10 May 2013

New environmental levy on Northern Territory mines

The Northern Territory Government has announced that it will impose a new levy on mining companies in order to fund the rehabilitation of legacy mine sites.

According to a media release by the Minister for Mines and Energy, a 1% levy will be imposed on all environmental rehabilitation security bonds from October 2013. This is intended to apply to new and existing environmental bonds.

Currently, environmental bonds can be required by the Minister through the imposition of a condition on an operator's mining authorisation under the Mining Management Act 2001 (NT). It is current policy for the Department of Mines and Energy to require an environmental bond for 100% of the cost of rehabilitating a mine site. This is calculated based on the actual cost of rehabilitation commensurate with the size, environmental risk and expected life of a project.

According to the media release, the proposed levy will be calculated as 1% of the full amount of an operator's environmental bond. Levies will be paid into a special fund that will be set up to address legacy mining liabilities across the Territory. The Minister has stated that the levy is expected to raise approximately $6.45 million in its first year and that some of this money will be used to fund a team dedicated to mining remediation and legacy issues.

How will this affect my mining project?

The proposed levy will have significant implications for mining operators who, from October 2013, may be faced with a levy equal to 1% of the cost of rehabilitating their mine sites.

In preparation for the introduction of the levy, mining operators should consider whether the amount of their environmental bond is capable of being reduced. This will be particularly relevant to operators of mines that have already commenced rehabilitation activities as, under the Department's Security Policy, bonds should be regularly reviewed and adjusted taking into consideration (amongst other things) an operator's progress in rehabilitation.

Further details of the levy are yet to be released. The Department has also not publicly stated whether it intends to reform the existing environmental bond system, although there have been calls from industry to do so. According to the Minister's media release, the Department will continue to hold environmental bonds for 100% of the rehabilitation cost of existing and new mine sites.

It will be important for mining operators to monitor these reforms as further details emerge in the lead up to the proposed implementation of the levy in October.

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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.