Summary

The Offshore Minerals Act 2003 (WA) (Act) was proclaimed on 17 December 2010 and commenced on 1 January 2011. The Act will replace the Mining Act 1978 (WA) (Mining Act) in respect to all mineral resources in State coastal waters, that is, waters within three nautical miles of the coastal baseline. Mineral resources beyond three nautical miles are governed by the Offshore Minerals Act 1994 (Cth) (Commonwealth Act) and administered by a joint state and federal authority. The Act mirrors the Commonwealth Act and results from an agreement made in 1979 between the Commonwealth and the States known as the Offshore Constitutional Settlement, which included an agreement to develop standard offshore minerals legislation for all States and the Northern Territory consistent with the Commonwealth regime.

Although the Act received assent in 2003, its supporting regulations have only recently been finalised which has delayed the proclamation and commencement of the principal act until now. The Act’s supporting regulations are the Offshore Minerals (Registration Fees) Act 2003 (WA) and the Offshore Minerals (Consequential Amendments) Act 2003 (WA).

Licences

The four main licences that will be administered under the Act are exploration licences, retention licences, mining licences and works licences. The Act, unlike the Mining Act, includes oil shale in its definition of ‘minerals’.

Under the Act, ‘exploration’ is defined to mean any activity that is directly related to the exploration for minerals in coastal waters, but does not include exploration for minerals found in the subsoil of coastal waters where the exploration is carried out by means of underground mining from onshore land in accordance with the Mining Act. Exploration licences will be granted for an initial period of four years, with three successive options to renew for a further period of two years. The maximum term for an exploration licence will be ten years.

Recovery of minerals under the Act must be carried out pursuant to a mining licence. The ‘recovery’ of minerals includes any activity that is directly related to the recovery of minerals, but does not include the recovery of minerals in the subsoil of coastal waters where recovery is carried out by means of underground mining from onshore land in accordance with the Mining Act. Mining licences will be granted for 21 year periods and are renewable for further periods of 21 years. The Act is silent on how many times mining licences may be renewed.

Royalties are payable in respect of minerals recovered under a mining licence. The royalty rates are determined by the Minister. Currently, no royalty rates have been published.

A retention licence is an intermediate form of tenure which allows its holder to retain for a limited time title to an area when:

  • a significant mineral deposit has been delineated
  • the mineral deposit is not a commercially viable proposition in the short term, and
  • there is a reasonable prospect for development in the longer term.

Retention licences have a maximum term of five years but can be renewed for further terms not exceeding five years and can be applied for by the holder of an exploration licence over the relevant area.

A works licence authorises activities directly connected with activities carried out, or to be carried out, under an exploration licence, retention licence or mining licence. Works licences have a maximum term of five years but can be renewed for further terms not exceeding five years. They can be granted over blocks which are the subject of other licences.

Applying for licences

Applications for exploration and mining licences will be allocated on a ‘first come, first considered’ basis, unless more than one application for the same block is received at the same time. The holder of an exploration licence has a priority right to apply for a mining licence over the area subject to the exploration licence. Where two applications for an exploration licence or mining licence over the same block are received at the same time, ballots will be used to determine the priority as to which application is to be considered first. The conduct and rules for the ballot process will be set out in future regulations.

 Transitional provisions

Exploration licences and mining leases for areas completely within coastal waters that are in force immediately before commencement of the Act will cease to be covered by the Mining Act on commencement of the Act. Instead, these will be treated as if they are licences under the Act immediately upon commencement. Conditions of a licence in force immediately before the commencement will be treated as if they were licence conditions specified under the Act. Holders of these licences must comply with the provisions of the Mining Regulations 1981 (WA) relating to expenditure conditions.

Existing exploration licences and mining leases that are partly within coastal waters and partly within the onshore limits of the State on commencement of the Act will be split so that the parts that cover coastal waters are governed by the Act from commencement, and the parts within the limits of the State continue to be governed by the Mining Act. Holders of affected licences and leases will be called on by the Minister to produce the licence or lease for endorsement and amendment of the instrument under the Mining Act and to issue a separate licence for the coastal waters concerned.

At present, there are 17 granted exploration licences that are partially within coastal waters. Thirteen of these have minor portions within coastal waters due to the square boundaries of graticular blocks and an irregular baseline. The holders of these licences were invited to partially surrender the coastal waters.

The Act provides that the duration of an exploration licence issued under the Mining Act that comes within the Act’s jurisdiction upon commencement may be varied to become compliant with the Act. The term of mining leases that become mining licences under the Act will not be varied.

Areas which straddle jurisdictional boundaries

The Act describes how licences issued will be affected if the baseline shifts. The Act defines baseline as the baseline adjacent to the coast of the State (including the coast of any island forming part of the State) as for the time being determined under section 7(1)(b) of the Seas and Submerged Lands Act 1973 (Cth). Licences already issued before the baseline shift will be governed by the act under which they were issued, irrespective of their geographical location after the baseline shift. Once a licence (or any successor licence by the same holder) affected by a change in the baseline is no longer in force, the new position of the baseline applies to subsequent licence applications.

The Act provides that if the baseline shifts away from land (seaward) such that the licence is no longer within coastal waters, licences issued prior to the movement of the baseline will remain within the jurisdiction of the Act. If the baseline shifts towards the land, such that a licence issued under the Commonwealth Act is situated within coastal waters, that licence is not affected by the Act. The Mining Act contains a similar provision, which provides that if a shift in the baseline towards the land causes a tenement under the Mining Act to then encroach upon coastal waters, the tenement remains within the jurisdiction of the Mining Act.

 What does it mean for you?

If you currently hold a mining tenement under the Mining Act that falls within the jurisdiction of the Act, the legislation governing your tenement may have changed. If you have an application for a mining tenement over an area now governed by the Act, the application will be determined according to the Act rather than the Mining Act.

There are 50 pending exploration licence applications and 38 of these have minor portions in coastal waters due to differences in graticular blocks and baseline boundaries. These portions will be excised upon grant unless satisfactory reasons can be provided for retention of the coastal waters. Nine mining lease applications exist all with minor portions in coastal waters and the applicants will be approached to have these minor portions excluded upon grant.