least three months before expiry.

Minister may cancel if:

  • satisfied that the licensee has not carried out the activities for which the licence was provided; or
  • the licensee fails to comply with conditions under which the licence was permitted; or
  • if the licensee fails to pay any relative fees; or
  • fails to make any required reports.

Written notice must of the cancellation must be given to the licensee.

Queensland

Mining lease

Period approved by the Minister

Renewable on application in the approved form, accompanied by fee payment and a statement from the lessee outlining proposed work.

Minister may grant the renewal subject to no renewal being granted in the future if satisfied that the land may be required for a purpose other than mining.

Application must be made at least six months before licence expiry but not one year before.

Minister may cancel if:

  • the activities carried out were not provided for in the lease; or
  • lessee failed to make a payment; or
  • lessee did not comply or contravened a condition of the lease agreement.

Queensland

Mineral development licence (equivalent to retention licence)

Maximum five years

May be renewed on application which complies with state legislation.

Renewal application must be made at least six months before original licence is set to expire but not more than one year before.

Licence may be cancelled if:

  • licensee carries out activities that are not for the purposes of which the licence was granted; or
  • licensee fails to pay moneys by the due date; or
  • licensee breaches licence conditions; or
  • licensee has failed to pay any penalty imposed by the Minister.

The Minister may choose to cancel the mineral development licence or impose a penalty not exceeding 1,000 penalty units.

Written notice must be given to the licensee of the cancellation and to every person who holds a recorded interest in respect of the mineral development licence accordingly.

The licensee must be given the opportunity to specify why the licence should not be cancelled or why the penalty should not be imposed.

South Australia

Exploration licence

Maximum five years

Renewable if aggregate term does not exceed five years. Application for renewal must be made at least one month before the licence is set to expire and be accompanied by a fee.

However, a subsequent exploration licence can be applied for three months before the expiry of the original licence.

Licence may be suspended or cancelled if the licensee fails to comply with or contravenes any provision in the Mining Act 1971 (SA) or a condition of the licence.

Licensee may appeal the cancellation or suspension within 28 days.

South Australia

Mining lease

Maximum 21 years

Renewable provided the renewal does not exceed 21 years. The application must be made by the lessee at least three months before lease is set to expire but not six months or more before expiry.

Minister may suspend or cancel the lease if the lessee contravenes or fails to comply with a condition of the lease or a provision in the Mining Act 1971 (SA).

Licensee may appeal the cancellation or suspension within 28 days.

South Australia

Retention licence

Maximum five years

Renewable upon application submission at least three months before the licence was set to expire.

Retention licence will only be renewed if it is more likely than not that production will be commercially feasible within the next 15 years.

Mining Act 1971 (SA) does not provide any cancellation or revocation provisions. However, provides that failing to comply with or breaching a condition of the licence may result in a maximum penalty of A$120,000.

Tasmania

Exploration licence

For all minerals except petroleum products, maximum five years; licences related to petroleum products can be granted for a term determined by the Minister

Renewable for a further period determined by the Minister. Application must be lodged before the expiry of the licence.

Licence revocable if:

  • licensee fails to comply with or contravenes a condition of the licence or a provision in the Mineral Resources Development Act 1995 (Tas); or
  • the land becomes required for any public purpose.

Written notice must be given to the licensee and the licensee must be given the opportunity to make submissions in favour of keeping the licence.

The licensee may appeal to the Mining Tribunal within 28 days.

Tasmania

Mining lease

Period determined by the Minister

Renewable, for a period determined by the Minister provided it does not exceed 20 years.

Lease may be cancelled if:

  • mining has not taken place for a period of 12 months; or
  • lessee fails to comply with or breaches a condition of the lease or provision of the Mineral Resources Development Act 1995 (Tas); or
  • fails to pay rent; or
  • the land subject to the lease is required for some public purpose.

Written notice must be given to the lessee and the lessee must be given the opportunity to make submissions in favour of keeping the lease.

The lessee may appeal to the Mining Tribunal within 28 days.

Tasmania

Retention licence

Maximum five years

Renewable, provided the term does not exceed five years.

Licence may be cancelled if:

  • licensee fails to comply with or breaches a condition of the licence or provision of the Mineral Resources Development Act 1995 (Tas); or
  • the land is required for some public purpose.

Written notice must be given to the licensee and the licensee must be given the opportunity to make submissions in favour of keeping the licence.

The licensee may appeal to the Mining Tribunal within 28 days.

Victoria

Exploration licence

Maximum five years

May be renewed; however, the Minister must refuse to grant a renewal if he or she is not satisfied the holder genuinely intends to do the work, unless he or she is satisfied additional time is necessary to assess economic viability or it is not currently economical but may become economically viable in the future.

The Minister may refuse to grant a renewal for a number of reasons, including:

  • there has not been substantial compliance with the act, any condition or work plan; or
  • the applicant has endangered the public.

The Minister may only renew an exploration licence twice, and the second renewal will occur only if there are exceptional circumstances.

Minister may cancel the licence provided 28 days’ notice is given to the licensee and the licensee has been asked to provide reasons why the licence should not be cancelled.

After the expiry of the 28 days, the minister may cancel the licence if satisfied:

  • licensee has not complied with or has breached a condition of the licence; or
  • there has been unreasonable delay; or
  • licensee did not commence work within three months after the licence had been granted.

Victoria

Mining lease

Maximum 20 years

May be renewed; however, the Minister must refuse to grant a renewal if he or she is not satisfied the holder genuinely intends to do the work unless he or she is satisfied additional time is necessary to assess economic viability or it is not currently economical but may become economically viable in the future.

The Minister may refuse to grant a renewal for a number of reasons, including:

  • there has not been substantial compliance with the act, any condition or work plan; or
  • the applicant has endangered the public.

The Minister may renew if there is a reasonable prospect mining will continue, or will recommence within two years of the renewal.

Minister may cancel the lease provided 28 days’ notice is given to the lessee and the lessee has been asked to provide reasons why the lease should not be cancelled.

After the expiry of the 28 days, the minister may cancel the lease if satisfied:

  • lessee has not complied with or has breached a condition of the lease; or
  • there has been unreasonable delay; or
  • lessee has stopped mining continuously for a period of two years; or
  • lessee did not commence work within three months after the lease had been granted.

The minister must cancel the lease if:

  • work plan has not been lodged within 12 months; or
  • work plan has not been approved within 18 months.

Victoria

Retention licence

Maximum 10 years

May be renewed; however, the Minister must refuse to grant a renewal if he or she is not satisfied the holder genuinely intends to do the work unless he or she is satisfied additional time is necessary to assess economic viability or it is not currently economical but may become economically viable in the future.

The Minister may refuse to grant a renewal for a number of reasons, including:

  • there has not been substantial compliance with the act, any condition or work plan; or
  • the applicant has endangered the public.

The Minister may only renew a retention licence twice, and the second renewal will occur only if there are exceptional circumstances. Further, the licence will be renewed only if it is economically viable in the future.

Minister may cancel the licence provided 28 days’ notice is given to the licensee and the licensee has been asked to provide reasons why the licence should not be cancelled.

After the expiry of the 28 days, the minister may cancel the licence if satisfied:

  • licensee has not complied with or has breached a condition of the licence; or
  • there has been unreasonable delay; or
  • licensee did not commence work within three months after the licence had been granted.

Western Australia

Exploration licence

Maximum five years

May apply for a licence extension in approved form.

May be liable to forfeiture if:

  • licensee does not pay required fees; or
  • licensee breaches conditions on which the licence was granted; or
  • reporting requirements are not complied with; or
  • the licensee is convicted of an offence under the Mining Act 1978 (WA).

Western Australia

Mining lease

Maximum 21 years

Lessee may apply for renewal of the lease provided that successively the term will not exceed 21 years.

The lease will be liable to forfeiture if the lessee breaches any conditions or covenants of the lease agreement.

Western Australia

Retention licence (offshore minerals)

Maximum five years

May apply for a licence extension in approved form.

Liable to forfeiture if:

  • prescribed rent or royalty not paid; or
  • any conditions of licence are not complied with or are breached; or
  • reporting requirements are not complied with; or
  • licensee is convicted of an offence under the Mining Act 1978 (WA).

Acquisition by domestic parties versus acquisition by foreign parties

Is there any distinction in law or practice between the mining rights that may be acquired by domestic parties and those that may be acquired by foreign parties?

Foreign persons proposing to acquire an interest in certain mining tenements need to make an application to the Foreign Investment Review Board for approval (see question 48).

Protection of mining rights

How are mining rights protected? Are foreign arbitration awards in respect of domestic mining disputes freely enforceable in your jurisdiction?

Mining rights are protected by way of mining tenements granted from the relevant state or territory governments. These tenements typically provide the holder with the exclusive right to explore for or extract specified minerals in specified areas as stated in the tenement. These rights are also subject to obligations under the relevant legislation and any other conditions specified in the tenement.

Australia is a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention), which has been given effect in the International Arbitration Act 1974 (Cth). This legislation provides that courts in Australia may only refuse to enforce foreign arbitral awards (including those dealing with mining disputes) in limited circumstances.

A court in Australia may refuse to enforce a foreign arbitral award only if the following applies:

  • a party to the arbitration agreement was under some incapacity at the time when the arbitration agreement was made, or the arbitration agreement was not valid;
  • the party resisting enforcement was not given proper notice of the appointment of the arbitral tribunal or of the arbitral proceedings, or was otherwise unable to present its case in the arbitration;
  • the award deals with a dispute outside the submission to arbitration;
  • the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties;
  • the award is not binding or has been set aside or suspended;
  • the subject matter of the dispute is not capable of settlement by arbitration; or
  • to enforce the award would be contrary to public policy.

Recent decisions from various courts in Australia demonstrate that the courts are reluctant to intervene in arbitral awards, and that there is strong judicial commitment to the enforcement of foreign arbitral awards in accordance with the New York Convention. Unless one of the limited grounds for refusing to enforce a foreign arbitral award can be shown to the satisfaction of the court, that foreign arbitral award will be enforced in Australia.

Surface rights

What types of surface rights may mining rights holders request and acquire? How are these rights acquired? Can surface rights holders oppose these requests?

Each state and territory has a unique land tenure regime. In most states and territories, the different types of tenure include estates in fee simple, leasehold estates, and Crown land such as forests, roads and reserves.

Mining proponents can secure interests in land by purchasing an estate, holding a lease or licence, or receiving permission from the rele­vant minister for Crown land.

However, in most states and territories, a mining proponent does not need to hold an interest in the underlying land title before a tene­ment is granted. Instead, for land with respect to which the landholder’s consent is required (eg, roads and some reserves) the mining company can enter into an agreement with the relevant landholder to secure required rights and provide compensation. For other land, the legislative regimes in most states and territories provide an alternative so that agreement with the landholder is not essential. For example, in Queensland the Land Court can determine compensation issues, and most landholders do not have a veto right over whether a mining lease is granted.

Participation of government and state agencies

Does the government or do state agencies have the right to participate in mining projects? Is there a local listing requirement for the project company?

In Australia, governments or their agencies rarely participate directly in mining ventures. Private enterprise conducts the exploration and production operations. Entities gain the right to undertake exploration and production activities through mining tenements granted by the rele­vant authority under statutory regimes.

There is generally no local listing requirement for a project company. However, it is common for foreign investors to hold interests in projects through locally incorporated companies.

Government expropriation of licences

Are there provisions in law dealing with government expropriation of licences? What are the compensation provisions?

The mining legislation in each state and territory contains provisions regarding cancellation of mining tenements as a result of non-compliance with the relevant legislation or the mining instrument itself. In these circumstances, compensation would not be provided to the mining proponent.

Further, in some states and territories, the government can compulsorily acquire land for mining interests, provided that certain procedural steps are met. In those circumstances, compensation would be provided to the relevant landholders.

Protected areas

Are any areas designated as protected areas within your jurisdiction and which are off-limits or specially regulated?

There are some limits on the access that a mining tenement application can obtain over private land without the agreement of the relevant landholder. These circumstances tend to be very limited. The mining legislation in each state and territory prescribes these limits.

