01 Mar 2012

Is the tide turning? NSW Government proposes lifting ban on uranium exploration

by Nick Thomas, Samy Mansour, Dean Gerakiteys

The ban on uranium exploration would be lifted – but not the ban on mining it.

The NSW Government is proposing to remove the 26 year-old ban on exploration for uranium deposits in NSW.

The Minister for Resources and Energy introduced the Mining Legislation Amendment (Uranium Exploration) Bill 2012 on 16 February. If the Bill is passed, it would be lawful to carry out exploration activities for uranium, provided an exploration licence under the Mining Act 1992 and other relevant approvals have been obtained. However, the prohibition on mining uranium in NSW would remain in place.

Why the policy change?

The Premier, when announcing the change in Government policy, stated that NSW should "look at every opportunity to join the mining boom", with a view to generating revenue for public spending, new infrastructure, and jobs.

He also pointed out that the Government was responding to a request from the Federal Government that NSW and Victoria revisit their prohibitions on uranium mining. Currently, NSW and Victoria are the only Australian States with a blanket ban on uranium exploration and mining. South Australia, Queensland, Western Australia and the Northern Territory currently permit uranium exploration. Tasmania has no ban on uranium mining, though currently there are no such mines operating within the State.

The announcement comes only months after the Australian Labor Party national conference gave the Federal Labor Government the green light to introduce legislation overturning the existing prohibition on the export of uranium to India (which has not yet signed the Treaty on the Non-Proliferation of Nuclear Weapons).

What the Bill will do

The Bill will amend several items of legislation which currently prohibit uranium exploration or mining, or make such activities more complex and heavily regulated than other forms of mining.

Currently, the Uranium Mining and Nuclear Facilities (Prohibitions) Act 1986 (the Prohibitions Act), prohibits prospecting for, and the mining of, uranium. The Bill proposes that this Act be amended to remove the prohibition on exploration for uranium, but leave the prohibition on mining uranium in place.

The Mining Act 1992 (and regulations under it) will be amended as well, to list uranium as a "mineral" and therefore make it subject to that Act in the same way as other minerals are. Among other things, this means that an exploration licence under that Act would be required to prospect for uranium.

The Bill also makes it clear that all uranium deposits in NSW will be vested in the Crown, so there will be no private mineral deposits of uranium.

The Bill will also amend State Environmental Planning Policy (Mining, Petroleum Production and Extractive Industries) 2007, which provides a streamlined and uniform planning regime for mining, petroleum and extractive industry operations. Currently, uranium is excluded from the SEPP, but the Bill will put it on the same footing as other minerals. This means that uranium exploration generally will not require separate planning approval, although the environmental impacts of a uranium exploration proposal must still be assessed in the course of an application for an exploration licence under the Mining Act.

What about uranium mining?

Given that the Bill would leave the legislative prohibition on uranium mining in place, stakeholders have asked whether there is enough incentive to invest in uranium exploration with no present prospect of being allowed to extract it if it is found.

In response, the Premier said this:

"We are not about to rush into mining uranium until we have carried out the necessary environmental and exploration checks and have had a mature and sensible discussion about utilising this resource, but we would be crazy not to look at whether this is a viable industry which would deliver jobs and revenue to NSW."

The Resources Minister has added that "there would not be uranium exploration in our traditional mining areas".

What do we know about uranium in NSW?

Not enough is known about the nature, extent and location of uranium deposits in NSW, which appears to be a key reason for the Government's change of policy.

Interestingly, when a previous NSW Government first announced a policy of banning uranium mining in 1979, more than 20 companies had submitted applications for uranium exploration licences and prospecting licences. The then Minister for Energy, when discussing the provisions of the Prohibitions Act, acknowledged that NSW contained "some very promising prospects for uranium" and referred to earlier studies in the Clarence-Moreton Basin, the Sydney Basin, the Great Australian Basin, the Murray Basin and the Mundi Mundi Plains west of Broken Hill, saying that results from the last location were "very encouraging and showed a number of significant and exciting results".

However, clearly more exploration work is necessary to prove up resources.

What happens next?

The Bill has not yet passed through the lower house in Parliament. It then needs to pass through the upper house and receive the Governor's assent before it becomes law.

If the Bill is passed, mining explorers will be able to apply to the Minister for a uranium exploration licence. While the Government's announcements so far suggest that it might propose the removal of the ban on uranium mining if commercially viable uranium deposits are found, that is not yet certain, and so financial backers will be asked to take a risk on Parliament subsequently removing the mining ban.

Whether they will apply for a licence, given that the grant of an exploration licence usually requires financial commitments to carry out exploration under that licence, remains to be seen.

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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.