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The Personal Property Securities Act 2009 (Cth) (PPSA) commenced operation at the start of 2012, a year when mining investment was generating a significant amount of the growth in Australia’s economy.
From 1 January 2017, all new Mining Proposals must be submitted in accordance with the revised 2016 Guidelines for Mining Proposals (New Guidelines) which replace the 2006 Guidelines for Mining Proposals (Old Guidelines) issued by the Department of Mines and Petroleum (DMP). The New Guidelines are an essential component of the DMP’s environmental reform program which aims to establish a risk and outcome-based regulatory framework.
Key issues that mining companies need to be aware of are:
Further details explaining when the New Guidelines apply and the key changes they bring about are set out below.
The New Guidelines apply to both new and existing operations to some extent.
The New Guidelines apply to any Mining Proposal submitted to the DMP for assessment and approval of operations which are not subject to any existing approvals.
For operations approved prior to 1 January 2017, there is a transition period of 6 years to re-submit a Mining Proposal in accordance with the New Guidelines. During that period, any existing projects that require a Mining Proposal to be submitted due to an expansion or alteration will have the option to use either the New Guidelines or the Old Guidelines. In circumstances where major changes are proposed, the DMP ‘strongly encourages’ companies to submit a Mining Proposal in accordance with the New Guidelines.
No new baseline data is required when re-submitting the Mining Proposal in accordance with the New Guidelines unless there is an expansion or alteration to the operations or the lack of the baseline data has been identified as a gap in an approved Mine Closure Plan.
The key change is that the New Guidelines have moved to an “activity-based” approval rather than the previous method of approving a Mining Proposal document and then monitoring compliance against that document. The New Guidelines provide the following structure for a Mining Proposal:
[Source: Department of Mines and Petroleum – Guidelines for Mining Proposals in Western Australia April 2016]
The Environmental Group Site Details, Activity Details and Environmental Outcomes and Reporting sections of the Mining Proposal (shown in the dark blue boxes) are the fixed activities and outcomes that will be approved. As a result, these cannot be updated without notification to, or approval of, the DMP. The other sections are information that is provided in the Mining Proposal to assist the DMP in making a decision regarding approval.
Consistent with this new structure, the New Guidelines have introduced new key terms:
The New Guidelines make the transition to the ‘One Mining Proposal’ model. This means that each mine site will have only one Mining Proposal and this Mining Proposal will be updated over time as necessary. This will minimise the amount of documentation required when compared to the Old Guidelines which required new documentation for each expanding activity. This means that the Environmental Group Site Details, Activity Details and Environmental Outcomes and Reporting sections of the Mining Proposal will need to be sufficiently flexible to allow for long term operations with limited amendments, as the DMP approval process (including any amendment) may be time consuming.
The DMP has recommended that companies work towards compiling their existing approved Mining Proposals into one Mining Proposal document during the six year transition period.
The New Guidelines allow for increased flexibility as to the location of mining activities. This flexibility will be facilitated through a Disturbance Envelope to be identified within the Environmental Group Site, providing for a maximum area within which the activities will be located. All areas included in the Disturbance Envelope will need to be considered in undertaking the risk assessment and determining the environmental outcomes to be set out in the Mining Proposal.
This will bring DMP’s practice in relation to Mining Approvals in line with the established Environmental Protection Act practice of having a ‘hard’ maximum disturbance envelope with flexibility of location of that envelope.
As a result of this transition to a ‘One Mining Proposal’ model, companies will be required to outline their Environmental Management Systems in the Mining Proposal. The outline will need to be comprehensive enough so as to assure the DMP that an appropriate system will be implemented and it can be demonstrated that environmental harm and risks are being managed and minimised.
In its recent public workshops the DMP has foreshadowed that they are inclined to replace the current practice of including a tenement condition that mining be undertaken only in accordance with an approved Mining Proposal with a system of conditions based on the outcomes identified in the Mining Proposal.
This will potentially mean that mining conditions will be directed to the outcomes to which miners are committed to under their Mining Proposal, which may be more difficult to amend than currently. That is, one can currently update, for example, the scope of works in a Mining Proposal by obtaining an approval of an amended or supplementary Mining Proposal. In the future, the process of amendment may also require the amendment of tenement conditions, which may be the subject of more comprehensive DMP consideration.
Further, in terms of compliance risk, any outcome based conditions need to be negotiated carefully to ensure that there is appropriate management of risk, given breach of an outcome that is embedded as a tenement condition could conceivably result in termination of the relevant tenement (and consequent triggering of rehabilitation obligations).
In light of the key changes brought about by the New Guidelines, prior to submitting a Mining Proposal, mining companies must consider carefully the environmental outcomes it commits to as these are likely to be applicable for the life of the mine, and will potentially become conditions of the mining tenement in question.