Meeting with the Minister for Energy and Resources
DR ELIZABETH GIBSON, CMPA General Manager
The CMPA was founded in 2000 on the issue of the foreseen adverse impacts of rehabilitation bonds on the extractive industry.
In 2001 Dr Prentice, Business School, LaTrobe University was engaged by CMPA to prepare a report on the “Economic Analysis of the Rehabilitation Bonds System” and CMPA engaged an Australian rehabilitation bond specialist Kevin Simpson (EHS – Support) in 2022 to conduct a review of rehabilitation and bond framework for quarries in Victoria and prepare a report.
CMPA Members are now subject to unwarranted massive and unsustainable rehabilitation bond increases as foreseen back in 2000.
The figures are far in excess of retaining economically viable quarry operations in Victoria with increases of 900% ($500,000 to $5,000,000) to 130,000% ($9000 to $12,000,000). This is inconsistent with the Victorian Auditor General’s Rehabilitating Mines Report 2020/21 which identified $361 million (2020/21 bonds $831 million quarries and mines) in contingent liability for the Victorian Government. This equates to bond increases of 43% across the board.
A virtual meeting was held with the Minister for Energy and Resources The Hon. Lily D’Ambrosio MP and the CMPA Management Committee with the aim of seeking relief for the extractive industry from unwarranted massive rehabilitation bond increases for the extractive industry.
Issues
• The extractive industry is low value (~$19/tonne) and high volume (72 million tonnes 2022/23) business with high costs.
• The recommendations from the CMPA Review of Rehabilitation and Bond Framework for Quarries in Victoria were all summarily dismissed by ERR.
• The rehabilitation bond calculator is not fit for purpose: it gives rise to huge increases in rehabilitation bonds (as already stated) that are then negotiated downwards through letters of intention.
• The formula is unreasonable having been developed by bureaucrats with little understanding of the industry and business economics: requiring the removal of all concrete, access and power which are often required to be retained for the future use. Additionally, there are no discounts for the bond for risk factors such as remaining resource, value of land etc.
• It is understood similar versions of the calculator may be used throughout Australia, but they are also focused on mines and do not necessarily require financial assurances.
• To date ERR has not undertaken rehabilitation of a Work Authority for a Work Authority on private land.
The Minister demonstrated a keen interest and appeared sympathetic to this issue impacting the extractive industry.
A second meeting was arranged as an outcome for two CMPA Members to demonstrate the rehabilitation bond calculator for their sites to the Minister.
CMPA is holding workshops on minimising rehabilitation bonds through progressive rehabilitation, including a presentation from ERR, Attwood 23 May 2024 (hard rock) and Pakenham 20 June 2024 (sand).
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