Natural Resources and Other Legislation Amendment Act 2019: Key changes for explorersJun 2019 | Energy & Resources
The Queensland State Government has passed further changes to the resources regulatory regime.
The Natural Resources and Other Legislation Amendment Act 2019 (NROLA) was passed by Parliament on 15 May 2019 and amends a significant number of Acts, including some key changes to the following resources legislation:
- The Mineral Resources Act 1989 (MR Act);
- The Mineral and Energy Resources (Common Provisions) Act 2014; and
- The Petroleum and Gas (Production and Safety) Act 2004 (P&G Act).
It is important to note that some changes commence on assent of NROLA and others are to be by proclamation.
Pursuant to the explanatory note, the policy objectives were:
'to improve administrative efficiency and ensure the regulatory frameworks within the Natural Resources, Mines and Energy portfolio remain effective and responsive;… and implement measures to improve performance of the resources tenure management system'.
In particular, in relation to resource authority holders, the changes are aimed at creating greater flexibility and reducing administrative burden to allow more time for exploration prior to the relinquishment of land.
A 15-year cap has been introduced on the overall life of a mineral or coal exploration permit (EP) with a one off extension of three years if an exceptional event has prevented exploration activities being carried out in accordance with a work program.
The change also captures existing permits through transitional provisions which introduce a maximum 10 year total on renewals (counted from first renewal post commencement), regardless of how many prior renewals have occurred. Currently permits can be subject to an unlimited number of renewals.
This change is intended to address exploration areas being held too long and to encourage timely progression of development and production. If exploration is not being advanced, this will allow the land to be turned over to other explorers.
The interpretation of an 'exceptional event' will be important in this context (and also relates to other changes imposed by NROLA).
An exceptional event under the MR Act is defined as an event that:
- Affects the carrying out of authorised activities under the permit;
- Is beyond the control of the holder of the permit;
- Could not reasonably have been prevented by the holder of the permit; and
- Does not include a takeover bid under the Corporations Act 2001 (Cth), Chapter 6 made or proposed by another entity in relation to the holder of the permit.
A near identical definition has been inserted in the P&G Act.
The explanatory note refers to the operational policy maintained by the Department of Natural Resources, Mines and Energy for guidance about exceptional events but the policy in fact refers to ‘exceptional circumstances’. Nevertheless, the policy describes an exceptional circumstance as follows:
'An exceptional circumstance is when the ability to undertake a statutory requirement of the permit applicant or holder is adversely impacted by an event that:
- is or was beyond the permit holder or the applicant’s control; and
- could not have been prevented by a reasonable person in the permit holder of the applicant’s position'.
According to the policy, exceptional circumstances do not include common risks in the industry. For example, a failure to raise funding or disappointing exploration results.
Relinquishment requirements for EPs and Authorities to Prospect (ATP) have been modified to generally allow more time before the first relinquishment due date and reduce the total area required to be relinquished before the expiry of the exploration authority.
For EPs, the amendments introduce mandatory relinquishment of 50% of the EP area in five years from the grant of the EP, then 50% of the area remaining after the reduction by 10 years after the grant of the EP. This is subject to the occurrence of exceptional events (mentioned above) or where an EP is within an exploration project.
An exploration project means a project involving two or more EPs that have a unifying exploration purpose. In those circumstances, the Minister may direct the permit holder to reduce the area by more or less than 50%.
Additionally, if an area of an EP has been granted a higher form of tenure (such as a mineral development licence or mining lease) or the authority holder has made voluntary relinquishments, those areas can count towards the relinquishment requirement.
For an ATP, the relinquishment requirements have been amended from 8.33% per year to 50% by the relinquishment day, which is the day before the sixth anniversary from the day the authority took effect (i.e. within six years of the ATP taking effect). The relinquishment day may be extended if the work program for the ATP is extended.
These changes do not affect existing ATPs but will impact existing EPs. A consolidated transitional provision has been provided for in the MR Act which requires all existing EPs to relinquish 50% of the permit area (as it was on commencement), by the day that is five years after the EP is first renewed after commencement. Further, any variations to relinquishment requirements previously approved by the Minister will not apply.
A new concept of outcomes-based work programs has been introduced as an alternative to existing activities-based work programs. In theory, outcomes-based work programs will provide greater flexibility and allow explorers to adjust their activities in response to exploration results without the need to seek approval from the department to vary their work program.
An outcomes-based work program includes the proposed outcomes, the strategy or strategies to pursue the outcomes and the proposed data and information to be collected during the term. The explorer can then change the on-the ground activities in line with the results as they become apparent.
Exploration authorities awarded through competitive processes, such as a tender process, will generally still be conditioned with an activities-based work program for the initial term, to preserve the integrity of the competitive process. Calls for tender may however, specifically require that the tender be accompanied by an outcomes-based work program.
These changes will not affect existing work programs but explorers applying for renewal may lodge either type of proposed work program at their discretion.
Variation of conditions
Perhaps one of the most controversial changes is the insertion of provisions in the MR Act and P&G Act enabling the Minister to amend the conditions of an EP or ATP without application by the holder. In response to industry concern, this power has been constrained so that the Minister may only vary the conditions (in the case of an EP) if it is necessary because of:
- An exceptional event affecting the existing permit; or
- Circumstances arising from the existing permit forming part of an exploration project.
Similarly, the Minister may amend the conditions of an ATP because of an exceptional event and may do so by imposing a condition on, varying or removing an existing condition, without application from the holder. Conversely, an ATP holder may apply to the Minister for a special amendment for either or both of the following:
- Relinquishment requirements; and/or
- Work program.
Such an application may only be made because of an exceptional event affecting the authority or circumstances arising from the authority forming part of an exploration project (also defined under the P&G Act has a project involving two or more ATPs that have a unifying exploration purpose).
Holders of existing EPs at the time of commencement may apply for variations under the earlier framework for the duration of the tenure, unless it relates to a reduction in the area of the EP.
This article may provide CPD/CLE/CIP points through your relevant industry organisation.