For example, most state and territory legislation prohibits access to private land in residential areas or near to key industrial infrastructure such as power stations. This is not usually a major concern as most mining projects are in remote locations. Further, most state and territory legislation prohibits works that may affect heritage places codified under regulations such as buildings built before a certain period.

Access to Crown land such as state forests, roads, land reserved for indigenous Australians and other reserves for exploration and mining activities is generally restricted and varies according to the land category and the state or territory in which the activity is carried out. Often, approval from the relevant minister is required to conduct exploration and mining activities on Crown land.

In some state and territory legislation, there is also provision to declare particular areas as ‘restricted’ (eg, for future national parks, etc) and therefore unavailable for mining or exploration grants.

In addition, Australian law recognises and protects the traditional connection to land of Aboriginal and Torres Strait Islanders People (indigenous Australians). The key issues requiring consideration for a mining proponent include the following:

  • whether the project affects land where native title does or may exist, in which case processes in the Native Title Act 1993 (Cth) will need to be followed;
  • the potential for the project to affect places or objects within the landscape that are of cultural significance to indigenous Australians; and
  • whether the land proposed to be used for a project is reserved under state- or territory-based legislation introduced for the bene­fit of indigenous Australians.

Areas and objects of archaeological importance or cultural heritage significance to indigenous Australians are protected from harm under commonwealth, state and territory laws.

Also, the Environment Protection and Biodiversity Conservation Act 1999 (Cth) sets out specified matters of national environmental significance. It lists the circumstances in which a mining project may need to be referred to the federal government and the requirements for having the impacts on those specified matters assessed, evaluated and approved (with conditions). Large resources projects are frequently referred under this regime, either to afford certainty or because they are likely to affect one or more of the listed matters of national environmental significance.

Duties, royalties and taxes

Duties, royalties and taxes payable by private parties

What duties, royalties and taxes are payable by private parties carrying on mining activities? Are these revenue-based or profit-based?

Royalties

Each state and territory currently imposes royalties relating to the extraction of minerals. The rates of royalty imposed differ between states and territories, and between different commodities.

Some examples of the royalties imposed are set out in the table below.

State (mineral)

Basis of calculation

New South Wales (coal)

Depends on the type of mining:

  • open-cut mining: 8.2 per cent of value of mineral;
  • underground mining: 7.2 per cent of value of mineral; and
  • deep underground mining: 6.2 per cent of value of mineral.

Northern Territory (most minerals)

20 per cent of net sales value of mineral.

No royalty is payable where the net sales value is A$50,000 or less.

If the net sales value is more than A$50,000, the royalty payable is reduced by A$10,000.

Queensland (coal)

7 per cent of the value of the coal up to A$100 per tonne, 12.5 per cent of the value between A$100 and A$150 per tonne and 15 per cent of the value thereafter.

Queensland (iron ore)

A$1.25 per tonne, if average price is A$100 per tonne or less. If average price is greater than A$100 per tonne, the rate is 1.25 per cent of value for the first $100 and 2.5 per cent of value for the balance.

Discount of 20 per cent if processed in Queensland and metal content is at least 95 per cent.

South Australia (coal)

5 per cent of value of mineral.

South Australia (refined mineral products and industrial minerals)

3.5 per cent of value of mineral.

Western Australia (coal)

Depends on the import and export status:

  • if exported: 7.5 per cent of value of mineral; and
  • if not exported: A$1 per tonne (adjusted each year on 30 June in accordance with comparative price increases).

Western Australia (iron ore)

Depends on type of ore:

  • beneficiated ore: 5 per cent of value of mineral; and
  • all other iron ore: 7.5 per cent of value of mineral.

Income tax

Broadly, a non-resident company will only be subject to tax on income that is sourced in Australia, subject to the application of any applicable double tax agreement (DTA). If a DTA applies to a non-resident company, the company will only be taxed on income attributable to any permanent establishment it has in Australia (other Australian sourced income such as dividends, interest, royalties and payments for construction and related activities are subject to a withholding tax regime) and gains derived on the disposal of real property located in Australia (whether such property is held directly or indirectly).

Under a DTA, Australia generally has the right to tax the profits attributable to the non-resident company’s permanent establishment. The profits are subject to tax at the corporate tax rate of 30 per cent, unless the company is a base rate entity. A base rate entity is a company that is carrying on a business and has an aggregated turnover of less than A$25 million for the 2017-2018 income year and less than A$50 million for the 2018-2019 income year. For base rate entities, the corporate tax rate is currently 27.5 per cent. The term ‘permanent establishment’ is defined in a DTA. There are also provisions in a DTA that can deem a permanent establishment to exist or not exist in specified circumstances. Ultimately, a determination of whether a non-resident has a permanent establishment will be based on the activities undertaken by the non-resident in Australia.

Withholding taxes

Only certain forms of income derived by non-residents are subject to Australia’s withholding tax regime, such as interest payments and dividends.

Capital gains

Broadly speaking, a non-resident shareholder is only subject to capital gains tax in respect of a gain derived from the disposal of the following:

  • Australian real property (including mining and petroleum interests);
  • shares in a ‘land rich’ Australian company (ie, more than 50 per cent of the market value of the company’s assets relate to Australian real property) and the interest held by the non-resident passes the ‘non-portfolio interest test’ (ie, if the interest is of 10 per cent or more in the company). The 10 per cent test is applied on an associate inclusive basis with a ‘look back’ period of up to two years before the disposal; or
  • assets used in carrying on business at, or through, an Australian permanent establishment.

Purchasers of Australian real property (with a market value of A$750,000 or more) or shares in a ‘land rich’ Australian company (or options over such assets) are required to withhold and remit to the Australian Taxation Office (ATO) 12.5 per cent of the purchase price if the vendor is a non-resident or, in the case of real property, is unable to provide an ATO clearance certificate. The vendor will receive a tax credit in respect of the withheld amount, provided it has been remitted to the ATO.

Goods and services tax (GST)

The commonwealth government imposes GST on supplies made by entities that are registered, or required to be registered, for GST. An entity is required to be registered for GST when its annual turnover from supplies connected with Australia (having regard to the previous 12 months and the following 12 months) exceeds A$75,000. An entity can elect to register for GST if it is carrying on an enterprise.

GST is imposed at a rate of 10 per cent. Supplies can be subject to GST if they are connected with Australia and made in the course or furtherance of an enterprise. Some transactions are not subject to GST because they are GST-free (such as exports) or are input taxed (such as financial supplies and supplies of precious metals in some circumstances). Except to the extent an acquisition is related to making input taxed supplies, an entity that is registered, or required to be registered for GST, can claim back as input tax credits any GST incurred on its costs and expenses, subject to holding a valid tax invoice.

Participants in a joint venture can notify the Commissioner of Taxation that it is a GST joint venture. Where a joint venture is a GST joint venture, the joint venture operator (either one of the joint venturers or another entity) has the responsibility, on behalf of all of the participants, to account for GST liabilities, input tax credit entitlements and adjustments relating to the operations of the joint venture. Supplies that are made by the joint venture operator to other participants are not subject to GST.

Stamp duty

All states and territories other than South Australia impose stamp duty on the transfer of interests in real property and goods transferred with real property. In South Australia, the transfer of goods, with or without real property, is not subject to duty; however, the transfer of real property is liable to duty. Stamp duty can also apply to transfers of business assets (in the Northern Territory, Queensland and Western Australia). Different rates apply in each state and territory and the rates also vary between different types of transactions.

Each state also imposes its own rules in respect of whether mining tenements and mining leases give rise to interests in land. For example, in New South Wales, an assessment lease under the Mining Act 1992 (NSW) does not give rise to an interest in land. However, a mining lease or mineral claim granted under the Mining Act 1992 (NSW), gives rise to an interest in land. In Queensland, a mining tenement under the Mineral Resources Act 1989 (Qld) is an interest in land. In Western Australia and the Northern Territory a mining tenement, is ‘an interest in land’.

In South Australia, duty on transfers of ‘non-residential, non-primary production real property’ is being phased out and will be fully abolished from 1 July 2018. Land to which the reduction in duty applies is land that is being used ‘other than for residential purposes or for primary production’.

All states and territories impose stamp duty on certain acquisitions of interests in companies or trusts that own Australian real property. This is known as ‘landholder’ duty. The duty is generally imposed on the value of the land held by the relevant entity (or the value of land and goods in New South Wales, Tasmania and Western Australia) and, in relation to non-listed entities, is imposed at the same rate as that imposed on the transfer of land. For listed entities, the Australian Capital Territory (ACT) does not impose duty and in all other jurisdictions except the Northern Territory and Western Australia, duty is imposed at 10 per cent of the rate that applies to a transfer of the land.

Tax advantages and incentives

What tax advantages and incentives are available to private parties carrying on mining activities?

The ‘Exploration Development Incentive’ was designed to encourage shareholder investment in small exploration companies undertaking greenfield exploration projects in Australia, but has now been finalised and is no longer accepting new participation forms. It has been replaced with an intention to introduce a ‘Junior Minerals Exploration Incentive’ (JMEI). The JMEI will allow eligible companies to create and issue tax credits by giving up a portion of their tax losses from greenfield mine­ral exploration expenditure. These tax credits can then be distributed to eligible shareholders. The JMEI applied from the 2017-2018 income year with exploration credits capped at A$100 million over a four-year period.

Parties carrying on mining activities may be eligible to claim upfront deductions for certain types of capital expenses relating to activities such as exploration and prospecting, and the rehabilitation of mining sites. Additionally, certain mining capital expenditure may be deductible over the life of a project.

Tax stablisation

Does any legislation provide for tax stabilisation or are there tax stabilisation agreements in force?

There is no legislation that deals with tax stabilisation. Tax stabilisation agreements - such as ‘freezing’ or ‘equilibrium’ agreements, which are designed to provide certainty to investors - have not been made in Australia.

Carried interest

Is the government entitled to a carried interest, or a free carried interest in mining projects?

There is no carried interest scheme in Australia.

Transfer taxes and capital gains

Are there any transfer taxes or capital gains imposed regarding the transfer of licences?

All states and territories impose stamp duty on the transfer of interests in real property. Whether the transfer of a licence is a dutiable transaction will depend on a number of factors, including the nature of the rights conferred by that licence and the state or territory legislation that governs the transaction.

Generally, a non-resident will be subject to capital gains tax in respect of a gain derived from the disposal of mining and petroleum interests.

Distinction between domestic parties and foreign parties

Is there any distinction between the duties, royalties and taxes payable by domestic parties and those payable by foreign parties?

A party’s status as a non-resident company can affect the royalties and taxes for which it is ultimately liable. For instance, particular forms of income derived by non-resident companies may be subject to withholding tax, and purchasers of property from non-residents may be required to withhold part of the purchase price.

A non-resident entity is only liable to pay tax on income that is sourced in Australia (if there is no DTA), or income that it earns in respect of its Australian permanent establishment (if a DTA applies). Such an entity may also be required to pay tax on capital gains it makes in respect of certain assets.

There is no distinction between domestic parties and foreign parties in relation to the payment of stamp duty (other than for residential property in New South Wales, Queensland and Victoria) and GST. The Western Australian government has announced that, from 1 January 2019, a foreign owner duty surcharge will also be introduced in Western Australia in respect of residential property. However, the surcharge is yet to be legislated. Stamp duty and GST will be payable if the requirements of the particular legislation are satisfied, regardless of the residency of the party.

Business structures

Principal business structures

What are the principal business structures used by private parties carrying on mining activities?

Private parties can carry out mining activities by obtaining approvals and directly investing as an individual entity. However, more commonly, mining proponents carry on mining activities through a range of different business structures such as joint ventures and farm-in agreements. These structures are discussed further below.

Joint ventures

It is common in Australia to conduct mining activities as part of a joint venture. Different arrangements may be required for ventures formed for various mining related activities (ie, exploration, production and the operation of an infrastructure facility).

The joint venture agreement generally states the scope, purpose and duration of the joint venture, identifies the assets committed to it, describes and quantifies the interests of the participants, and provides for the operation, management and control of the venture. The agreement also covers the making of ‘called sums’, the holding and expenditure of funds, the apportionment of liability, the consequences of default, the use and disposal of the output of the venture and the assignment of interests and withdrawal from the venture.

