What’s happened since the F&F Decision

Since the High Court handed down the F&F Decision in August 2017 invalidating certain mining leases and mining lease applications (see our previous updates, available here and here):

  1. the Department of Mines, Industry Regulation and Safety (Department) has issued letters to applicants for mining leases (but not holders of granted invalid mining leases) whose applications ‘appear’ to be invalid. The letters inform the applicants that on a date in the future the Department’s register will be updated to show the application as ‘null and void’;
  2. the Minister for Mines and Petroleum (Minister) has informed the public that there would be a swift legislative response to the F&F Decision, but no legislation has yet been passed or made available in draft for consultation; and
  3. as a precautionary measure, tenement holders and applicants have been reapplying for mining leases and other tenure. The graph below shows an increase in mining lease and exploration licence applications received by the Department after the F&F Decision was handed down.

Why the Department’s letters regarding ‘invalid’ applications are problematic

The core issue with the Department updating the register to show tenement applications as ‘null and void’ (meaning invalid), is that none of the Minister, the Minster’s delegate, the Department or the Director General of Mines[1] have any power to summarily determine the validity of any tenement application.

In most circumstances the approach that has been adopted by the Department will not prejudice a tenement applicant that receives one of the Department’s letters. By receiving advance notice of the Department’s intention to update the register, the applicant can apply for a new tenement application over the same land before the former tenement application is shown on the register to be ‘null and void’ (meaning that the land is open for mining if the underlying tenement has expired).

There are, however, issues that remain for certain classes of applicants for ‘invalid’ tenements. If a third party has applied for a mining tenement over the same area prior to the applicant re-applying, that third party will be first in time and will have priority for determination. In such a case, the tenement applicant will need to apply to the Minister to exercise his power under section 111A to terminate the third party application. There is, obviously, no guarantee that the Minister terminates the third party tenement application. If the Minister does not exercise his discretionary power under s111A the original tenement applicant’s priority to the land would be lost.

Another class of applicants that may be prejudiced by being required to reapply in substitute for an ‘invalid’ application are applicants that have made significant progress through the native title process. That progress would potentially be lost if a tenement was ‘invalid’: the tenement applicant would need to start from scratch with any new application. Even if the applicant was on the verge of agreement, re-notification of the application would require a delay of at least 4 months to allow for the making of fresh native title applications.

What can tenement applicants do?

If a tenement applicant has received one of the letters from the Department regarding the invalidity of one or more applications, there may be grounds for the Department and/or the Director General of Mines to be restrained by a Court from taking the proposed action updating the register on the basis that such an action is beyond power.

If the application is in fact invalid pursuant to the Court’s reasoning in the F&F Decision, then the Court that has been asked to restrain the Department and/or the Director General of Mines may also at the same time declare the invalidity of the application, which would mean that the tenement applicant would achieve no practical benefit from agitating the issue.

If, however, the tenement application is not invalid (despite an assertion in a Departmental letter that is ‘appears’ to be invalid), then applying to a Court to restrain the Department and/or the Director General of Mines from updating the register is an action that may preserve the tenement applicant’s rights.

If this is an issue that you are grappling with at the moment, please feel free to call any of the authors of this note to discuss.

‘Invalid’ granted mining leases

The Minister issued a press release in relation to the F&F Decision on 5 September 2017, stating that the “State Government is acting swiftly to ensure certainty and security for mining operations”.

The Minister has recently stated that cabinet has approved the drafting and introduction of the Mining Legislation Amendment and Validation Bill 2017. He has also stated that the State Government received advice that legislation validating tenements may be considered a “future act” under the native title regime, although the mining leases in issue have already completed the future acts process when they were purportedly granted. As a result, the State Government has written to Senator George Brandis encouraging the Commonwealth to progress complementary amendments to the Native Title Act.

The fact that it has taken time to prepare the legislative response has created uncertainty. Tenement holders still do not know:

  1. if they are the holders of mining leases that the Department considers may be ‘invalid’; or
  2. if the legislative fix proposed by Government will cure the invalidity of their tenure under both the Mining Act and Native Title Act.

In light of this uncertainty as to the security of tenure, it isn’t hard to envisage tenement holders delaying investment in mining or exploration until such time as they are assured that they either have secure tenure or, if they don’t, the legislative fix will cure the particular defect affecting their tenure. Given the need to coordinate with the Commonwealth Government, it is hard to see a ‘fix’ being implemented before August 2018 – a year after the decision was handed down. The longer we go without a ‘fix’, the greater the risk to tenement holders.

In order of priority, it is hoped that the Minister and Government:

  1. adopt a legislative response that comprehensively deals with the issues arising out of the F&F Decision as they relate to granted mining tenure; and
  2. does so as quickly as is practicable to resolve the present uncertainty.