Amendments to Victorian mineral resources legislation – what you need to know

Articles Written by Peter Rose (Partner), Christian Jones
bright coloured stone wall

The Mineral Resources (Sustainable Development) Amendment Bill 2023 (Amendment Bill) recently passed the Victorian Parliament and now awaits Proclamation. The Amendment Bill will rename the Mineral Resources (Sustainable Development) Act 1990 (Vic) (Principal Act) as the Mineral Resources and Extractive Industries Act 1990 (Vic) to reflect the broader regulatory framework encompassed by the Act. The Amendment Bill establishes a modern, general duty and risk tiered regulatory framework for mineral and extractive industries, and sets out the transitional arrangements to move towards that approach from the current work plan approval process.[1] It will have a far-reaching impact on the mining, prospecting, exploration and extractive industries in Victoria.

The key changes effected by the Amendment Bill include:

  • A new statutory duty to eliminate or minimise the risk of harm to the environment, public, land, property and infrastructure
  • Companies and individuals undertaking mining, prospecting, exploration and extractive operations in Victoria must apply for a new risk tiered licence or work authority
  • The removal of the lengthy work plan approval process, while retaining the requirements relating to rehabilitation plans
  • Harsher penalties for non-compliance
  • Greater community influence on awarding licences and work authorities

Statutory duty to eliminate or minimise the risk of harm

Clause 14 of the Amendment Bill inserts into the Principal Act a new Part 1A, which establishes a duty-based framework for the elimination or minimisation of the risk of harm.[2] The duty is imposed on any holder of a licence or work authority under the Principal Act. These duty holders must, as far as reasonably practicable, eliminate or minimise any risk posed to the environment, to any member of the public or to land, property or infrastructure by exploration, extractive industry, mining or rehabilitation of land or any related activity carried out by or on behalf of the duty holder. The term ‘reasonably practicable’ is not defined in the Amendment Bill and we are unlikely to receive guidance on this issue until it is litigated.

Companies or individuals seeking to engage in operations pursuant to the Principal Act will now be under an obligation to determine the potential risks flowing from those operations. Further to this obligation, duty holders must assess:[3]

  • the likelihood of the risk eventuating;
  • the severity of the harm that may result should the risk eventuate;
  • what they know or ought reasonably to know about the risk and any methods of eliminating or minimising the risk;
  • the availability and suitability of any methods of eliminating or minimising the risk; and
  • the cost of eliminating or minimising the risk.

A duty holder will be in breach of its obligation to eliminate or minimise risk if it fails to do any of the following:

  • use and maintain plant, equipment, processes and systems in a way which eliminates or reduces any risk posed by such activities;
  • use and maintain systems to identify, assess and control risks that may arise in connection with the activity and to evaluate the effectiveness of those systems on an ongoing basis;
  • use and maintain adequate systems to ensure that if a risk eventuates, its harmful effects are minimised;
  • ensure that all substances related to the activity (including stone, minerals and waste) are handled, stored, used and transported in a manner that minimises the risk posed by those substances; or
  • provide persons engaging in the activity with the information, instruction, supervision and training necessary to enable those persons to eliminate or minimise the risk posed by the activity.

It is specifically provided that a duty holder will contravene its duty if it fails to carry out its activities in accordance with any Code of Compliance, prescribed standard or condition of a licence or work authority. Any breach of duty to eliminate or minimise the risk of harm will be considered an indictable offence. Corporations will be liable for 10,000 penalty units (equivalent to approximately $1.93 million). All other persons will be liable for 2,000 penalty units (equivalent to approximately $385,000).[4] There is little guidance as to possible defences to an offence under the Amendment Bill.

New application process for licences and work authorities

Any entity which currently holds a licence or work authority under the Principal Act will be required to undergo a new risk assessment process conducted by the Department Head prior to the commencement of the new regime.[5]

The new licencing and work authority framework means that companies and individuals will be assessed on the level of risk their proposed operations pose to the environment, public, land and infrastructure. This reflects a nationwide approach to impose stricter licensing requirements in relation to riskier exploration, mining, and extractive operations.