There are two types of joint venture commonly used in Australia - incorporated and unincorporated joint ventures. Each structure has different legal and taxation implications that need to be carefully considered and assessed, having regard to the commercial objectives of the parties.

We provide a high-level summary of the general characteristics of (and differences between) incorporated and unincorporated joint ventures, as follows:

  • an incorporated joint venture is operated by a special purpose company in which the joint venturers are shareholders. The joint venture has its own separate legal personality. A shareholders’ agreement between the parties is entered into and, at the same time, the special purpose company is formed to own and control the venture, with an agreed number of directors appointed by each party; whereas
  • an unincorporated joint venture involves parties agreeing to cooperate in relation to a commercial undertaking, with the parties holding their interests and entitlements in the venture separately, rather than jointly. As there is no company structure, the contract (ie, the joint venture agreement) between the parties will govern their relationship, the operation of the venture and their obligations to each other. Less corporate regulation makes this structure particularly attractive to private parties in some cases.

Recent amendments to the Competition and Consumer Act 2010 (Cth) that took effect in November 2017 have broadened the scope of the joint venture exception to cartel conduct. The amendments seek to ensure that legitimate joint commercial activities are exempt from Australia’s cartel laws by, among other things, extending the joint venture exception to ‘arrangements’ and ‘understandings’ (and not just formal contracts) containing cartel provisions, and to joint ventures for the acquisition of goods and services (in addition to production and supply joint ventures). The relevant conduct exempted from the cartel rules must, however, be for the purposes of the joint venture, reasonably necessary for undertaking the joint venture, and the joint venture must not otherwise be for the purpose of substantially lessening competition.

Farm-in agreements

As mentioned above, the particular arrangements in respect of each joint venture will invariably differ depending on the terms of the rele­vant joint venture arrangements. However, a particular form of joint venture that is worth discussing in some further detail are those which involve a farm-in or farm-out arrangement.

Farm-in agreements are often used in conjunction with a joint venture structure to share the risk of the exploration and development stages of a tenement. In a typical farm-in agreement, the owner of a tenement would offer to sell part or all of its tenement to another entity in return for the farmer funding or completing ‘work’ on the tenement. The farm-in agreement would generally specify the financial contribution to be made, or work required to be carried out, within a certain time frame in exchange for transfer of a proportionate interest. Following transfer, the parties may enter into a joint venture agreement to govern how they will work together to further develop the tenement and carry out mining operations.

Local entity requirement

Is there a requirement that a local entity be a party to the transaction?

No. Foreign companies can transact to acquire or dispose of interests without a local party to the transaction. However, foreign companies should be aware of the foreign investment approval scheme described in question 45. This scheme includes special provisions applicable to the acquisition of interests in certain mining tenements.

Bilateral investment and tax treaties

Are there jurisdictions with favourable bilateral investment treaties or tax treaties with your jurisdiction through which foreign entities will commonly structure their operations in your jurisdiction?

Australia has entered a number of bilateral investment treaties (otherwise known as ‘investment protection agreements’) with other states since entering its first such treaty with China in 1988. However, these treaties do not significantly affect the way in which foreign entities structure their operations in Australia.

Generally speaking, bilateral investment treaties to which Australia is a party provide investors with a range of protections, such as guarantees against discriminatory treatment or expropriation without compensation. These treaties also generally include dispute settlement procedures that can be utilised by investors in certain circumstances. However, there have only been a very small number of reported claims by Australian or foreign investors under bilateral investment treaties.

Financing

Principal sources of financing

What are the principal sources of financing available to private parties carrying on mining activities? What role does the domestic public securities market play in financing the mining industry?

Private parties will often finance mining activities through equity markets or debt financing, depending upon factors such as the nature of the proposed activities, the risk profile of the project, the structure of the transaction (eg, an unincorporated joint venture) and the stage of the project (eg, pre-feasibility study, greenfield project development, expansion, stockpile or working capital financing). A number of mining companies are listed on the ASX, which can engage in equity or capital raising to finance mining activities.

There are a number of other potential sources of finance. For example, some Australian projects receive funding from export credit agencies (ECAs), which are government-owned or backed institutions that provide financial support for transactions that are in some way connected with the country of the ECA. ECA support for a mining project might be provided on a ‘tied’ basis, in the sense that the participation of the ECA is dependent on the procurement of equipment, materials or services from the country of the ECA.

Project proponents in Australia should also consider how the environmental and social impact of their proposed activities might influence the availability or conditions of project finance. For instance, a large number of financial institutions have adopted the ‘Equator Principles’, which provide a voluntary benchmark for assessing and managing environmental and social risk in major development projects.

Direct financing from government or major pension funds

Does the government, its agencies or major pension funds provide direct financing to mining projects?

The government itself does not provide direct finance for mining projects in Australia.

In some circumstances, Australia’s ECA, EFIC, may provide financial support where the commercial market is not willing to provide it, subject to the project satisfying EFIC’s Australian content and export requirements.

Australia’s sovereign wealth fund, the Future Fund, holds equity investments in large mining companies like BHP Billiton and Rio Tinto, but has not provided debt funding directly for specific projects. Australia’s pension funds have generally steered away from greenfield mining projects due to the uncertainty of returns.

The Australian government’s Northern Australia Infrastructure Facility (NAIF) is an A$5 billion fund that has the ability to provide grants of financial assistance (in the form of loans, guarantees and other financial mechanisms) for the construction of infrastructure, which may include infrastructure in connection with mining projects. Among other mandatory criteria that must be satisfied for a grant of financial assistance under the NAIF, the applicant must show that the loan will be able to be repaid or refinanced and that the project is located in or will have a significant benefit for Northern Australia. On 2 May 2018, the NAIF investment mandate was amended to allow the NAIF to finance up to 100 per cent of a project’s debt (where previously the financing provided by NAIF could not exceed 50 per cent of total debt for the proposed project). Some of the other mandatory requirements were also relaxed.

The Australian government’s Clean Energy Finance Corporation (CEFC) can also provide financial assistance for certain mining projects (in the form of loans, equity and convertible debt investments and other forms of ‘financial assets’). The CEFC’s ability to invest is limited by its governing legislation, the Clean Energy Finance Corporation Act 2012 (Cth) (CEFC Act). The CEFC may only make investments that are:

  • in clean energy technologies (including businesses that supply goods or services needed to develop or commercialise, or are needed for use in, clean energy technologies);
  • not a prohibited technology under section 62 of the CEFC Act; and
  • solely or mainly Australian-based. The CEFC has invested in a Western Australian lithium-tantalum mining project, which fell within the legislative criteria.

Security regime

Describe the regime for taking security over mining interests.

Mining tenements are regulated by each state and territory under separate legislation and the regimes regarding taking security over mining interests vary accordingly.

In most jurisdictions, mining tenements can be subject to a ‘mortgage’, which is a charge on the tenement for securing money or money’s worth. Generally, a fixed or floating charge is lodged as an attachment to the prescribed form with the relevant mining regulator. Once registered, the mortgage will be noted on the relevant tenement instrument, which is publicly searchable. A mortgage over a mining tenement is not the same as a mortgage over real property interests. It will not necessarily afford the mortgagor priority interests in the same way that a mortgage over real property interests would.

In most states and territories, a caveat can be lodged over mining tenements. The registration of a caveat generally prohibits the transfer of the tenement without the consent of the caveat holder. The caveator will have to provide the mining regulatory with evidence of its interest in the tenement. The key benefit of a caveat is that the caveator receives notices of any intended dealings concerning the mining tenement. Once registered, the caveat is noted on the relevant mining ­tenement instrument, which is publicly searchable. Caveats are generally for a prescribed period and will lapse unless they are lodged with the consent of the tenement holder.

Restrictions

Importation restrictions

What restrictions are imposed on the importation of machinery and equipment or services required in connection with exploration and extraction?

There are currently no restrictions on the importation of new mining equipment. However, new equipment may be subject to an inspection by the Department of Agriculture and Water Resources to ensure that it is, in fact, new and free of contamination.

Used mining equipment requires an import permit. Under the current regime, a condition of the permit is that the equipment arrives in a ‘clean as new’ state. As of 9 April 2018, where used equipment that requires a permit arrives without said permit, the Department of Agriculture and Water Resources will direct the used equipment be exported from Australia, or require it to be destroyed in an approved manner, even if a permit application for that equipment is currently under consideration.

In 2017, the Department of Agriculture and Water Resources conducted a review of import conditions for used machinery. A number of changes have been agreed in principle, including:

  • classification of used machinery prior to import;
  • mandatory offshore cleaning of high-risk used machinery;
  • reduced onshore intervention for importers with a demonstrated history of compliance;
  • removing the requirement for lower-risk used machinery inspections to be performed by accredited biosecurity officers; and
  • an option for used machinery to be cleaned onshore in extenuating circumstances, at the importer’s expense.

A phased approach to implementation of the changes has been developed. As part of the next phase of this process, the Department of Agriculture and Water Resources will progress trial arrangements to assess industry compliance with the proposed conditions.

Where occupational health and safety is concerned, state regulations dictate that an importer must identify hazards and assess and reduce risks associated with the equipment.

There are no specific tariffs on the importation of mining equipment, although depending on where the equipment was manufactured, importers may have to pay a customs duty (usually 5 per cent). GST of 10 per cent will also generally be payable on importation of mining equipment. However, the GST amount can generally be claimed back as an offset or refund. Approval can also be sought to defer the GST on importation until lodgement of the relevant return, which coincides with the claiming of the offset.

Standard conditions and agreements

Which standard conditions and agreements covering equipment supplies are used in your jurisdiction?

There are no Australian standard conditions or agreements specifically covering equipment supplies; however, the following standard contract forms and guidelines are regularly used in Australia:

  • contracts developed by Standards Australia;
  • the National Alliance Contracting Guidelines, published by the Department of Infrastructure and Regional Development; and
  • the FIDIC conditions of contract.

In general, the market is considered to be buyer-friendly.

Mineral restrictions

What restrictions are imposed on the processing, export or sale of minerals? Are there any export quotas, licensing or other mechanisms that prevent producers from freely exporting their production?

Export control

There are two commonwealth-administered mineral export controls that specifically concern rough diamonds and uranium respectively:

  • Rough diamonds may only be exported to countries that participate in the Kimberley Process Certification Scheme, and must be accompanied by an Australian Kimberley Process Certificate. The Kimberley scheme is an international initiative to stem the flow of conflict diamonds, and imposes extensive requirements on its members to ensure that their rough diamonds are ‘conflict-free’. Certificates are issued by the Department of Industry, Innovation and Science.
  • Export controls apply to uranium (and related nuclear materials, including tantalum and mineral sands containing monazite) to ensure compliance with Australia’s non-proliferation policy obligations and safeguards regime. Under the Customs (Prohibited Exports) Regulations 1958 (Cth), permission to export uranium and other nuclear and related materials must be obtained from the Minister for Resources and Northern Australia or an authorised person. Prior to lodging export permit applications, companies should also ensure they have obtained relevant permissions from the Australian Safeguards and Non-Proliferation Office to possess or transport nuclear material pursuant to the Nuclear Non-Proliferation (Safeguards) Act 1987 (Cth).

Exploration control

At the state and territory level, only the Northern Territory, South Australia, Tasmania and Western Australia allow the exploration and mining of uranium. New South Wales and Queensland permit exploration only, while Victoria does not permit either.

Mining and planning approvals in project-specific indentures and state acts may also impose restrictions on the processing, export or sale of minerals. Such restrictions can include, but are not limited to, capped production quantities and project-specific practice codes.

Import of funds restrictions

What restrictions are imposed on the import of funds for exploration and extraction or the use of the proceeds from the export or sale of minerals?

There are no specific restrictions on the use of foreign debt to fund exploration or extraction. There are also no restrictions on the use of proceeds from the exportation or sale of minerals.

For details of Australia’s foreign investment restrictions, see question 48.

