Mining has been prevalent in Queensland since the late 1800s, when workers, armed with little more than picks, shovels and their own resolve, risked everything to exploit the state’s vast resources.
Talk to a mining operator today and chances are they’ll cite tenure legislation, volatile commodity markets, high labour costs and taxes – roughly in that order – as the most salient challenges they face.
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Picks and shovels may have been replaced by automated drilling technology but the importance of land access and use remains unchanged. Legislation managing exploration permits and mining leases aims to strike a balance between economic development, sustainability and investment attraction.
Instead, miners argue that the tangled hairball of rules and regulations governing tenure makes it increasingly difficult for them to secure the large land packages required for mineral exploration.
And without exploration there can be no major new discoveries − and that spells potential disaster for resource-rich Queensland. In 2014-2015, the mining and energy sector contributed A$20.56bn (7.3%) of the state’s gross product, attracted 53% of all capital investment and employed 180,000 people.
“Ever since Queensland began mining in the late 1800s, Queensland’s resources legislation has been expanded, amended and adapted, each time to keep pace with the growth of the industry and best practice,” wrote AMEC CEO Simon Bennison recently on Australia’s The North West Star news site. “By 2013 the industry was operating under several different Acts and a confusion of regulations.
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By GlobalData“Each mineral exploration company operates in a complex, sensitive and high-risk capital market that involves thousands of current and prospective shareholders. It is a responsibility of the state government to ensure that Queensland remains attractive to investment.”
States of change: differing regulations in the six Australian states
Mineral rights in Australia are generally reserved to the six state governments, although, in some cases, the minerals may continue to be the property of the individual land owner. Operators wishing to look for potential minerals or resources must therefore apply for a permit, lease or licence permit.
In order to actually break ground, a further grant is required. The legislation also provides for the payment of royalties to the state and to compensate the owners or occupiers of the surface land.
The rules governing the acquisition of rights vary between each of the six states depending on their legislative frameworks. For example, in the Northern Territory, more than 80% of the mineral value comes from Aboriginal lands. Approximately 30% of this is currently under exploration or under negotiation.
Under the Land Rights Act, Aboriginal land owners have the right to agree or disagree to mining or exploratory activity on their land and resource companies are obligated to enter into good faith negotiations with Aboriginal people, with agreements reached to include benefits for all parties.
In Western Australia, the Western Australian Mining Act 1978 dictates that virtually all minerals, including petroleum and geothermal energy existing in their natural form, are owned by the state. Operators also pay for petroleum tenures, prospecting and exploration licences and mining leases.
Complex and confusing: Queensland’s mining tenure regulations
Queensland is slightly different again. Here, the government issues a range of permits, licences and leases relating to the exploration, development and/or production of minerals, petroleum and gas.
A mining lease, for example, allows the leaseholder to conduct large-scale operations and may be issued for a specific mineral. Royalties are dependent on the resource and the scale of the activity.
The state in north-east Australia is rich in coal deposits, metallic and non-metallic minerals, and petroleum, notably coal seam gas. Queensland is one of the top-five regions worldwide for the production of lead, zinc, bauxite and silver, as well as being a major seaborne exporter of coal.
In light of these complexities, AMEC is campaigning for the rules on mining tenure – who has the right to explore and develop minerals on a specific area of land – to be simplified so that these resources, many of them financed directly or indirectly by foreign investors, can be exploited to the benefit of all industry stakeholders.
“Since 2013, the AMEC has been calling for changes to Queensland’s tenure structure believing the existing model was rigid and needlessly complex,” Bennison wrote.
“AMEC and its members have a ‘Top Ten’ list of the initiatives to be brought forward, including reforms to threshold levels, capped exploration terms, project based administration and outcomes-based work programmes, among others,” he added.
Specific reforms: government response to industry feedback
In October 2013, the Queensland Government established the Ministerial Advisory Committee on Exploration to provide an open dialogue with industry on the subject of exploration sector reform.
Key mining industry gripes include inflexible regulatory settings, costly and unnecessary compliance procedures, and poor land banking – the process of aggregating land for future development.
Operators also complained about the lack of differentiation between greenfield and brownfield exploration, confusing rules on decommissioning and rehabilitation, and duplicated applications.
“The reform objective is to develop a new resource authority administrative framework for minerals, coal, oil, gas and extractive industries that is flexible, responsive and meets the requirements of modern government and industry,” wrote Bennison. If done well, the reform will improve Queensland’s standings in the Fraser Institute’s Survey. Queensland cracked the top ten last year of this international survey of mining executives’ willingness to invest in a jurisdiction. For the mineral exploration sector to grow it needs greater investment.
Bennison ended on an optimistic note, stressing the importance of the mining sector to Queensland.
“The current intention with tenure reforms remains positive,” he said. “The Department of Natural Resources and Mines is looking to bring forward those reforms that can be implemented in the short term, through policy and other means, without requiring lengthy legislative changes.
“Although the full reform process should continue into next year, AMEC expects to see some changes rolling out later this year. Mining and mineral exploration creates and supports thousands of jobs and generates significant economic and social dividends and royalties for the state.
“Breaking the reforms down into legislative and non-legislative will allow for a faster, more gradual reform process. Although the full reform process should continue into next year, AMEC expects to see some changes rolling out later this year.
