Financial assurance and mine rehabilitation reform in Queensland

Corporate Update

In May 2017, the Queensland Government released two discussion papers outlining proposed changes to Queensland's financial assurance and rehabilitation framework. You can read about these discussion papers here.

The consultation period has now closed and the Queensland Government has released the results of the consultation process in the Queensland Government Consultation Report - Financial Assurance Framework Reform and Queensland Government Consultation Report - Better Mine Rehabilitation Queensland.

Over the consultation period for both discussion papers, 998 submissions were received and over 46 external stakeholder consultation meetings were held.  As a result, the Queensland Government has proposed changes to a number of the reforms initially described in the discussion papers. 

Many of the issues raised in response to the discussion papers are still under consideration, with an external advisor having been appointed by the Queensland Government to assist in that process and the development of the draft legislation. 

Financial assurance framework reform

The key changes to the proposed financial assurance framework following the consultation reportedly are:

  • The Selected Partner Arrangement category has been removed from the financial assurance scheme. Significant resource entities meeting the Selected Partner Arrangement description will contribute to the general rehabilitation fund up to the threshold of 5% of Queensland's total estimated rehabilitation cost. Any environmental authority (EA) above the threshold amount will need to be covered by a third party surety. The financial assurance scheme will therefore be comprised of: The rehabilitation fund; and The "Surety Division"
  • Establishment of a scheme manager who will report annually on the financial assurance scheme, including providing updates on aggregate revenues and expenditures, aggregate surety arrangements and interest on cash sureties.
  • When assessing an EA holder for the purposes of allocation to the appropriate division of the financial assurance scheme, the scheme manager will have regard to overall resource project (including available remaining resources at the site and the extent of required rehabilitation) and not just the financials of the EA holder. 
  • Operators with estimated rehabilitation costs of less than $100,000 (increased from $50,000) will not be assessed for overall soundness and will continue with their current financial assurance arrangement pending further review. 
  • The transitional arrangements have been updated so that existing activities will convert to the new regime over a three year period, and individual companies may negotiate the transition for each resource project currently underway. EA holders who move between categories of contribution will additionally be given a 12 month notice period. 
  • It's expected that the scheme will be implemented in July 2018 and new resource activities will be brought into the new financial assurance framework from this time. 
  • There will be no ability to opt out of the rehabilitation fund if allocated to that division. 
It is noted that the Queensland Government is still considering how the financial assurance scheme will apply to joint venture arrangements and complex corporate structures.

Further information about the consultation process and the responses received can be viewed in the consultation report.  

Better mine rehabilitation for Queensland reform

Those who viewed the Better Mine Rehabilitation for Queensland Discussion Paper will recall that it proposed to introduce an 'integrated mined land management framework' made up of six elements built around a 'Life of Mine' plan, being:

  1. Life-of-mine plans for all site-specific mines
  2. Regular monitoring, assessment and reporting
  3. Enforceable requirements for progressive rehabilitation
  4. Clear completion and sign-off requirements
  5. Performance based incentives
  6. Good quality data to inform policy and regulatory implementation

Some of the key outcomes from the consultation on the draft integrated mined land management framework are:

  • The need for better clarity on the terms 'available' and 'rehabilitation'.  This is important so that it is clear when land is 'available' (and conversely, not 'available') for rehabilitation.  'Rehabilitation' will be defined to mean the act of rehabilitating rather than being the final end state. This is consistent with the policy framework of requiring progressive rehabilitation.
  • A maximum disturbance to rehabilitation ratio will be introduced but will not be mandatory across all sites.
  • All mines with site specific EA's must have a life of mine plan. This may replace the need to develop and lodge plans of operations.
  • The final rehabilitation policy will clearly state the Government's expectations on mine rehabilitation, and the final guidelines will clearly state what must be included in life of mine plans. This is being developed in consultation with external technical advice.
  • As long as a life of mine plan is consistent with delivering the rehabilitation requirements set out in the environmental authority, the initial life of mine plan will not be subject to public notification.
  • The process of amending an environmental authority and life of mine plan is to be streamlined so that a change in mine operation can occur through one integrated procedure.
  • Only some major amendments to a life of mine plan would be released for public notification, for example, where the scale or impact of the change would be of interest to the broader public such as a significant change to the final rehabilitation outcome, a significant increase to the disturbance footprint or a significant change to the life of mine timeframe.
  • Progressive rehabilitation as stated in a life of mine plan will need to be conducted irrespective of whether a mine is on care and maintenance.
  • Life of mine plans will transfer to new holders of the EA.  As a public document, prospective buyers will be able to access and assess their rehabilitation obligations earlier in a due diligence process.
  • The introduction of annual self-assessments by companies to assess their performance against the life of mine plan, which will be made publicly available. Public reporting of the overall rehabilitation process was also generally supported and will be pursued in the final policy.
  • The Queensland Government will also be assessing its residual risk policy (i.e. the process of monitoring, management and repair of sites once an EA has been surrendered).

If the reform goes ahead, the integrated mined land management framework will only apply to mines making new applications for site specific EA's. Existing mines with site specific EA's will be transferred to the new regime over a yet to be determined period. 

Further information about the consultation process and the responses received can be viewed in the consultation report.  

Draft legislation

Whilst the consultation reports provide some indication of how the new financial assurance and rehabilitation frameworks will operate, the devil will be in the detail and interested parties will need to wait for the draft bill to be introduced to parliament to assess its real impact.

Further discussion papers

Additional discussion papers related to the broader financial assurance reform are due to be released in the fourth quarter of this calendar year.