18 Jul 2013
Lifting of RA394 reduces prospects of a Mining Lease application loophole
The Queensland Government has lifted RA394 and with it the moratorium on applications for new coal mining tenements in Queensland, and released an operational policy to clarify the use of prospecting permits to apply for mining leases.
Restricted Area 394 (RA394), which placed a moratorium over the application for and grant of new coal tenements in Queensland since January 2012, was lifted on 28 June 2013.
In April we commented that this should be the next step after the introduction of the competitive tendering process for exploration permits for coal (EPCs) under the Mining and Other Legislation Amendment Act 2013 (Qld), as the moratorium was only intended to be a temporary measure until the new tender regime was introduced and its continuation after this time served only to unnecessarily restrict applications for mining leases (MLs) using prospecting permits (PPs).
Prospecting permit loophole
In lifting RA394, the Department of Natural Resources and Mines (DNRM) still has some concerns about the use of PPs as a direct route to peg out and apply for a ML as it believes it could technically be used as a means of avoiding the competitive tender process for EPCs.
To rectify this concern, DNRM released an Operational Policy in June 2013. The policy highlights that the Minister may reject a ML Application (MLA) using PPs as a prerequisite tenure if it is not in the public interest for it to be granted.
The policy indicates that the Minister has broad powers in deciding whether the grant of the ML is not in the public interest and may take into account any information in relation to the subject matter and scope of the Mineral Resources Act 1989 (Qld) (MRA). Such non-exhaustive considerations referred to in the policy include:
maximising the economic value of Queensland's resource potential;
the objectives of the MRA;
the objective of allocating land for coal exploration through a competitive tender process; and
Acceptable ML applications
Pursuant to the policy, MLAs from PPs will generally be accepted where they are not seen to be subverting the tender process. This may be the case where:
- an overlapping EPC or mineral development licence (coal) holder consents to the application;
- the MLA is adjacent to the applicant's existing ML or MLA and the applicant requires the lease for the purposes of access or infrastructure to support the existing or proposed project; or
- there is a net positive public interest.
Importantly, because of the Minister's discretionary powers, even where the application for the ML is predicated on one of the first two scenarios described above, the Minister may still reject that application on public interest grounds. It would seem then that for land which is prospective or highly prospective, a greater threshold will be faced by the applicant in satisfying the public interest.
The Queensland Government is intent on ensuring that the grant of coal exploration mining tenements are subject to the competitive tendering process with only limited exceptions. A proponent seeking to apply for a ML from PPs should seek an early decision from DNRM as to whether any such MLA is to be rejected on public interest grounds. This way, an expensive and timely approval process will not commenced only for a ML to be later rejected on public interest grounds, based solely on the use of PPs to apply for the ML.
You might also be interested in...