05 Feb 2009

Recent Mineral Resources Act amendments

by James Minchinton, Prudence Harvey

The public interest test for mining tenements has been substantially extended. Holders of Mining Leases which overlap with Petroleum leases must offer incidental Coal Seam Gas to the Petroleum Lease-holder before flaring or venting.

Public interest test for mining tenements

The public interest test is not entirely new to the Mineral Resources Act (MRA), as it is already present for the renewal of an exploration permit, the renewal or addition of minerals to a mineral development licence (MDL) and the grant and renewal of mining leases.

The amendments essentially require the public interest test to be applied in more situations. For MDLs it has now become relevant for the grant, the imposition of conditions or variation as well as varying access to the land the subject of the MDL. For mining leases, it has been added for the variation, the addition of extra minerals, access to land and as an element of potential consideration for the Governor in Council in relation to the general conditions to which all mining leases are subject. As such, the holder of, or applicant for, mining tenements will need to address these public interest issues when making various applications in respect of their tenements. This could require the provision of additional information.

There is a definition of "public interest" in the MRA, but this applies to issues of overlapping mining and petroleum tenures. It is not clear whether a similar test will apply to these new uses of the public interest test. Public interest, as defined for the overlapping tenure regime, means: a consideration of: government policy, value of commodity production, employment creation, total return to the state and Australia, social impacts and overall economic benefit for the State. Some of these issues can be subjective in their interpretation.

Essentially, the public interest test appears to operate to give the Government a broad discretion in the exercise of their power over mining tenements and applicants and holders may consequently have to deal with less certainty.

New requirements for flaring or venting CSG

New provisions in relation to the use of incidental Coal Seam Gas (iCSG) have been introduced where there is an overlap between a mining lease and a petroleum lease.

Previously, the holder of a mining lease had only two options: to use the iCSG for its own mining purposes or to vent or flare it (with some restrictions). The amendment introduces a new requirement. If the mining lease-holder does not wish to use the iCSG for its own use, it may give the petroleum lease-holder written notice that the iCSG is available. The petroleum lease-holder then has 20 business days to accept in writing. The term "give" connotes that no payment will be received. If the petroleum lease-holder does not want the gas, the mining lease-holder may then flare or vent it. Venting or flaring can only occur if the mining lease-holder has first offered the iCSG to the petroleum lease-holder and the petroleum lease-holder has either declined or has not responded to the offer within 20 business days. This new requirement has two purposes:

  • to optimise the use of iCSG by reducing the potential for it to be flared or vented; and
  • to reduce greenhouse gas emissions.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.