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14 May 2020

Time to review your exploration tenure strategy – reform to Queensland resources legislation and COVID-19 relief

By MARK GERITZ, PATRICK CRANLEY AND CLAIRE BOLTON

Exploration resource authority holders should consider the changes to current relinquishment requirements, exploration work programs and renewal requirements applicable to EPs and ATPs, and eligibility for rent, fees and charges relief.

Exploration resource authority holders should consider the impact of the amendments made by the Natural Resources and Other Legislation Amendment Act 2019 (NROLA) to their exploration authorities, including relinquishment requirements, exploration work programs and renewal requirements, which are due to commence on 25 May 2020.

Commencement of NROLA

The commencement of the NROLA on 25 May 2020 will commence a number of key amendments to the Mineral Resources Act 1989 (MRA), Mineral and Energy Resources (Common Provisions) Act 2014 (MERCP Act) and the Petroleum and Gas (Production and Safety) Act 2004 (PAG Act) that affect aspects of the management of mineral (including coal) and petroleum exploration authorities.

Our earlier article provides detail on the key amendments introduced by NROLA, with the subject of this article being a refresh on the commencement and impact to existing tenements.

Holders of current coal and mineral exploration permits (EPs) and authorities to prospect (ATPs) should be aware of the effect of NROLA on renewal requirements, relinquishment and exploration work programs under the MRA and PAG Act.

In addition, holders of current EPs and ATPs should be aware that from the commencement of NROLA, the Minster will be able to unilaterally impose, vary or remove conditions on permits as a result of COVID-19 being recognised as an 'exceptional event'.

Implications on existing EPs and ATPs

Renewal

NROLA introduces a maximum cap on the life of EPs (15 years). Existing EPs granted under the MRA were previously subject to unlimited renewals. The introduction of NROLA means that these existing EPs will be limited to further renewals of up to a maximum 10 years from the first renewal after commencement of NROLA (made up of individual renewals of not more than 5 years each). For example, if an EP is due for renewal in 2021, it may be renewed multiple times for maximum periods of 5 years, but will ultimately expire in 2031.

Relinquishment

The current relinquishment requirements on renewal of an EP under the MRA will cease on commencement of NROLA. For most existing EPs,[1]the NROLA amendments mean that a single 50% relinquishment is required 5 years after the first renewal of the relevant permit following commencement of NROLA. For example, if an EP is renewed in June 2020, the holder will be required to relinquish 50% of the area of the EP by June 2025.

Although relinquishment requirements for ATPs will also be amended from 8.33% per year to 50% by the "relinquishment day" (being the day before the 6th anniversary of the day the ATP took effect), existing ATPs are not affected by these relinquishment changes.

Work programs

New types of work programs are introduced by NROLA: "outcomes based" and "activities based". Any approved programs of work for current EPs and ATPs will not be affected by NROLA and will be dealt with under the MRA or PAG Act (as applicable) as if the provisions have not been amended.  On renewal, holders will need submit a work program that complies with the updated requirements and either be "outcomes based" or "activities based".

Applications

Applications that have been made, but not decided, by the commencement of NROLA are also dealt with under the NROLA amendments.  Applicants should consider the transitional provisions to confirm the impact on existing applications as a result of the amendments.

COVID-19 Exceptional Event

NROLA provides the Minister with powers to unilaterally amend exploration permits by imposing a condition on, or varying or removing a condition of the permit where the Minister considers it necessary because of an 'exceptional event'.  Any such amendment will take effect 10 business days after the holder is given notice or on any later day stated in the notice and the Minister's power can apply to exploration permits granted before the commencement of NROLA.  An exceptional event is also a ground on which a holder may apply to vary conditions. 

On 6 May 2020 the Department of Natural Resources Mines and Energy announced that the Minister has deemed the COIVD-19 pandemic an "exceptional event". Consequently, effective 25 May 2020, under NROLA, the Minister may exercise their power to unilaterally vary the conditions of existing exploration permits in response to the COIVD-19 pandemic by offering holders relief from undertaking any or all exploration work by way of variation to work programs, or from complying with certain conditions.

The Department has also announced a number of other relief measures in response to COIVD-19 including:

  • a 12-month rent waiver for holders of an EP or ATP, where rent is payable between 1 April 2020 and 30 September 2020;
  • the removal of application fees for special variations to ATP work programs;
  • capping of all other fees and charges under the MRA and PAG Act at 2019-20 rates; and
  • a freeze on fees and charges in respect of renewals and variations to permits until 1 July 2021.

Recommended actions

Exploration resource authority holders should consider the impact of the amendments made by the commencement of NROLA on 25 May 2020 to current relinquishment requirements, exploration work programs and renewal requirements applicable to EPs and ATPs. Further, holders should consider engaging with the Department on eligibility for rent, fees and charges relief due to the declaration of COVID-19 as an "exceptional event" under NROLA.



[1] Other than in circumstances where s232(1) of the MERCP Act applies, being where an exploration permit for coal (EPC) overlaps a Petroleum Lease (PL) that existed prior to the commencement of the MERCP Act, and no agreement is reached between the EPC and PL holder for the purposes of section 232(2). Back to article

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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.