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08 Apr 2020

Costs and possibly travel relief for WA tenement holders and the mining sector in response to COVID-19

By Brett Cohen, Armin Fazely and Olivia Barns

Holders of mining tenements in Western Australia have been thrown a potential lifeline from the State Government in respect of their expenditure obligations under the Mining Act 1978 (WA).

The WA State Government recently announced that holders of exploration licences may obtain exemptions from expenditure conditions where their inability to meet the expenditure conditions is a direct result of COVID-19 or the Government restrictions in response to the pandemic. Relief from tenement rents and travel restrictions may also be available in current circumstances.

This response is consistent with the State Government's commitment to supporting arguably Western Australia's most important industry.

It is no surprise that the Government restrictions imposed in response to the COVID-19 pandemic have brought about challenges and disruptions to the mining industry. Restrictions on travel, the closure of the State's border and social distancing initiatives necessarily have impacted on the ability of tenement holders to access and conduct activities on their tenements. The relief will go some way to easing the burden on the sector.

In this article we'll set out the main restrictions currently affecting WA mining, and the new exemptions.

Status of WA travel restrictions

Currently, Western Australia is in a State of Emergency with a number of State and Federal Government restrictions in place to limit the spread of COVID-19.

Interstate and international travel

The WA State border is now closed, and entry into Western Australia from all interstate and international destinations is now prohibited in the absence of an exemption.

One relevant exemption for the resources industry is the exemption for fly-in-fly out (FIFO) workers and their families who wish to return to Western Australia. This exemption must be applied for and shall be granted on the condition that the worker and their family complete a mandatory 14-day quarantine at the expense of the worker's employer. FIFO workers who wish to apply for the exemption are required to complete the "WA Entry – Request for Approval as an Exempt Traveller" Form.

Intrastate travel

The State has been divided into nine regions, with any movement between regions strictly prohibited, unless there is an exemption. Currently one exemption applies for persons who ordinarily travel from one region to another for work purposes, such as FIFO workers, people transporting freight and other workers in the mineral exploration sector. A person taking advantage of the exemption must carry:

  • photo identification;
  • a letter or email from an employer supporting the travel; and
  • a health declaration stating the person has not travelled overseas in the past 14 days,

and have no symptoms of COVID-19, nor have come into any close contact with a confirmed case of COVID-19.

Additionally, the Federal Government has implemented further regional restrictions within Western Australia; those restrictions prevail over inconsistent State restrictions.

The State and Federal Governments have also jointly restricted travel to remote Aboriginal communities, with even stricter restrictions in place for the Kimberly and Pilbara regions. The only exemptions are for the delivery of essential services or cultural or family reasons.

There are also local government authority restrictions in the Esperance and Kimberley regions.

Despite the exemptions, they obviously will not totally ameliorate the impacts of the COVID-19 pandemic on proposed exploration activities. That is where the new exemptions for expenditure and rent relief come into play.

The legislative framework for expenditure – and exemptions

The Mining Act 1978 (WA) requires holders of certain mining tenements to meet minimum expenditure requirements in relation to their exploration and mining activities. Where a holder of a mining tenement is unable to meet their expenditure requirements, the holder may apply for an exemption, either in whole or in part.

The exemptions available under the Mining Act can be granted for a number of reasons, including but not limited to, where:

  • the ground the subject of the mining tenement is for any sufficient reason unworkable; or
  • political, environmental or other difficulties in obtaining requisite approvals prevent mining or restrict it in a manner that is, or subject to conditions that are, for the time being impracticable (section 102(2)).

COVID-19 expenditure exemption

In addition to the reasons expressly set out in the Mining Act, an exemption may be granted under the Mining Act "for any other reason which may be prescribed or which in the opinion of the Minister is sufficient to justify such exemption" (section 102(3)).

By way of Government Gazette dated 3 April, the WA Minister for Mines prescribed, for the purposes of section 102(3) of the Mining Act, an additional reason for granting an exemption from expenditure conditions: that the holder was unable to meet the expenditure requirements relating to the tenement as the direct result of COVID-19 or restrictions imposed by governments in response to the COVID-19 pandemic.

This decision is set to remain valid until 31 March 2021, unless rescinded earlier.

How to apply for an expenditure exemption

The application process for applying for an exemption remains unchanged. Applicants are required to lodge a Form 18 accompanied by a statutory declaration setting out the reasons for the application.

The application should be lodged electronically with the WA Department of Mines, Industry Regulation and Safety (DMIRS) during the relevant expenditure year, or within 60 days of the end of the year to which it relates.

In the Government Gazette, the Minister for Mines stated that the applicants must include a statement demonstrating that exploration expenditure conditions have not been met because of the direct effects of COVID-19 and/or the government restrictions as a result of the pandemic.  

Therefore, when applying for an exemption, the applicant should clearly detail all relevant evidence in support of the application. To reduce the risk of a challenge by a third party, any statement contained in the statutory declaration should have a reasonable level of detail.

The Government is yet to release the criteria applied when considering the exemption, however some examples for how to demonstrate the effect of COVID-19 or the Government's restrictions may include situations where:

  • travel restrictions have caused exploration operations to be suspended;
  • travel restrictions have impacted access to required sites;
  • social distancing practices have impacted miners' ability to work in close proximity and carry out their role effectively;
  • the importance of protecting Aboriginal communities within the Kimberley region has suspended activities; and
  • travel restrictions have prevented access to necessary areas for conducting activities such as clearing, geophysical surveys, heritage surveys, sampling, drilling etc.

DMIRS has reiterated the intention of the Mining Act is to ensure effective exploration and development, and that compelling reasons should be given by the tenement holder where ground remains unexplored.

At this stage, it does not appear that the expenditure exemption announcement extends to relief from mining expenditure under mining leases. However, in the State Government's media announcement, it was stated that it is considering other initiatives that may assist the mining industry during the pandemic.

Other relief for holders of mining tenements in WA – rent relief

In addition to expenditure relief, affected tenement holders should also consider applying for an extension of time to pay tenement rents.

For mining and exploration licences, an application for an extension of time should take the form of an email or letter to DMIRS. The application should detail the reasons why the extension should be granted, seek a specific date for the rent to become payable. The reasons provided would likely be consistent with those included in application for the expenditure exemption, that is, the direct impact of COVID-19 or the government restrictions implemented in response to the COVID-19 pandemic.

Given the speed at which the COVID-19 landscape is changing, those within the mining industry should stay alert and up to date with respect to any Government updates and publications, which may offer additional support or relief in these challenging times.

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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.