Environment

Principal applicable environmental laws

What are the principal environmental laws applicable to the mining industry? What are the principal regulatory bodies that administer those laws?

Each state and territory has enacted legislation regulating environmental matters and the approval process in that state or territory.

The key environmental legislation and regulator for each state and territory is set out below.

State/Territory

Key environmental legislation

Key environmental regulator

New South Wales

Protection of the Environment Operations Act 1997 (NSW)

Environmental Planning and Assessment Act 1979 (NSW)

Mining Act 1992 (NSW)

Water Management Act 2000 (NSW)

Water Act 1912 (NSW)

Contaminated Land Management Act 1997 (NSW)

Biodiversity Conservation Act 2016 (NSW)

Heritage Act 1997 (NSW)

National Parks and Wildlife Act 1974 (NSW)

Environment Protection Authority

Department of Planning and Environment

Department of Primary Industries

Northern Territory

Environmental Assessments Act 1982 (NT)

Mining Management Act 2001 (NT)

Northern Territory Environment Protection Authority

Department of Primary Industry and Resources

Queensland

Environmental Protection Act 1994 (Qld)

Department of Environment and Science

South Australia

Environment Protection Act 1993 (SA)

Environment Protection Authority

Tasmania

Environmental Management and Pollution Control Act 1994 (Tas)

Department of Primary Industries, Parks, Water and Environment

Victoria

Environment Protection Act 1970 (Vic)

Environment Effects Act 1978 (Vic)

Environment Protection Authority

Department of Environment, Land, Water and Planning, Victoria

Western Australia

Environment Protection Act 1986 (WA)

Environmental Protection Authority

Department of Water and Environmental Regulation

Importantly, there are also environmental requirements included in the mining legislation for each jurisdiction (see question 5). Other legislation may also be relevant in particular jurisdictions (eg, the Radiation Protection and Control Act 1982 (SA), the Development Act 1993 (SA) and the Natural Resources Management Act 2004 (SA) in South Australia).

In New South Wales, the appropriate regulatory authority (which is usually the EPA for mining projects) can issue environment protection notices under the Protection of the Environment Operations Act 1997 (NSW), including clean-up, prevention and prohibition notices to occupiers of premises, polluters or persons carrying on an activity (such as mining activities). Depending on the circumstances, such notices may require clean-up of pollution, preventive work to prevent harm to the environment or cessation of activities.

New South Wales has also recently overhauled its legislative management of threatened species, biodiversity conservation and native vegetation, with the introduction of the Biodiversity Conservation Act 2016 (NSW), Local Land Services Act 2013 (NSW) and the repeal of previous legislation. An updated approach to the management of Aboriginal Cultural Heritage is also on the horizon, with the February 2018 introduction of the draft Aboriginal Cultural Heritage Bill 2018 (NSW). Public consultation on this draft bill recently closed and the New South Wales government is reviewing submissions received during the bill’s consultation period.

Victoria’s Environmental Protection Agency (Victorian EPA) has launched a five-year reform programme as part of its efforts to provide a ‘strong, agile and modern environmental regulator’. Under the proposed reforms, the Victorian EPA will take greater responsibility for environmental compliance and enforcement in relation to mining operations. Businesses will be required to take preventive action to mitigate the risk of harm to the environment. As part of this reform, the Victorian parliament has passed the Environment Protection Act 2017, which strengthens and modernises the Victorian EPA.

There is also significant federal legislation dealing with environmental matters, including the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act). The EPBC Act is concerned with the protection of specified matters of national environmental significance. It sets out the circumstances in which a mining project may need to be referred to the federal government, and the requirements for having the impacts on those specified matters assessed, evaluated and approved (with conditions). In 2013, water resources, in relation to coal seam gas and large coal mining projects, were included in the EPBC Act as an additional matter of national environmental significance. As a result, coal seam gas and large coal mining projects that are likely to have a significant impact on water resources require assessment and approval under the EPBC Act.

Large resources projects are frequently referred under this regime either to afford certainty or because they are plainly going to affect one or more of the listed matters of national environmental significance.

In some cases the federal government has delegated supervision of the environmental impact assessment part of the process to state and territory governments, although EPBC Act approvals must, nevertheless, still be made by the Federal Environment Minister. This means that in some cases, the EPBC Act assessment process can be combined with the relevant state or territory assessment process, thereby avoiding some duplication and potentially reducing the time taken to approval.

Environmental review and permitting process

What is the environmental review and permitting process for a mining project? How long does it normally take to obtain the necessary permits?

Environmental approvals

Regulatory environmental approvals must be obtained before the commencement of exploration or production stages, and the mining company must adhere to the terms and conditions of those approvals, as well as to the requirements of general environmental regulations, throughout the mining life cycle.

Environmental approvals are only granted following a detailed assessment of impacts and, in Australia, these processes are largely governed by state and territory legislation administered by the relevant environmental regulator in each jurisdiction.

The key matters to be addressed in the impact assessment are as follows:

  • managing air, water, land and noise impacts;
  • protection of flora, fauna and habitat; and
  • recognising and preventing impacts to objects or sites significant to indigenous communities.

The assessment work can take considerable time and resources with the environmental impact statements produced for large projects typically running to thousands of pages. Frequently, the assessment is also open to public consultation and appeals (including by third parties in some jurisdictions). New South Wales, in particular, has a complex regime of environmental approvals for mining projects, which are sepa­rate from the planning approval for the project.

A determination about the proposed project is then made by the relevant environmental regulator. Approval is generally given by the relevant state or territory minister and is usually subject to conditions designed to minimise the environmental impact. It may also be necessary to obtain approval from the federal environmental regulator. The mining company (and in some cases its executive officers) will be liable for any non-compliance.

Government facilitation of approvals process

In some states, the approval processes for major mining projects receive special assistance from a centralised government coordinating authority. This authority facilitates the planning and coordination of government agencies involved in the approvals processes, and may also assist in securing access to land and infrastructure needed for the project.

Beyond facilitation, some states and territories commit to seeking the passage of project-specific legislation to ratify agreements between the government and the proponents of the mining project (ie, state agreements). Each agreement specifies the rights, obligations, terms and conditions for development of the project and establishes processes for ongoing relations between the government and the proponent.

Each state and territory has a separate process for planning and approvals. In New South Wales, for example, if state-significant development consent is granted for a project, certain other statutory approvals are not required to be obtained (this is not the case in the Northern Territory, Queensland or Western Australia). Some statutory approvals, while still required, cannot be refused and must be substantially consistent with the conditions of the development consent granted for the project. Separate from the planning approval, a mining project will (in almost all cases) also require an environment protection licence, which sets out a range of conditions in terms of authorised pollution. In South Australia the mining legislation includes a development approval process - the Minerals Resources Division follows a streamlined regulatory process that focuses on the environmental risk of the proposed mining operation.

Planning approvals

Like all development activities, mining projects involve the construction of buildings, roads and other infrastructure, which may require local government or state government planning approval. In some jurisdictions, planning approval is integrated into the project approvals process or may be subsumed by the mining and environmental approvals processes.

Planning approvals are controlled by state and territory planning legislation and planning schemes. Local governments may have a key role under this legislation in formulating and administering planning schemes. Assessments for issuing permits under planning schemes need to take account of the potential for a mine or mineral processing project to affect future uses of the area. In New South Wales, planning approvals for mining projects are assessed and granted under the Environmental Planning and Assessment Act 1979 (NSW). This act was significantly amended on 1 March 2018, including a reformatting and renumbering of its provisions, although the planning approval pathway for mining projects (which will usually be ‘state-significant development’ for the purposes of the act) remains largely unchanged.

Time frames

The time frame for obtaining the necessary environmental permits will vary, depending on the nature and scale of the proposed activities and likely impacts. By way of example, it may take two years or more to obtain the approvals necessary for the production stage of a large mining project, with the environmental impact assessment process taking up the bulk of this period.

In New South Wales, considerable time can also be spent by the proponent in preparing a report in reply to submissions received during the public exhibition of the environmental impact statement (EIS) and preparing a preferred project report. In New South Wales, third parties are able to bring judicial review legal challenges in the Land and Environment Court to approvals granted under the planning and environmental legislation. It is not uncommon for third parties to bring these challenges to major mining projects and for these challenges, whether successful or unsuccessful, to delay the project.

Closure and remediation process

What is the closure and remediation process for a mining project? What performance bonds, guarantees and other financial assurances are required?

Generally the closure and remediation of a mining project in Australia involves five stages, as follows:

  • care and maintenance: the period following temporary cessation of mining operations;
  • closure: mining operations completely cease and infrastructure is removed;
  • decommissioning: any leftover infrastructure is removed and services end;
  • rehabilitation: activities undertaken to return the land to a certain condition; and
  • relinquishment: approval by the relevant regulator that certain completion requirements have been met and the mining tenement surrendered.

This closure and remediation process is largely regulated as part of the approval processes under each state and territory’s mining and environmental laws, with standards and criteria often set during environmental impact assessment work. Each jurisdiction also has mine closure processes in legislation, regulations and guidelines containing certain completion requirements that must be met before a tenement can be relinquished. In Queensland, legislation has been introduced to require progressive rehabilitation of land, including the requirement, in some instances, to develop a progressive rehabilitation and closure plan with time-based milestones for progressive rehabilitation of mined areas to deliver post mining land uses.

State and territory governments generally require security bonds, such as a bank guarantee or other form of financial assurance, to be provided in advance of construction work commencing to guarantee the company’s ‘cradle-to-grave’ environmental performance. If the mining company defaults on its remediation obligations (eg, owing to insolvency), the relevant regulatory agency can then draw on the bond to defray the costs incurred in carrying out remediation work. If the company has discharged all its rehabilitation obligations, the security will be released by the regulator. In New South Wales, the requirement for a security deposit to is set out in the conditions of the mining lease granted for the project under the Mining Act 1992 (NSW). The amount of security is (in most cases) that which would be required to achieve the complete rehabilitation of a mine site. The New South Wales government has recently released a discussion paper on improving mine rehabilitation in New South Wales. Submissions on the discussion paper have closed and the New South Wales Department of Planning and Environment is considering these submissions before releasing any draft legislative amendments or guidelines. Among other things, the discussion paper proposes more detailed and rigorous rehabilitation plans to be included in the EIS for new state-significant development applications for mines, conditions requiring progressive rehabilitation of mine sites, greater community consultation on mine rehabilitation and post-closure uses and greater accountability for rehabilitation costs.

The quantum of security required by the regulator is typically calculated on the basis of the likely costs and expenses that would be incurred by the government if it were required to rehabilitate and restore a mine site if the mining company failed to so. This calculation will take into account factors such as the planned activities, term of the tenement and area of planned disturbance.

In recent years some state governments have sought to reform the way in which financial assurance is provided, through the establishment of an annual contribution to a ‘pooled fund’. For example, Western Australia created a mining rehabilitation fund in 2012, which requires annual contributions at prescribed rates. Similarly, Queensland has introduced legislation creating a tailored solution, where companies will be risk-assessed and required to pay a contribution to a pooled fund or provide a surety. The Queensland legislation is designed to manage the risk to the state of incurring costs and expenses if a proponent does not comply with its obligations.

In Western Australia in 2012, the bond system was replaced by the Mining Rehabilitation Fund (MRF) established under the Mining Rehabilitation Fund Act 2012 (WA). The act requires tenement holders to compile and submit assessment information each year regarding activities carried out on the tenements, and then pay an annual mining rehabilitation fund levy when it falls due. Costing for the annual levy is based on a disturbance type and the area of the tenement. Tenements with a rehabilitation liability estimate below a threshold of A$50,000 must report disturbance data but are not required to pay into the fund.

Queensland includes provisions in the Environmental Protection Act 1994 (Qld) that allow environmental obligations to be imposed on environmental authority holders, as well as a broad range of ‘related persons’. Notably, the relevant department can issue environmental protection orders requiring ‘related persons’ to rehabilitate sites. During 2017, the Queensland government conducted a review of Queensland’s financial assurance framework, resulting in a number of proposed reforms. On 15 February 2018, the Mineral and Energy Resources (Financial Provisioning) Bill 2018 (Qld) was introduced into the state parliament. The bill proposes to replace Queensland’s existing financial assurance arrangements with a framework that would:

  • establish a financial provisioning fund;
  • classify mining companies based on financial risk profile and rehabilitation liability; and
  • impose a corresponding financial assurance arrangement, which would involve either payment of a contribution into the fund or the giving of a surety.

