Financial assurance, mine rehabilitation and closure – a new perspective on an old issue (Part 2 of 2)

May 2017 | Energy & Resources

Part 2: Better mine rehabilitation for Queensland

Introduction

As discussed in part one of this newsletter series, the Queensland Treasury Commission (QTC) undertook a ‘Review of Queensland’s Financial Assurance Framework’ (FA Review). In response to the FA Review, the Department of the Premier and Cabinet has released two discussion papers: ‘Financial Assurances Framework Reform’ and ‘Better Mine Rehabilitation for Queensland’ (Rehabilitation Discussion Paper).

The discussion papers form part of the Financial Assurance Framework Reform Package being considered by government.

In part one of this series, we reviewed the proposed financial assurance package of reforms. In this part two, we review the proposed mine rehabilitation requirements.

Overview

The low rates of rehabilitation have caused concern to the Queensland Government, prompting this review. When discussing the proposed mine rehabilitation reforms, the Queensland Environment Minister said that:

This program of reforms is all about making sure rehabilitation happens progressively so it is not left as one big job for the end of the mine’s life, and also ensuring that we have sufficient financial assurance every time one of those mines has been abandoned.1

As set out in the Rehabilitation Discussion Paper, failure to rehabilitate mined land is a key risk for government because:

  1. There is more disturbed land at risk of becoming a financial liability for the State;
  2. Environmental values are at greater risk due to the emission of contaminants from disturbed land;
  3. Failure to convert to alternative economic uses affects post-mining employment and economic opportunities; and
  4. There is an increased likelihood of transferring that risk from mines and that disclaim tenure or are abandoned.

Without better processes and performance of progressive rehabilitation of land disturbed by mining, the QTC’s review found that Queensland will remain heavily reliant on the financial assurance system.

Proposed framework

The Rehabilitation Discussion Paper recommends a six-element integrated mined land management framework that will deliver better environmental outcomes and decrease the State’s risk of financial exposure for abandoned mines. It is intended that the new framework will apply to all existing and future mines that have a ‘site-specific’ environmental authority.

The six elements are:

  1. Introducing life-of-mine plans for all site-specific mines. Mines that have a site-specific environmental authority will be required to prepare and implement a life-of-mine plan that provides for mine closure land rehabilitation strategies. The plan would require specific milestones with respect to rehabilitation to be set out in the plan, with a focus on progressive rehabilitation. It is intended that life-of-mine plans will be available for public review and consultation as part of the environmental authority application process. It is not clear at this stage what rights the public at large will have to object specifically to a life-of-mine plan. New site-specific mines will be required to prepare a life-of-mine plan as part of the application for new tenure (and the accompanying site-specific environmental authority) from mid to late 2018, after the commencement of the relevant legislative amendments.

Existing site-specific mines are currently required to prepare a ‘plan of operation’, which are usually prepared in five year increments, and do not necessarily set out long term goals with respect to rehabilitation. It is proposed that existing mines will be transitioned to the life-of-mine plan requirements within two years of the commencement of the legislative amendments. Mines categorised as ‘high risk’ may need to comply within one year.

It is not yet clear whether the life-of-mine plan will replace the five yearly plan of operation, or whether the two types of plans will operate together. The Discussion Paper specifically seeks comments on this issue.

  1. Regular monitoring, assessment and reporting. Currently, operators are required to provide reports about their operations through annual returns, but the public reporting of compliance is limited. Preparation of the proposed life-of-mine plan may include a requirement to report on the key milestones set out in the plan, and specifically, the rehabilitation outcomes. In addition, assessment reports will be required, and consideration is being given to making the reports publically available.

The Discussion Paper is also seeking views on the content and timeframes of assessment reports.

  1. Enforceable requirements for progressive rehabilitation. Any milestones set out in the life-of-mine plan would be enforceable, so that the regulator could act if a resources company fails to meet its milestones. Measuring a company’s achievement of its milestone targets would be done by assessment against a series of performance criteria, for the life of a mine.
  1. Clear completion and sign-off requirements. The State proposes to prepare clear mine closure completion criteria relating to land rehabilitation and future use. The Discussion Paper specifically seeks feedback with respect to the level of detail required in the completion criteria.
  1. Performance based incentives. The Discussion paper considers a range of measures that could be introduced to incentivise best practice rehabilitation management and outcomes. Incentives could include:
    1. preferential treatment to companies with a history of good rehabilitation performance;
    2. rehabilitation performance being a factor in the determination of a company’s annual fees; and
    3. annual fees being reassessed on a regular basis, and potentially reduced for good rehabilitation performance.

The State is seeking views on other incentives or disincentives that could be considered.

  1. Good quality data to inform policy and regulator implementation. Rehabilitation data is presently collected from plans of operation and annual reports. This information is not necessarily electronic, and is not easily accessible to the public.

The State is considering introducing additional data collection requirements, so that:

  1. electronic data is maximised;
  2. standardised data parameters are set;
  3. data is collected from all sites for the same period and at the same frequency; and
  4. visibility of the data to the public is enhanced.

The State is seeking feedback as to the nature of the data that it should collect and publish.

Next steps

Submissions on the Better Mine Rehabilitation for Queensland paper are due before 15 June 2017. As part of the continued stakeholder consultation relating to the entire financial assurance framework reform package, feedback will be sought regarding the other reform agenda items progressively until mid 2018.

We will continue to keep you informed of the coming developments.

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1 Louisa Rebgetz, ‘Queensland mine rehabilitation should be progressive, not left as one big job: Miles’, ABC News (online), 19 May 2017 <http://www.abc.net.au/news/2017-05-19/queensland-mine-rehabilitation-progressive-reform-steven-miles/8540586>

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