Government Response to CMPA Rehabilitation Report
The CMPA produced a Review of Rehabilitation and Bond Framework for Quarries in Victoria March 2022. A letter (with the Review) was sent to the Minister for Resources The Hon Jaala Pulford, MP detailing the recommendations in the CMPA Review (6 May 2022).
The response from Resources, DJPR is at best somewhat disappointing, see below.
CMPA REHABILITATION PROJECT
06 / 09 / 2022
Dear Elizabeth
Thank you for your letter to the Minister for Resources of 6 June 2022 about the CMPA Rehabilitation Project. The Minister has asked that I respond on her behalf .
I would like to acknowledge the important role that the CMPA continues to play in improving the performance of the extractives industry with regard to regulatory compliance. The report commissioned by the CMPA demonstrates this commitment, and I understand that you have met with Mr Chris Webb, Acting Executive Director, Earth Resources Regulation, to discuss the contents of your report in more detail.
The Victorian Government is responsible for regulation of earth resources sites and carries the risk on behalf of taxpayers for any rehabilitation liability not covered by a bond, if an operator defaults. Effective rehabilitation and regulation of rehabilitation is therefore essential to ensure community confidence is maintained in both the government and industry.
Changes have been made to the regulation of quarry rehabilitation since a review was undertaken in 2018 by Earth Resources Regulation (ERR), an audit on mine rehabilitation by VAGO in 2020 and the publishing of the
Regulatory Practice Strategy for the Rehabilitation of Earth Resources Sites in 2020.
In response to the above, the Rehabilitation Liability Assessments and Bond Team (RLAB) was formed as a dedicated group for setting bonds to ensure consistency across the state. RLAB is a specialist team with relevant
qualifications and industry experience, who are working in association with the compliance team to complete site visits on a risk- based approach.
Comments in relation to your report can be found at attachment 1. Thank you for taking the time to write to me. I trust that this information has assisted in answering your concerns and providing some more detail around the changes made in ERR and how rehabilitation liability assessments are being undertaken.
I understand that a commitment has been made to continue engagement on the matter of rehabilitation bonds to find improvements to the system where they may be possible.
If you require further information, please contact Mr Chris Webb, Acting Executive Director, Earth Resources Regulation at email chris.webb@ecodev.vic.gov.au or telephone 0410 572 421.
Yours sincerely
Jane Burton – Head of Resources
The CMPA responded to the Resources (DJPR) letter and are in ongoing discussions with Chris Webb Acting Executive Director Earth Resources Regulation.
ATTACHMENT 1
ERR FEEDBACK ON CMPA REVIEW OF REHABILITATION AND BOND FRAMEWORK FOR QUARRIES IN VICTORIA March 2022
- Your report has found that the risk of default for sites is low, this is not in line with RLAB’s findings, with several sites already identified as not having been rehabilitated years after extraction has ceased. Some sites have attempted to transfer away their rehabilitation liabilities, whilst others are not in a sound financial position to fund the rehabilitation.
- As of June 2022, approximately 186 work authorities are considered inactive with no production in at least five years. Many sites have a large gap between the bond held and actual liability and in addition some sites have expired planning permits which means the work authority is no longer in force. These sites are considered at a high risk of default in the future.
- To reduce the risk to the state, a transition to regular rehabilitation liability reviews will happen over the next few years, with updated bonds required to cover 100% of the approved rehabilitation liability. The bond reviews are being conducted in a progressive manner, with sites being prioritised for review via a risk assessment or triggered
through changes such as work plan variations or transfers. - Whilst there is a risk of costs to operators increasing when bonds increase, it is the preference of Earth Resources Regulation for sites to have a low rehabilitation liability, rather than a large bond. Progressive rehabilitation is a requirement for work authorities and is encouraged by Earth Resources Regulation as it has many benefits, one of which is in reducing the rehabilitation liability and bond.
- The RLAB team is actively working with operators to reduce their rehabilitation liability and bond through options such as including smaller stages of extraction, with progressive rehabilitation of each stage and reducing the maximum disturbance allowed in work plans. These options have already reduced the rehabilitation liability for several sites and these approaches will continue to be encouraged.
- In regard to the recommendations outlined in the report, the rates in the rehabilitation liability bond calculator were based upon several sources, including benchmarking against NSW and QLD rates by an independent specialist firm and consulting the stakeholder reference group. The rates will continue to be periodically reviewed and updated based on the market and inflation. Where an operator believes the default rate is not appropriate to their site, they may provide third party quotes for consideration.
- The report states that costs such as pest and weed management is an unknown and therefore should not be included in the bond estimate, however it is a requirement for these aspects to be managed by the authority holder. The nature of quarrying leaves large areas of disturbed land and it is based on experience that pest and weed management will be required to ensure success of rehabilitation.
- Whilst there is no allowance in the Mineral Resources (Sustainable Development) Act 1990 for the inherent value of the resource or land to result in a reduced bond, or the risk of a site to alter the bond value, these considerations factor into the risk assessment conducted to prioritise sites requiring bond reviews.
- The rehabilitation bond must be based on the cost to achieve the final landform as approved in the rehabilitation plan. If the approved final landform is no longer considered the best use of the site, operators have the option of applying to vary their rehabilitation plan. Where a work plan variation is approved, this would trigger a bond review.
- Where progressive rehabilitation has been conducted, the work already completed is not included as a cost in the rehabilitation liability assessment. Operators are encouraged to identify where work has been completed through the self – assessment or during the consultation phase. The transitional measures which include voluntary annual bond reviews, and letter-based commitments may also be relevant options to reduce the bond required for some sites where progressive rehabilitation is being undertaken.
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