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Rehabilitation Bonds

By on August 29, 2024

DR ELIZABETH GIBSON, CMPA General Manager

As all are well aware the rehabilitation bond value expelled by the Earth Resources Regulator (ERR) calculator is of such orders of magnitude greater than the original bond that, generally, it has the potential to impact the financial viability of the quarry. In contrast, the Victorian Auditor-Generals Office Rehabilitating Mines Report 2020 indicated that there was a contingent liability of $361 million to the Victorian Government across mines and quarries. This equates to a 44% increase in the rehabilitation bond. Quarries have a much different and lower risk profile than mines so the percentage increase for quarries is expected to be lower.

An in-person meeting was held in East Melbourne on Tuesday 25 June 2024 with the Minister for Energy and Resources, The Hon. Lily D’Ambrosio MP; Jack Buksh (Minister’s Senior Adviser), Chris Webb (Executive Director ERR); Jason Comben (Chairperson CMPA); Sarah Andrew (Secretary CMPA) and Dr Elizabeth Gibson (General Manager CMPA). It was acknowledged by ERR that the risk of default on rehabilitation was very low in the extractive industry. However, concerns were held by ERR that if the site is deserted by the work authority holder, then there is the potential likelihood for:
• Public safety issues;
• Sterilisation of land for future use.

This assumes that the Minister holds 100% of the liability which the CMPA argues is not the case especially on private land.

As discussed at the meeting a commitment was made by the Minister for Resources Victoria to:
• Provide a flexible approach to rehabilitation bond reassessments;
• Consideration of hardship cases where appropriate;

• Independent review mechanism to be created by 30 June 2024;
• 5 year rolling reassessment of rehabilitation bonds.

At the meeting it was agreed that ERR would hold a workshop (held 24 July 2024, Kilmore) with CMPA to explore mechanisms for rehabilitation bond offsets (note that CMPA believes that participation by Earth Resources Policy and Programs would have been of benefit):

  1. The rehabilitation bond is not required in legislation to be 100% of the liability;
  2. Standardise the landowner’s expectations at Work Authority surrender;
  3. Remaining resource value (figures are already required of the extractive industry in legislation and published by ERR annually);
  4. Value of land as per council rates notice (note the Victorian Valuer General already has procedures for valuing quarry sites);
  5. Potential for collective rehabilitation bond for multiple sites;
  6. Simplify the mechanism by which rehabilitation plans may be updated.

Option 3 (remaining resources) and Option 4 (land value) will be explored by Earth Resources Policy and Programs to determine the feasibility by 31 August 2024.

The CMPA is not debating that there should be no rehabilitation bonds, it is arguing for them to be fair, just and reasonable.

This will enable a vibrant extractive industry benefitting all Victorians going forward.

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