The bill remains before the Queensland parliament.

Also arising from this review was the discussion paper ‘Better Mine Rehabilitation for Queensland’, which proposes a new policy for mine rehabilitation in Queensland. The proposed new policy approach involves:

  • introducing life-of-mine plans for site-specific mines;
  • regular monitoring, assessment and reporting;
  • enforceable requirements for progressive rehabilitation;
  • clear completion and sign-off requirements;
  • incentives for good performance; and
  • collection of good-quality data for policy and regulatory implementation.

At this stage, no legislative amendments have been proposed to give effect to the policy.

In Victoria, the holder of a mining licence is required to rehabilitate the land in accordance with an approved rehabilitation plan. That plan must include:

  • concepts for the final end use of the mine site;
  • proposals for progressive rehabilitation, stabilisation and vegetation of the site and other land affected by the operations;
  • a proposal for landscaping to minimise visual impact of the mine site; and
  • proposals for the final rehabilitation and closure of the site, including the removal of certain materials and products.

Restrictions on building tailings or waste dams

What are the restrictions for building tailings or waste dams?

In New South Wales, the construction and operation of tailings dams and waste dams are subject to environmental assessment and approval under the Environmental Planning and Assessment Act 1979 (NSW), and will be subject to conditions. Dams are also regulated under the Mining Act 1992 (NSW) through the mining lease or other tenement. A mine manager is required to be appointed under the mining legislation who will be directly responsible for mining operations on the tenement, including any tailings or waste storage dam. Tailings and waste dams usually also require an environmental protection licence and will be regulated by the Environment Protection Authority under the Protection of the Environment Operations Act 1997 (NSW). The Dams Safety Committee has authority under the Dams Safety Act 1978 (NSW) to regulate prescribed tailings dams and waste dams. In prescribing a dam, the committee requires that the owner (or operator) conduct a risk assessment of the magnitude and seriousness of any adverse consequences if the relevant dam were to fail. The committee publishes detailed guidance sheets on its website, which contain its requirements for the building and operation of these dams, including dam surveillance and emergency plans. For example, the committee normally requires that tailings and waste dams have emergency spillways or reliable flood mitigation measures. In the event of an emergency, the Minister can give the committee approval to take full charge and control of the dam and to conduct any necessary works, in which case the dam owner (or operator) may be required to pay any costs or expenses incurred by the committee. The Dams Safety Act 1978 (NSW) will be replaced by the Dams Safety Act 2015 (NSW), which has been enacted but has yet to commence. Once commenced, the Dam Safety Committee will be replaced by a new body called Dams Safety NSW. The regulations to the new dams safety legislation have yet to be prescribed, although they are likely to include dam safety standards, requirements for declared dam owners to prepare operation, maintenance and emergency plans for their declared dams.

In the Northern Territory, the construction and operation of tailings dams will form part of the ‘mining activity’, and will be authorised and conditioned by an authorisation issued pursuant to the requirements of the Mining Management Act 2001 (NT).

In Queensland, construction and operation of tailings dams and waste dams for mining projects will generally be authorised as part of a mine’s approval under the Environmental Protection Act 1994 (Qld), and will be subject to conditions. The conditions will generally deal with matters such as design, construction and operation, inspections (typically required annually), reporting and emergency procedures.

In South Australia, a licence is required to build tailings dams and waste dams. The design, construction and operation of the tailings dam must be in accordance with the Environment Protection (Water Quality) Policy, the mine’s approved programme for environmental protection and rehabilitation and any other relevant environmental licence granted by the EPA. For uranium mines, an approved radio­active waste management plan is required to address the construction, operation, monitoring and reporting of the tailings dam, as a licence condition.

In Tasmania, activities in relation to tailings dams are regulated under the Water Management Act 1999 (Tas) and the Water Management (Safety of Dams) Regulations 2015 (Tas). The regulations use the system of consequence categories for dams, as set out by the Australian National Committee on Large Dams, and require different levels of ongoing dam safety activities and reporting, depending on the severity of damage and loss to the downstream environment and population in a dambreak event situation. Tailing dams that have a significant or higher consequence category require more ongoing safety activities and reporting than tailing dams that have a low or very low consequence category.

In Victoria, the design, construction and operation of tailings dams for mining projects are subject to approval and conditions imposed by the Department of Economic Development, Jobs, Transport and Resources. A work plan, including a tailored emergency response plan for the facility, is required to be lodged and approved before the construction or operation of a tailings dam can commence. Once operational, an annual audit and review of the facilities should also be undertaken, with the report to be submitted to the department.

In Western Australia, a tailings dam for a mining project may require approval under the Environmental Protection Act 1986 (WA). Conditions relating to the operation and management of the tailings dam may be imposed on these environmental approvals. The Western Australia Department of Environment Regulation was due to release an environmental standard for tailings storage facilities for public consultation in June 2017; however, this consultation was put on hold following the 1 July 2017 merger of the former Department of Environment Regulation with the Department of Water and the Office of the Environmental Protection Authority. The new Department of Water and Environmental Regulation has not yet released a date for the upcoming consultation. Requirements can apply to tailings dams for mining projects through measures including conditions imposed on the grant of mining tenements and mining proposals under the Mining Act 1978 (WA), project management plans under the Mines Safety and Inspection Act 1994 (WA), and associated guidance documents.

In addition, occupational health and safety legislation in force in each jurisdiction imposes broad obligations on entities in respect of work undertaken by them or on their behalf, including activities forming part of, or connected with, construction work. As a general proposition, those duties would apply to the construction of dams. The particular duty holders and the scope of each duty holder’s duty will depend on the particular circumstances, including the extent to which they have management and control of construction-related activities. Some jurisdictions have also enacted mine safety legislation that operates concurrently with general occupational health and safety legis­lation and that may impose obligations relating to the construction of tailings or waste dams.

The above is not exhaustive. Corresponding provisions and obligations will apply in other state and territory jurisdictions, which would need to be considered in any given case in those jurisdictions.

Health & safety, and labour issues

Principal health and safety, and labour laws

What are the principal health and safety and labour laws applicable to the mining industry? What are the principal regulatory bodies that administer those laws?

Employment and industrial law

Legislative framework

Currently, the centrepiece of the Australian industrial relations legislative framework is the Fair Work Act 2009 (Cth). The Fair Work Act applies generally to corporate employers (foreign, trading or Australian constitutional corporations) and their employees.

Safety net entitlements

The Fair Work Act governs a system of minimum terms and conditions of employment that cannot be undercut in an individual contract. These ‘safety net entitlements’ can be found in the following:

  • the National Employment Standards, setting a statutory minimum for leave entitlements, termination of employment, maximum hours of work and flexible working arrangements;
  • modern awards, prescribing the minimum terms and conditions relating to employers and employees in particular industries (ie, mining, construction, and oil and gas) and occupations;
  • long-service leave legislation, prescribing entitlements to leave for employees with long periods of service. A portable long-service leave scheme applies to the black coal mining and construction industries; and
  • superannuation legislation, prescribing superannuation contributions to be made by employers on behalf of employees to recognised superannuation funds. Some states and territories have specific legislation dealing with superannuation contributions in the coal and oil shale mining industries.

Enterprise agreements

An employer and its employees may negotiate a collective enterprise agreement that sets out the minimum conditions of employment that will apply in a particular business. As a general principle, industrial action (ie, a strike or work ban) is only allowed during negotiations for a new enterprise agreement.

Enterprise agreements are required to pass a better-off overall test, administered by a government tribunal known as the Fair Work Commission. In short, the proposed agreement is measured against the award provisions, which, but for the agreement, would apply to see if they are, in a global way, met and exceeded. Once an enterprise agreement is approved and while it operates, the award against which the agreement was measured ceases for the time being to apply. While enterprise agreements operate to the exclusion of awards, they operate in conjunction with the National Employment Standards.

There is a facility for multiple enterprise agreements (which are not common) and for a greenfield agreement where a new enterprise or project is being established.

An enterprise agreement other than a greenfield agreement must have the approval of a valid majority of employees employed in the enterprise who will be covered by the agreement.

Unions

The Fair Work Act permits active participation by unions in employment matters. The level of unionisation varies from industry to industry, but is comparatively high in the mining, construction and resources industries.

Employees have a right under the Fair Work Act to choose to belong or not belong to a union or a particular union, or to involve a union in enterprise bargaining on their behalf.

The Fair Work Act provides that unions are the default representative for employees in enterprise bargaining. Generally speaking, to put in place enterprise agreements for new projects (greenfield agreements), there is a requirement for agreement with unions. In certain circumstances, it will be possible to put in place a greenfield agreement without union agreement, provided that particular legislative criteria are satisfied.

Unions are entitled, through an officer or employee holding a relevant permit, to enter premises where their members or eligible members work in each of the following situations:

  • holding discussions with those employees the union is entitled to represent;
  • investigating a suspected breach of industrial laws; and
  • investigating a suspected breach of state or territory work health and safety laws.

Transfer of business

The Fair Work Act generally provides that, where there is a transfer of business situation (eg, there is a transfer of assets, an outsourcing or insourcing of work or the relevant entities are related) and employees transfer to a new employer but keep performing substantially the same work, any enterprise agreement covering these employees will be binding on the new employer.

Unfair dismissal

Under the Fair Work Act, subject to various exceptions and eligibility rules, employees are able to claim reinstatement or compensation if they can prove that termination of their employment was harsh, unjust or unreasonable.

Adverse action

An employer must not take any ‘adverse action’ against an employee (eg, dismissal, not giving the employee his or her legal entitlements, changing the employee’s job to his or her disadvantage, treating the employee differently from others) because the employee has a workplace right, has exercised a workplace right or proposes to exercise that workplace right.

Workplace rights include the following:

  • receiving a benefit or having a role or responsibility under a workplace law (such as the Fair Work Act), a workplace instrument (such as a modern award or enterprise agreement), or an order made by an industrial body (such as an order made by the Fair Work Commission);
  • commencing or participating in a process or proceeding under a workplace law or instrument (such as taking court action); and
  • being able to make a complaint or inquiry about employment.

An employer must not take adverse action against an employee because the employee engages in or proposes to engage in ‘industrial activity’ such as belonging to or participating in a union or participating in lawful industrial action.

Discrimination

Unlawful discrimination in employment and employment related activities is regulated by federal, state and territory anti-discrimination legislation.

The laws have wide coverage prohibiting discrimination on a number of grounds listed in the legislation (eg, age, sex, pregnancy, carer’s responsibilities, race and disability). Unlawful discrimination can also occur in the context of non-employment relationships and in broader business activities, including the provision of goods and services to customers.

Limits on certain senior management employment termination benefits

The termination benefits of senior management personnel are generally limited to the amount of salary received in the previous 12 months unless shareholder approval has been obtained.

Work health and safety (WHS)

WHS legislation

On 1 January 2012, new WHS laws commenced in most jurisdictions in Australia. This followed a lengthy process of national review and harmonisation of Australia’s WHS laws. As of 1 January 2015, the new WHS laws operate in all jurisdictions in Australia except Victoria and Western Australia. In Victoria and Western Australia, existing WHS laws continue to operate, although Western Australia has announced an intention to introduce harmonised legislation in mid-2019.

Some states and territories have specific laws that regulate WHS in the mining industry, and for oil and gas facilities located onshore and in coastal waters. WHS on offshore oil and gas facilities located in commonwealth waters operates under a national statutory framework, separate to the state and territory WHS laws.

These industry-specific WHS laws prescribe particular safety measures, systems and processes that must be implemented or complied with by employers in the particular industry. Specialist government regulators have been established in some jurisdictions to monitor and enforce compliance with these laws.

Liability

Under the WHS laws, the primary duty of care is imposed on a person who conducts a business or undertaking. This person must ensure, so far as is reasonably practicable, the health and safety of workers. A worker includes direct employees and also other workers such as contractor personnel.

