Progress on Earth Resources Reform

An update by DR ELIZABETH GIBSON.

THE Department of State Development, Business and Innovation (DSDBI) is responsible for delivering on the Government’s response to the Economic Development and Infrastructure Committee (EDIC) Inquiry into Greenfields Mineral Exploration and Project Development in Victoria that was handed down in May 2013.

DSDBI has established the Earth Resources Reform (ERR) Steering Committee to provide expert advice to DSDBI in the development and implementation of reforms to improve regulatory practice in the earth resources sector. Experts include invited industry representation from CMPA, CCAA, MCA and PMAV.

The ERR Steering Committee will:

• Facilitate and monitor reform initiatives relating to work plans, rehabilitation bonds and other reforms under the Victorian Government’s response to the EDIC recommendations;
• Develop and agree on a work program to deliver the initiatives, the scope and deliverables for each project and the resources required; and
• Identify further improvements (if any) that could be addressed at the same time (or identified for consideration as part of future reforms), in order to establish effective and consistent regulatory practice for the Earth Resources Regulation, develop best practice guidance for regulation and support the effective operation of Earth Resources Development as a lead-agency.

The primary function of the Committee is to identify earth resources regulation reform initiatives, oversee the project team(s) in the fulfillment of their role in delivering the outcomes and outputs to meet the Government Response to the EDIC Inquiry, and any other projects to meet the wider earth resource regulation reform agenda. The Committee does not have any separate power.

The Committee has met several times and has resolved to focus on two main issues from the EDIC inquiry: work plan reform and rehabilitation bond reform. Discussion papers were prepared by DSDBI for the Committee that gave consideration to work plan reform options and rehabilitation bond reform options that would be progressed further through Working Groups.

Another paper prepared for the committee was a review of “Risk-based approvals assessments and Work Plans in Australian Jurisdictions”. It was agreed that due to the differences between the Extractive and Minerals industry, to separate out the Work Plan Working Group as shown below.

The bond working group initially consists of extractive and minerals industry representation. CMPA is also of the view that the Bond Reform Working Group should also be separated also into extractive and minerals industry.

The focus of all the working groups will initially be in the area that does not require legislative change, though this has not been ruled out.

WORK PLAN REFORM WORKING GROUP – EXTRACTIVE INDUSTRY

The Work Plan Reform Working Group has met once. Dr Elizabeth Gibson chaired the group which also included industry representatives included but not limited to Peter Barro (Barro Group), Garry Cranny (Dandy PreMix Quarries) and Basil Natoli (Bell, Cochrane & Associates). Consideration was given to the discussion paper “Work Plan Reform Proposals”.

The EDIC recommendation 19 “That the Victorian Government considers redirecting the regulatory focus of exploration, mining and extractive work plans towards outcomes and away from prescriptive conditions, in order to better manage risk and achieve socially, economically and environmentally sound outcomes.”

To which the Government responded that it will “Introduce changes to work plan requirements in the minerals regulations that are more risk based and less prescriptive, where such an approach is effective and practicable.”

The discussion paper summarised the issues faced by the industry that had previously been submitted by stakeholders such as:

• Less prescription and more outcomes focused.
• More input from proponents in standards and requirements.
• Work plans and planning permits – DSDBI should oversee the operational issues on site and the local government should oversee amenity and other offsite issues.
• A clear separation of approvals and compliance in DSDBI.
• Clarity from DSDBI around when work plan variations are required.

The discussion paper outlined relevant legislative reforms that are currently in train through a Bill introduced into Parliament on 29 October 2013.

Statutory time-frames – a time-frame of 28 days within which DSDBI must respond to applications for statutory endorsement of work plans and work plan variations.

Outcomes focused work plans – the Bill will better outline the purposes of the work plan , including identifying the risks that the operation may pose to the environment, members of the public, land, property or infrastructure in the vicinity of the operation, and specifying what the authority holder will do to minimise those risks as far as reasonably practicable.

Schedule 1 of Mineral resources (Sustainable Development) (Extractive Industries) Regulations 2010 will specify the requirement in the work plan to be more risk and outcomes based, in order to better identify and subsequently eliminate those risks including those to the environment, to any member of the public, land or property in the vicinity of work being completed.

The Working Group will initially focus on:

• Development of a risk based work plan application form.
• Develop guidance document/revise extractive work plan guideline in the context of risk management framework; industry will have flexibility to identify risk and controls; where risk is complex, those risk to be assessed properly. This will include regulators to develop expertise and industry to develop knowledge.

To this end a scope was developed for a Request for Quote to undertake this work that will take into consideration progress made by industry representatives. It is the intent of the Working Group to have this work completed by June 2014.

Rehabilitation Bond Working Group – Extractive and Minerals Industries

The Rehabilitation Bond Working Group – Extractive and Minerals Industry has met once. CMPA industry representatives are Dr Elizabeth Gibson and Mark Wagner (Conundrum Holdings). DSDBI developed a discussion paper “Rehabilitation Bond Reform Options”.

The EDIC response provides for short term measures to be implemented for immediate relief in the form of the cash bond system (up to $10,000), the start-up bond scheme and the late bond lodgment penalty. However these do not address all the issues raised by the extractive industry and summarised in the paper such as:

• Bank guarantees are onerous.
• Current system ties up capital.
• Bank guarantees have high transaction costs.
• No recognition of low failure rate.
• No reward for past good behavior.

The Working Group resolved to engage a consultant to develop and model the practical application based on a two-track bond model (predefined liability proportion model, http://www.
energyandresources.vic.gov.au/earth-resources/about-earthresources/legislation-and-regulation/discussion-papers/reviewof-the-mineral-resources-sustainable-development-act-1990/discussion-paper-no-5-rehabilitation-bonds) as a base.

This concept reflects the discount in bond offered to eligible operators. In the event of failure to meet certain performance criteria, the operator will revert back to the old model. This will be applied to a range of real site examples across extractive and mining sectors of varying scale and complexity. It will also include a return of bonds mechanism.

The CMPA tabled a paper “Why a review is necessary of Construction Materials Rehabilitation Bonds is Necessary?” which has been published in the last two additions of Sand & Stone (Issues70 and 71). A summary of this paper – “The Way Forward – Reform of the Rehabilitation Bond System” is given in this issue of Sand & Stone.

It was also agreed to review the bond calculator once a model for payments and returns is agreed. Due to the bond reform this will lead to changes on how bonds are determined, a hiatus on bond reviews (except for statutory triggers and high risk sites) is proposed until such time as the policy is determined and finalised. CMPA Members should have been notified in December 2013.

You must be logged in to post a comment Login