There are three tiers of risk which can apply to a licence or work authority: lower risk; moderate risk and higher risk. The risk level applicable to an applicant’s licence will dictate the kind of work which can be undertaken as well as the applicant’s responsibility to eliminate or minimise risk. There will also be implications for the rehabilitation plan approved for the applicant’s operations. The decision on which risk category an applicant’s operations will fall into will determine the nature and extent of the regulation that will apply to the operations. This is designed to create greater consistency and increase public confidence in the mining, prospecting, exploration and extractive industries in Victoria.

Clause 15 of the Amendment Bill inserts a new Division 10 into Part 2 of the Principal Act which sets out the requirements for companies and individuals seeking to obtain a licence or work authority.[6] Applicants must first make a self-assessment of the risk level posed to the environment, members of the public, land, property and infrastructure (under section 38AAF for licence and 77IA for an extractive industry work authority).[7] If the applicant assesses the level of risk for their mining or prospecting operations as moderate risk or high risk of harm, they must also provide a rehabilitation plan to be approved by the Department Head.[8] Following the self-assessment the applicant must make an application to the Department, based on which the Department Head will then make a final determination as to the risk level to attach to the licence or work authority (section 38AAG for mining and prospecting operations and section 77IB for extractive industries).[9] The Department Head may request further information from the applicant or consult public sector bodies to assist with determining the level of the risk associated with the proposed operations. This new framework replaces the work plan approval process currently contained in the Principal Act. Under transitional provisions contained in the Amendment Bill, current holders of licences or work authorities under the Principal Act will be required to engage in a risk assessment process to be conducted by the Department Head prior to the commencement of the new regime.

Lower risk, moderate risk and higher risk operations must all comply with Codes of Compliance, which are yet to be formulated. Moderate and higher risk operations will also have to comply with the prescribed standards, which are also yet to be formulated. Furthermore, higher risk operations will also be required to comply any individualised conditions which have been placed on their licence or work authority. It should be noted that the Amendment Bill repeals the provisions of the Principal Act relating to ‘low impact exploration’ – it would appear that, to the extent that such activities constitute lower risk operations, they are to be regulated in future by Codes of Compliance.

The Amendment Bill allows holders of licences and work authorities to seek a review of the risk tier applicable to their licence or work authority where they reasonably consider that their operations have changed, or are proposed to change, so as to reduce the risk posed by the operations. The Amendment Bill also contains provisions which oblige holders to notify the Department Head of material changes, or proposed material changes, to work under licences or work authorities, or any change in circumstances, which is likely to increase the risk posed by that work.

Work plan approval process repealed in favour of rehabilitation plans

A key change effected by the Amendment Bill is the removal from the Principal Act of the work plan approval process. In its place, the holder of a mining or prospecting licence or extractive industry work authority must, prior to undertaking new operations, submit a rehabilitation plan detailing how the land on which operations are taking place will be rehabilitated if the operations are self-assessed or determined by the Departmental Head to be of moderate risk or higher risk.[10] There is no requirement to submit a rehabilitation plan if the operations are of lower risk; in such circumstances rehabilitation is to be undertaken in accordance with the applicable Code of Compliance. Minor variations to a rehabilitation plan will not require approval from the Department Head, unless the proposed changes to the rehabilitation plan may significantly increase the risk of harm to the environment, members of the public, or to land, property or infrastructure.[11]

Part 6 of the Amendment Bill imposes a duty on licence and work authority holders to rehabilitate the land on which they operate in accordance with an approved rehabilitation plan. Lower risk operations will be under an obligation to rehabilitate the land in accordance with a Code of Compliance to be issued by the Minister.[12]

Failure to comply with the duty to rehabilitate land will attract harsher penalties once the Amendment Bill takes effect. Corporations will be liable for 1,000 penalty units (approximately $192,000) and for any other person the applicable penalty will be 200 penalty units (approximately $39,000).