The WHS laws also impose obligations on those who manage or control workplaces and on those who design, manufacture, import and supply plant, substances or structures for use at work. Duties also apply to those who install, construct or commission plant or structures for use at work.

Officers of corporations have duties to exercise due diligence to ensure that the relevant business or undertaking complies with the WHS laws. Workers also have duties to take reasonable care for their own health and safety and to ensure their acts or omissions do not adversely affect the health or safety of other persons.

Safety management system

Persons who conduct a business or undertaking generally comply with the WHS duty of care by developing and implementing a safe system of work that has various components. These components include a risk management system and management structure that identify the positions having responsibility for applying the risk management system.

Compulsory workers’ compensation

The states and territories each have legislation in place that regulates workers compensation in the event of a workplace injury or illness. An employee does not need to prove a fault by the employer to be entitled to workers’ compensation. The employer is required to obtain appropriate insurance against the risks of workers’ compensation claims.

Management and recycling of mining waste

What are the rules related to management and recycling of mining waste products? Who has title and the right to explore and exploit mining waste products in tailings ponds and waste piles?

In New South Wales, the management and recycling, if any, of mining waste products (such as waste in tailings dams) is generally managed by conditions in the development consent, mining lease and environment protection licence for a mine. Re-use of waste products will usually require a resource recovery exemption issued by the EPA under the Protection of the Environment Operations Act 1997 (NSW) and the Protection of the Environment Operations (Waste) Regulation 2014 (NSW). The EPA has issued a number of general resource recovery exemptions, some of which may be relevant to reuse of waste products in the mining industry. New South Wales waste management laws also impose a range of requirements for the tracking and transport of certain wastes, and requirements for the proper disposal of waste.

In the Northern Territory, the removal, handling, transport and storage of waste in connection with mining is considered to be a ‘mining activity’ under the Mining Management Act 2001 (NT). Accordingly, the relevant authorisation will need to contemplate such activities. The processing of tailings, spoil heaps or waste dumps is also a ‘mining activity’ requiring an authorisation under the Mining Management Act 2001 (NT).

In Queensland, management and recycling of mining waste products will generally be authorised as part of a mine’s approval under the Environmental Protection Act 1994 (Qld), and will be subject to conditions. In certain circumstances, the transport of such waste may also be subject to additional information and tracking requirements under the Environmental Protection Regulation 2008 (Qld). Subject to rele­vant approval obligations, the mining lease holder will have the right to exploit mine waste products such as tailings. If a mining lease holder wishes to sell waste products to another party, it is important that the relevant sale agreement clearly and descriptively identify the product being sold. The sale agreement should be sufficiently specific in its description of the waste product being sold, including the type and combination of minerals or chemicals, precise location of the product on the tenement, and the amount of product.

In South Australia, a person conducting lawful mining operations holds the property in minerals upon and in consideration of the payment of a royalty (if applicable), or upon recovery of the minerals. ‘Minerals’ is defined to include any mineral that has been dumped or discarded in the course of mining operations or operations incidental to mining.

In Tasmania, all minerals that were not held in private ownership at the time of the commencement of the Mineral Resources Development Act 1995 (Tas) are owned by the Crown, and will remain vested in the Crown if sold or disposed of. Additionally, gold, silver, atomic substance, helium, geothermal substances, petroleum, hydrogen and oil are specifically stated to vest in the Crown. However, as the definition of mineral excludes minerals ‘produced as a by-product of a mining operation and stored as a waste product on a lease area and not sold or otherwise disposed of to another person’, title to mining waste should not vest in the Crown where mining is conducted on land sold to private ownership.

In Victoria, minerals in ‘tailings’ (any waste mineral, stone or other material produced during mining) are owned by the Crown. However, title to minerals passes to a licence holder if the tailings were separated from the land in accordance with the licence.

Use of domestic and foreign employees

What restrictions and limitations are imposed on the use of domestic and foreign employees in connection with mining activities?

Apart from the requirement for foreign workers to have a valid visa, there are no other restrictions or limitations imposed on the use of domestic and foreign employees for mining activities.

In April 2017, the federal government announced reforms to the employer-sponsored skilled migration programme (the 457 visa programme). The list of eligible occupations for a 457 visa was reduced, including the removal of a number of positions in the mining industry.

With effect from March 2018, the 457 visa was abolished and replaced with a temporary skills shortage visa, divided into a short-term (two-year) stream, a medium-term (four-year) stream and a labour agreement stream.

Social and community issues

Community engagement and CSR

What are the principal community engagement or CSR laws applicable to the mining industry? What are the principal regulatory bodies that administer those laws?

Australia has no direct CSR laws. However, CSR principles are indirectly incorporated in numerous state and federal laws, including the following:

  • the Corporations Act 2001 (Cth), which provides protection against insolvent trading and protects the rights of creditors in the event of insolvency;
  • the Fair Work Act 2009 (Cth): this act applies, generally, to corporate employers and their employees and sets a system of minimum terms and conditions of employment that cannot be undercut in an individual contract;
  • WHS laws: each of the states and territories have in place WHS legislation. The WHS laws impose a primary duty of care on a person who conducts a business or undertaking. This person must ensure, so far as is reasonably practicable, the health and safety of workers. Some states and territories have specific laws that regulate WHS in the mining industry and for oil and gas facilities located onshore and in coastal waters;
  • the Competition and Consumer Act 2010 (Cth), which provides protection for consumers and businesses against various unfair and anticompetitive practices, including misleading and deceptive conduct and cartel conduct;
  • the Native Title Act 1993 (Cth) provides a process for recognising and protecting native title. The right to negotiate process provides for good faith negotiation to occur between the parties for a period of six months prior to the involvement of the National Native Title Tribunal;
  • cultural heritage laws: areas and objects of archaeological importance or cultural heritage significance to indigenous Australians are protected from harm under commonwealth, state and territory cultural heritage laws. This protection is afforded regardless of whether heritage is listed on a register or is otherwise identified or located; and
  • the ASX Listing Rules, which include provisions regarding the conduct and reporting obligations of mining companies.

Further, Australia is a ‘designated country’ for the purpose of the Equator Principles. Designated countries are those countries with robust environmental and social governance and laws to protect their people and the natural environment. The Equator Principles are a voluntary industry-developed risk-management framework. For Equator Principle financial institutions, the Equator Principles provide standards for identifying, assessing and managing the social and environmental risk of financing large infrastructure, resources and industrial projects.

Rights of aboriginal, indigenous or disadvantaged peoples

How do the rights of aboriginal, indigenous or currently or previously disadvantaged peoples affect the acquisition or exercise of mining rights?

A licence holder’s relations with indigenous Australians can be a key determinant of the successful implementation of a mining project in Australia.

From a legal perspective, the issues requiring consideration include:

  • whether the project affects land where native title does or may exist, in which case processes in the Native Title Act 1993 (Cth) will need to be followed;
  • the potential for the project to affect places or objects within the landscape that are of cultural significance to indigenous Australians; and
  • whether the land proposed to be used for a project is reserved under state- or territory-based land legislation introduced for the benefit of indigenous Australians.

An emerging theme in negotiating with indigenous Australians is the development of international standards on ‘free prior and informed consent’. While strictly separate to the legislative framework set out in the Native Title Act and Australian cultural heritage legislation, proponents also need to have regard to the broader policy framework when considering how to approach indigenous land access issues and matters that may affect their ‘social licence to operate’.

Native title overview

Native title is the set of rights and interests of indigenous Australians over land and waters arising from their traditional laws and customs. These rights are recognised by Australia’s common law.

The Native Title Act is commonwealth legislation that establishes the system through which native title is integrated into the Australian legal system. It applies in each state and territory. The Native Title Act has four objectives, which are reflected in its operation:

  • protection of native title: to provide for the recognition and protection of native title;
  • validation of prior invalid tenures: to provide for, or allow, the validation of historic actions that may have been invalidated because of the existence of native title;
  • validity of future acts: to establish ways in which future dealings affecting native title may proceed and to set standards for those dealings; and
  • native title claims resolution process: to establish a mechanism for determining claims to native title.

Where does native title exist?

In general, native title does not exist over, or has been extinguished by, freehold title. It can exist in relation to Crown land and much of Australia comprises Crown land. For example, in Western Australia over 90 per cent of the state is Crown land.

Extinguishment of native title by grant of certain tenures and construction of public works

The Native Title Act confirms that the grant of certain classes of land tenure, including freehold and leases conferring exclusive possession, as well as the construction of public works, have extinguished native title. It is usual to review the area of a proposed project to assess whether native title to the relevant land parcels may continue or whether it has been extinguished. If extinguished, there is no need to consider the requirements of the Native Title Act any further.

Compensation claims

In a landmark decision in August 2016, the Federal Court ordered the Northern Territory government to pay A$3,300,261 to the Ngaliwurru and Nungali Peoples as compensation for the impact of land grants and public works on their native title (over an area of about 23 square kilometres). This decision is the first-ever assessment of native title compensation in Australia. The award comprised three forms of compensation including for economic loss, non-economic loss (caused by loss of traditional attachment to the land and associated pain and suffering) and interest on the economic loss. In July 2017, the Full Court of the Federal Court upheld most of the findings in the 2016 decision. The Full Court upheld the award for non-economic loss, but held that the trial judge in the Federal Court had overvalued the economic aspects of the native title interests and reduced the award from 80 to 65 per cent of the freehold value of the relevant land at the time of the compensable acts. The Full Court agreed that only simple interest was payable on the economic loss component of the award (not compound interest). In February 2018, the High Court of Australia granted special leave to appeal on issues in respect of the three forms of compensation. These proceedings are still in process.

A significant increase in the number of compensation claims across Australia is anticipated as a result of these proceedings, which may amount to billions of dollars in compensation payable by government and possibly non-government parties.

Native title claims

Indigenous Australians have made several hundred claims seeking recognition of their native title through the processes in the Native Title Act. Many claims have been determined in favour of native title claimants, and there are large areas of land in Australia where native title has been formally determined to exist. For mining proponents, in practical terms, there is not a great difference between determined native title holders and registered claimants. Both enjoy the same procedural rights under the Native Title Act in respect of the grant of mining tenements.

Future land use

The Native Title Act protects native title from invalid interference by setting out a regime that governs all ‘acts’ (such as the grant of tenures and mining licences) that occur on land and waters after 1 January 1994 that affect native title (called ‘future acts’). A future act will be valid if it is done pursuant to the requirements of the Native Title Act.

The procedural requirements associated with the particular classes of future acts vary. Generally, the greater the impact on native title rights, the more onerous the procedural requirements.

As an alternative to the ‘right to negotiate’ process under the Native Title Act, a proponent may seek to negotiate an ‘indigenous land use agreement’ (ILUA). This type of voluntary agreement may record multiple consents and approvals from a native title group. These agreements are registered with the National Native Title Tribunal. When registered, these agreements bind all affected indigenous Australians and provides greater certainty for project proponents.

A significant native title decision in 2017 found that the Native Title Act required all named applicants for a native title group to be party to and execute an ILUA. This meant that where a named applicant had passed away or refused to sign the ILUA, the claim group would need to have replaced the applicant pursuant to Native Title Act processes under section 66B. That decision also meant that any ILUAs which were already registered may not have been valid where one or more applicants had failed to execute the ILUA. In response to that decision, legislative amendments to the Native Title Act were passed in June 2017. The amendments reversed the impact of the decision for registered ILUAs (and some ILUAs pending registration), and changed the requirements for who must be a party to future ILUAs. For future ILUAs, the amendments allow a native title claim group to either nominate particular applicants to be a party or decide that the agreement needs to be signed by a majority of the applicants. The amendments did not address the impact of the 2017 decision on other agreements with native title groups, particularly agreements under the right to negotiate process.

In most cases, the creation of a right to mine or the compulsory acquisition of native title for use by a non-government party will attract the ‘right to negotiate’. This requires a minimum of six months’ good faith negotiation as to the terms on which the acts proposed can occur, between the relevant state or territory, the tenure applicant and registered native title holders or claimants. These agreements commonly involve the payment of money, provision of employment and training opportunities to native title group members and protection for areas of cultural heritage significance. If no agreement is reached, the National Native Title Tribunal can determine whether the grant or compulsory acquisition can proceed.

In most cases, the future act processes will not confer a right of veto to native title claimants and holders over whether a project will proceed. However, the processes can be time-consuming and can create critical delays if not managed carefully. Some projects cannot be implemented without an indigenous land use agreement to ensure that the project is valid from a native title perspective. In those circumstances, the native title claimants have a veto. This is usually dictated by state policy or legislation rather than the Native Title Act. An indigenous land use agreement requires the consent of the relevant native title parties and can therefore operate as a veto in some circumstances.

Aboriginal cultural heritage overview

Areas and objects of archaeological importance or cultural heritage significance to indigenous Australians are protected from harm under commonwealth, state and territory laws. Indigenous cultural heritage is protected, irrespective of whether the heritage is listed on a register or is otherwise identified and located.

The states and territories each have their own aboriginal cultural heritage protection laws, which vary considerably across the jurisdictions. New South Wales, Queensland and Victoria, in particular, impose significant approval obligations and significant monetary penalties if unauthorised harm to indigenous cultural heritage occurs. Proponents may also be ordered to stop work if protected heritage is at risk of harm. In practice, regardless of the specifics of the regulatory regime, cultural heritage protection requirements are often time-consuming with onerous approvals to obtain, which can cause considerable delay to a project.

The Aboriginal and Torres Strait Islander Heritage Protection Act 1984 (Cth) (Commonwealth Heritage Act) also operates to protect areas or objects of particular heritage significance at imminent risk of harm. In those circumstances, under the Commonwealth Heritage Act, the Minister can require the works to stop.

The laws regarding heritage protection in Australia have become considerably stricter in the past decade. The penalties, statutory obligations and risk of being ordered to stop work after construction has commenced mean that it is important to assess and address cultural heritage risk early in any major project.

Obtaining an approval to conduct a project that will affect aboriginal cultural heritage will require the proponent to engage with indigenous Australians with a traditional connection to the land in question. Proponents will often, but not always, be dealing with the same indigenous Australian group in connection with both native title and cultural heritage approvals.

State and territory land rights schemes overview

Many states and the commonwealth in the Northern Territory have established schemes allowing the transfer of freehold interests in certain public lands to indigenous Australian groups with connection to those lands. Reserves created for the benefit of indigenous Australians also exist in many states. There are, as a result, large areas of land held as freehold by indigenous Australians for the benefit of their communities.

The use of this land for mining and infrastructure projects will require the consent of the relevant community and is tightly regulated. As a result, the agreements that need to be negotiated in respect of these lands can be more difficult to negotiate and more favourable to indigenous Australians than native title agreements. It is also possible for native title to exist over these areas.

International law

What international treaties, conventions or protocols relating to CSR issues are applicable in your jurisdiction?

Australia has ratified numerous international instruments that incorporate CSR principles, including the following:

  • International Covenant on Civil and Political Rights 1966 (ICCPR): Australia has also ratified the first and second protocol to the ICCPR;
  • International Covenant on Economic Social and Cultural Rights 1966 (ICESCR): Australia has also ratified the protocol to the ICESCR;
  • Universal Declaration on Human Rights 1948;
  • Equal Remuneration Convention 1951;
  • Discrimination (Employment and Occupation) Convention 1958;
  • Convention on the Elimination of All forms of Discrimination Against Women 1979;
  • Employment Policy Convention 1964;
  • Occupational Safety and Health Convention 1981: Australia has also ratified the Protocol to the Occupational Safety and Health Convention; and
  • UN Declaration on the Rights of Indigenous Peoples 2007.

It is important to note that the obligations contained in the above treaties, conventions or protocols are not legally binding until incorporated into Australian legislation.

Anti-bribery and corrupt practices

Local legislation

Describe any local legislation governing anti-bribery and corrupt practices.

The commonwealth and all Australian states and territories have legis­lation criminalising bribery and corruption, and practices to disguise such conduct (eg, false accounting). The commonwealth has laws prohibiting bribery of commonwealth and foreign public officials. The states and territories have laws against the bribery of their own public officials and also against secret commissions (commercial bribery). In the ACT, New South Wales and Victoria, the same legislative provision is used for both public and commercial bribery. In the Northern Territory, Queensland, Tasmania and Western Australia there are provi­sions dealing specifically with public sector bribery and separate provisions dealing with secret commissions (which can be applied in both the public and commercial context).

Bribery of a foreign public official

This is prohibited under section 70.2 of the Commonwealth Criminal Code. It prohibits the offer or provision of a benefit to another person (or causing this to be done) when the benefit is not legitimately due, and is intended to influence a foreign public official in the exercise of his or her duties in order to obtain or retain business or a business advantage that is not legitimately due. ‘Benefit’ is defined broadly to include any advantage and is not limited to money or property. ‘Foreign public official’ is also defined broadly to include government employees (including employees of corporations where the foreign government has a controlling interest), members of the executive, legislature, judiciary or military, a person performing official duties under a foreign law and employees of public international organisations.

The legislation applies to Australian citizens and residents, Australian incorporated companies or to anyone else if the conduct occurs wholly or partly in Australia. It would be sufficient, for example, if relevant email communications were made from Australia for there to be ‘conduct occurring partly in Australia’. It is no defence that such payments are customary. A defence is available for facilitation payments that are minor payments for routine government actions (ones to which an individual has an existing entitlement) where specified details concerning the payment are recorded as soon as practicable after it was made.

Organisations must therefore take great care in providing benefits such as gifts, corporate hospitality and political or charitable donations.

On 6 December 2017, the Australian government released the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017 (Cth), which aims to significantly strengthen Australia’s anti-bribery and corporate misconduct laws. The proposed reforms include the introduction of new offences of failing to prevent bribery and recklessly bribing a foreign public official, clarifying or simplifying elements of existing offences and extending the definition of ‘foreign public official’ to include candidates for office. The proposed legislation also introduces a deferred prosecution agreement regime (whereby a criminal prosecutor and corporate defendant could voluntarily agree that a prosecution be discontinued in exchange for the corporation complying with certain requirements, such as compensating victims and paying a financial penalty). If implemented, the reforms would significantly increase the scope and enforceability of Australia’s foreign bribery laws.

Domestic bribery (public and commercial)

Bribery of commonwealth public officials is prohibited under section 141.1 of the Commonwealth Criminal Code. It prohibits the dishonest offer or provision of benefits with the intention of influencing a commonwealth public official in the exercise of their duties, or where the actual or expected receipt of the benefit would tend to influence the official in the exercise of his or her duties. While the legislation dealing with bribery of public officials in the Northern Territory, Queensland, Tasmania and Western Australia is slightly differently worded, it is broadly similar to the commonwealth provision.

All states and territories have prohibitions on the payment of secret commissions that can be applied in both a public and commercial context. While the wording differs across the jurisdictions, broadly the provisions prohibit the giving to, or receiving of payments by agents (or offers to do so) to induce the agent to do or not do something in relation to the affairs of the agent’s principal, or which would tend to influence the agent to show favour or disfavour. In some jurisdictions an ‘agent’ is defined to include particular categories of person (eg, employees, agents, officers of companies or lawyers), but the definitions are broad and usually cover anyone who would legally be classified as an agent.

Each state has its own broad-based anti-corruption commission to investigate public sector corruption. Further, there are currently moves to introduce anti-corruption commissions in the Northern Territory (expected later in 2018) and the ACT. Although the remit of each commission differs, all of them have broad investigative powers to obtain search warrants, compel production of documents and examine witnesses. The commissions prepare reports following their investigations, which are referred to prosecuting authorities when they contain recommendations for prosecution.

Practical operation of Australia’s anti-bribery provisions

The Australian legislative provisions dealing with domestic bribery all require payments to be made ‘corruptly’ or ‘dishonestly’. While there is some debate as to what this means, the better view is that it does not require a person to have a subjectively improper intent; it is enough that they intend to influence a person or official. A person’s intention is inferred from all the circumstances of the case. The amount and frequency of any benefit, whether it coincides with any critical decision by the other party (eg, a tender outcome) and whether there is some genuine commercial justification for the benefit (eg, transport and accommodation for a government official for a necessary site visit to a project), are all factors taken into account in determining whether a person’s intention was corrupt or dishonest. In states and territories other than New South Wales, South Australia and the ACT, there is a reverse onus of proof, which means that the person who gave or received the payment (or offered to do so) must prove that it was not done with an improper motive. For commercial bribery, if there is no element of secrecy (ie, the principal is aware of the benefit), it is unlikely to be found to be a bribe, so when providing gifts or hospitality (eg, to the employee of a company), communicating the fact of the gift to a range of people within the company (especially if they are senior) can be protective.

Corporate criminal liability for the acts of officers, employees or agents is much easier to establish under commonwealth law than under state or territory law. In the states and territories, companies are generally only liable for the acts of their officers, employees or agents where there is knowledge at senior management or board level of what they have done. In contrast, the commonwealth has broad provisions to impute liability to companies for the acts of their officers, employees and agents, both where there is express or tacit approval at board or senior management level of what has occurred, but also where the company had a culture that encouraged non-compliance or failed to encourage compliance.

While there is no express obligation to self-report bribery under the provisions discussed above, employees of companies which cover up breaches of bribery provisions may be in breach of commonwealth, state or territory false accounting provisions, and directors or officers whose conduct has allowed bribery to occur risk a breach of their duty to manage the affairs of the company with due skill and diligence.

There are stringent penalties for breach of the various anti-bribery provisions, comprising both imprisonment and fines. For commonwealth offences, it is up to 10 years’ imprisonment or a fine of around 10,000 penalty units (which currently equals A$2.1 million) for individuals. For a company it can be up to 100,000 penalty units (A$21 million) or three times the value of the benefit to the company (if ascertainable) or 10 per cent of the company’s annual turnover. There are also civil consequences of bribery. A contract awarded as a result of a bribe may be deemed unenforceable and a contract with an agent who it is known is using bribes will also not be enforced.

Foreign legislation

Do companies in your country pay particular attention to any foreign legislation governing anti-bribery and foreign corrupt practices in your jurisdiction?

Large and sophisticated transnational organisations frequently pay heed to the regulation effected by the Bribery Act 2010 (UK) and Foreign Corrupt Practices Act 1977 (US), even where their organisations have no jurisdictional nexus to the UK or the US, on the basis that there is extensive regulatory guidance, including in the form of guidance papers, provided by the Ministry of Justice (UK) and the Department of Justice (US) derived from long-standing regulatory experience in those jurisdictions.

There is no equivalent guidance document in Australia, where there has historically been only a limited number of domestic bribery prosecutions and only a couple of prosecutions arising out of foreign bribery, although, following OECD criticism of Australia’s record, there is now a push at the commonwealth level to facilitate a greater number of prosecutions. As mentioned above, the Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017 (Cth) proposes the introduction of deferred prosecution agreements into Australia, drawing significantly on principles and processes put in place for such agreements in the UK and the US. It is expected that more companies will self-report bribery if the deferred prosecution agreement regime is introduced.

Multinational companies will also pay significant attention to in-country advice obtained concerning local anti-bribery and corruption laws in jurisdictions in which they operate.

Disclosure of payments by resource companies

Has your jurisdiction enacted legislation or adopted international best practices regarding disclosure of payments by resource companies to government entities in accordance with the Extractive Industries Transparency Initiative (EITI) Standard?

On 6 May 2016, the Australian government announced that Australia will join the EITI, after being provided with a report on a domestic pilot programme in which three state governments, the commonwealth and eight companies participated to assess the practical application of EITI principles in Australia. The report set out a methodology for the implementation of EITI methodology suitable for Australian circumstances and recommends a voluntary, light-touch reporting model.

On 22 November 2017, a multi-stakeholder group established to oversee the EITI process in Australia agreed on a work plan to progress Australia’s move towards adopting EITI. However, currently Australia is yet to implement the EITI Standard or to submit an application to be formally recognised by the EITI as a candidate for recognition as being compliant with the EITI Standard.

Foreign investment

Foreign ownership restrictions

Are there any foreign ownership restrictions in your jurisdiction relevant to the mining industry?

Foreign investment approval - who needs to apply?

Investments by foreign persons in Australia are regulated under the Foreign Acquisitions and Takeovers Act 1975 (Cth) (FATA). Foreign persons include Australian subsidiaries of foreign companies.

Acquisitions by foreign persons of mining and production tenements require prior clearance of the Treasurer under the FATA in the following cases:

  • an acquisition by an enterprise or national of Chile, New Zealand or the US (excluding a foreign government investor, such as a foreign government, state-owned enterprise or sovereign wealth fund), if the value of the tenements exceeds A$1,134 million (this amount is indexed annually); or
  • an acquisition by any other foreign person (including a foreign government investor from Chile, New Zealand or the US), regardless of the value of the mining and production tenements.

Mining and production tenements include rights conferred under Australian law (including state and territory laws) to recover minerals, oil or gas in Australia or from the seabed or subsoil of the offshore area, other than a right to recover minerals, oil or gas for the purposes of prospecting or exploring for minerals, oil or gas.

Acquisitions of exploration tenements by foreign persons may also require clearance under the FATA in some cases, such as where:

  • they are being acquired by a foreign government investor; or
  • the relevant lease or licence gives rights to occupy Australian land and the term of the lease or licence (including any extension or renewal) is reasonably likely, at the time of acquisition, to exceed five years.

Acquisitions of certain other interests may also need prior clearance under the FATA, including:

  • acquisitions of interests in other kinds of Australian land (including agricultural land, as discussed further below);
  • acquisitions of interests of 20 per cent or more in Australian companies, where the value of the interests or the value of the company exceeds a particular threshold (generally A$1,134 million);
  • acquisitions of interests in an entity, the value of whose interests in Australian land (inclusive of mining and production tenements) exceeds 50 per cent of the value of the entity’s total assets; or
  • acquisitions by a foreign government investor in an entity, the total value of whose legal or equitable interests in exploration, mining and production tenements exceeds 50 per cent of the entity’s total assets.

 

There is an exemption for certain acquisitions of interests in Australian land (including mining or production tenements) from the Australian government or a government body that may apply in relation to acquisitions by non-government foreign investors.

Australia’s Foreign Investment Review Board (FIRB) has issued a Guidance Note on foreign investment in mining (Guidance Note 24), which may be found on FIRB’s website (www.firb.gov.au).

From 1 February 2018, acquisitions of interests in agricultural land must now be subject to an ‘open and transparent’ sales process, which requires the property to be advertised for at least 30 days before the sale. Exceptions to this rule apply where foreign persons are required to make the acquisition to comply with state or commonwealth law (for example, mining buffer zones) or where the interest is a leasehold interest for wind or solar farm development.

Agricultural land is defined as land in Australia that is used, or that could reasonably be used, for a primary production business. Exceptions to this definition apply for land which is wholly or predominately used for mining operations, where approval has been received to establish or operate a mining operation on the land or where an application for such approval has been lodged.

FIRB has issued a guidance note on acquisitions of agricultural land (Guidance Note 17), which may be found on FIRB’s website (www.firb.gov.au).

What should be included in the notification?

Where a proposed investment requires clearance, it is an offence, and criminal and civil penalties may be imposed, if the investment is made without having obtained prior clearance. Clearance for a proposed acquisition is required to be sought from the Treasurer through FIRB.

The FIRB website contains a checklist setting out what needs to be included in any application to FIRB. Applications are made online via the FIRB website.

At a minimum the application will need to include information about the following:

  • the relevant parties;
  • the investment (including its nature, the method of acquisition, its value and the timetable); and
  • the investor’s intentions (immediate and future with respect to the investment).

As the government considers each application against national interest considerations, the application should also indicate how the proposal will affect the following:

  • national security;
  • competition;
  • other Australian government policies (including tax and environmental matters); and
  • the economy and community.

The application should also include information about the character of the investor.

On receipt of the application (including payment of the prescribed fee - see below), the Treasurer initially has 30 days to decide whether to prohibit the acquisition on the basis that it would be contrary to the national interest. FIRB has an additional 10-day period to advise the applicant of its decision. FIRB may also seek to extend the 30-day statu­tory period by one of the two following means:

  • the Treasurer can make an interim order to extend the time for its decision by up to a further 90 days (the existence of an interim order would be made public as it is required to be published in the Commonwealth Gazette); or
  • it may (and often does in practice) ask the applicant to agree to an extension of time (this would normally occur on a confidential basis).

As noted, FIRB will normally consult all relevant government departments and agencies before making a recommendation to the Treasurer in relation to the application. This is normally done on a confidential basis.

The vast majority of applications are cleared. Clearance may be given on a conditional or unconditional basis. The Treasurer may also impose conditions (ie, in addition to the tax-related ‘standard conditions’ mentioned below) if the Treasurer is satisfied that doing so is necessary to ensure that the proposed investment is not contrary to Australia’s national interest.

The Treasurer has published certain tax-related standard conditions (published in FIRB Guidance Note 47) that will generally be imposed on foreign investment approvals to make clear the requirements of, and expectations for, foreign investors. The conditions include, among other things, compliance with Australian taxation laws, provision of documents or information that is required to be provided to the ATO under commonwealth taxation law, and notification to FIRB after making the proposed investment and after a termination event in relation to the investment (eg, cessation of control). Additional tax-related conditions may also be applied where a significant tax risk is identified in a particular case. These may include requiring the investor to enter into advance pricing arrangements with, or seek rulings from the ATO, or comply with other directions from the ATO that are specific to its circumstances.

Fees payable

A foreign person will be required to pay a non-refundable fee before FIRB will assess a proposed acquisition. For the 2017-2018 financial year, the fee for an application to acquire an interest in a mining or production tenement is A$25,300 or, for a foreign government investor, A$10,100. These fees are indexed each financial year.

International treaties

Applicable international treaties

What international treaties apply to the mining industry or an investment in the mining industry?

Australia has entered into 21 current bilateral investment treaties with countries including China, Indonesia and the Philippines.

Australia has 10 free-trade agreements (FTAs) in force with countries that include Chile, China, Japan, Korea, Malaysia, New Zealand, Singapore and the Association of South-East Asian Nations. The Trans-Pacific Partnership has been concluded but not yet signed by the participating countries, being Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US and Vietnam.

In addition, Australia has eight FTAs under negotiation, which include the Pacific Alliance Free Trade Agreement, the Australia-India Comprehensive Economic Cooperation Agreement and the Indonesia-Australia Comprehensive Economic Partnership Agreement.

Australia currently has more than 40 tax treaties with countries including Chile, Japan, Malaysia and New Zealand. Australia and Germany signed a revised tax treaty in 2015, which has now come into force.

* The authors would like to thank: John Sartori (partner), Natsuko Ogawa (partner), Matt Hartsuyker (senior associate), Stephen Moore (lawyer) and Jarred Gerson (graduate) for their contributions to corporate and mining matters; Tony Denholder (partner), Lucy Bretherton (counsel), Jo Slater (senior associate), Grace Carstensen (lawyer), Roxane Read (lawyer), Connor Davies (lawyer) and Hayden Dunnett (graduate) for their contributions to native title matters; John Briggs (partner), Caroline Ammundsen (partner), Tony Hill (partner), Geoff Lynn (partner), Andrew Gay (partner), Peter Arnold (senior associate), Paul Wilson (senior associate), Cheyne Jansen (senior associate), Mia Swift (lawyer), Sara Malek (lawyer), Montana Linkio (lawyer), Luke Salem (lawyer) and Dario Aloe (graduate) for their contributions to environment matters; Geoffrey Mann (partner), Ian Kellock (partner), Kristina Popova (senior associate) and Bronwyn Kirkwood (senior associate) for their contributions to tax matters; Gaelan Cooney (partner), Michelle Gaynor (lawyer) and Zoe Woolford (senior associate) for their contributions to finance matters; Jane Harvey (partner), George Cooper (partner) and Abigail Cooper (senior associate) for their contributions to employment and health and safety matters; Jeremy Chenoweth (partner) and Daniel Welsh (lawyer) for their contributions to disputes matters; and Alyssa Phillips (partner), Fiona Hudgson (partner) and Nathan Lindsay (lawyer) for their contribution to anti-bribery and corruption matters. All are lawyers at Ashurst.

Update and trends

Update and trends

What were the biggest mining news events over the past year in your jurisdiction and what were the implications? What are the current trends and developments in 2017 in your jurisdiction's mining industry (legislation, major cases, significant transactions)?

Native title

  • In July 2017, the Full Court of the Federal Court upheld most of the trial judge’s findings in the landmark decision of the Federal Court in Alan Griffiths and Lorraine Jones on behalf of the Ngaliwurru and Nungali Peoples v Northern Territory of Australia [2016] FCA 900 (Timber Creek). In the original decision, the Federal Court ordered the Northern Territory Government to pay A$3,300,261 to the Ngaliwurru and Nungali Peoples as compensation for the impact of land grants and public works on their native title (over an area of about 23 square kilometres). Almost all issues were re-agitated in the appeal. The majority of the original judgment was upheld, save for the reduction of the economic aspects of the native title rights and interests from 80 to 65 per cent. The Federal Court’s decision was the first-ever assessment of native title compensation in Australia. Special leave to appeal the case to the High Court was granted in February 2018. No hearing date has been set.
  • A significant native title decision handed down in February 2017 found that the Native Title Act requires all named applicants for a native title group entering an ILUA must be parties to, and execute, the ILUA. The decision meant that any ILUAs which had already been registered may not have been valid where one or more applicants have failed to execute the ILUA. Legislative amendments to the Native Title Act were passed in July 2017 to provide validity to past agreements and ensure that, going forward, agreements could be signed by a majority of the named applicants.
  • The Australian government released an options paper on proposed reforms to the Native Title Act 1993 (Cth) in late 2017 . The aim of the reforms is to improve the efficiency and effectiveness of the native title system to resolve claims, better facilitate agreement-making around the use of native title land, and promote the autonomy of native title groups to make decisions about their land and to resolve internal disputes. The government is currently consulting stakeholders regarding the reforms proposed in the options paper.

Increased environmental activism

  • Environmental activism has increased dramatically in Australia recent years, causing delays to a number of major resources projects. One notable example is the sustained campaign of environmental activism in relation to Adani’s Carmichael Coal Mine and Rail Project. This proposed project is set to extract a total of 2.3 billion tonnes of coal over a period of 60 years. Although proposed in 2010, the project did not receive state and federal approval until late 2016, owing in large part to a spate of judicial review applications made in respect of a number of approvals for the project. Throughout 2017 and early 2018, environmental activism against the Carmichael Mine also included disruptions to coal transport via rail. Activists would place themselves or objects in the path of coal trains, which results in significant delays in the coal operation.
  • In particular jurisdictions, environmental activism has delayed projects through the court process. In Queensland for example, the New Acland Coal mine had its environmental authority objected to in the Land Court. The court process took over a year to complete, and resulted in significant delays to the projects timeline.

Major legislative changes on the horizon

  • Queensland has introduced the Mineral and Energy Resources (Financial Provisioning) Bill 2018, which significantly changes the way in which proponents will provide financial assurance. The bill establishes the role of a scheme manager, whose function is to manage a pooled fund and risk-assess holders of environmental authorities. Based on the assessment, holders will be allocated a risk category and, depending on the category, will be required to pay an annual contribution to the scheme fund or provide a surety to the scheme manager. The bill also introduces changes to rehabilitation obligations for site specific mines, requiring the development of a progressive rehabilitation and closure plan (PRCP). These plans will include a PRCP schedule, which includes time-based and enforceable progressive rehabilitation milestones.
  • The Northern Territory has also announced its endorsement of the recommendations stemming from an inquiry into fracking in the Northern Territory. Part of the inquiry’s recommendations include major legislative reforms, including revamping the territory’s financial assurance framework and the creation of an abandoned wells fund. Draft legislation has yet to be prepared and the Northern Territory government has not yet provided a time frame for implementation of the inquiry’s recommendations.