Other changes

Another significant change under the Amendment Bill is the removal of the lengthy and complex requirement under Part 6B of the Principal Act to obtain statutory endorsement of a work plan in respect of which a planning permit under the Planning and Environment Act 1987 is currently required. The Amendment Bill provides for Part 6B of the Principal Act to be repealed.[13] Upon commencement of the Amendment Bill, licence and work authority holders will be able to seek planning permission as part of the approvals process for operations, rather than needing to obtain a statutory endorsement of an approved work plan from the Department Head. This change is intended to streamline the process of commencing work under a licence or work authority. However, this change is likely to overwhelm planning departments, which may in turn delay the process of gaining approval to commence mining, exploration or extraction operations.   

Licensees and holders of work authorities will be able to apply to VCAT for a review of decisions made by the Department Head in relation to rehabilitation plans or determinations of the risk tier allocated to the licence or work authority.

Greater community influence

The Explanatory Memorandum for the Amendment Bill highlights that for the Bill to be effectively implemented, comprehensive stakeholder engagement will be required.[14] It states that engaging with industry and community representatives as well as Traditional Owner groups will be required as part of formulating Codes of Compliance, prescribed standards, regulations and Ministerial guidelines. This Parliamentary aspiration has the capacity to place a greater burden on companies and individuals given that the Department Head will make decisions based on the standards which are yet to be prescribed. The standards will govern the risk tier allocated to a licence or work authority as well as the approval of a rehabilitation plan. Until these standards are known, it remains to be seen how much of a burden will be placed on companies under the new regime governing the mining, prospecting, exploration and extractive industries.

Steps to implementation

The provisions of the Amendment Bill will come into operation on 1 July 2027 unless an earlier commencement date is proclaimed. This will allow time for the development of Codes of Compliance and other subordinate instruments that are contemplated by the Amendment Bill. Pursuant to transitional provisions contained in the Amendment Bill, the Department Head is required to determine the risk tier applicable to existing licence and work authority holders (as well as former holders that have not fulfilled their rehabilitation obligations) prior to commencement of the new regime.

 

[1] Mineral Resources (Sustainable Development) Amendment Bill 2023 Explanatory Memorandum, page 1.

[2] Mineral Resources (Sustainable Development) Amendment Bill 2023, Part 4.

[3] Ibid, s 12C(3).

[4] Ibid, s 12D.

[5] Ibid, Schedule 10.

[6] Ibid, Division 10 Part 2.

[7] Ibid, ss 38AAF and 77IA.

[8] Ibid, s 42(1).

[9] Ibid, ss 38AAg and 71IB.

[10] Ibid, ss 40 and 78.

[11] Ibid, ss 41(1) and 77H.

[12] Ibid, 12H.

[13] Ibid, Clause 85.

[14] Mineral Resources (Sustainable Development) Amendment Bill 2023 Explanatory Memorandum, page 2.

Important Disclaimer: The material contained in this article is comment of a general nature only and is not and nor is it intended to be advice on any specific professional matter. In that the effectiveness or accuracy of any professional advice depends upon the particular circumstances of each case, neither the firm nor any individual author accepts any responsibility whatsoever for any acts or omissions resulting from reliance upon the content of any articles. Before acting on the basis of any material contained in this publication, we recommend that you consult your professional adviser. Liability limited by a scheme approved under Professional Standards Legislation (Australia-wide except in Tasmania).

For more information, please contact

Related insights Read more insight

Russian sanctions: supervening illegality and impact on contracts with Russian interests

In the first case of its kind in Australia, the Federal Court of Australia held that Rio Tinto-backed Queensland Alumina Ltd was correct in interpreting and applying the sanctions imposed by the...

More
Mandatory climate-related financial disclosure – exposure draft legislation released for comment

Treasury has released an exposure draft of its CRFD legislation for public comment. This is the next step towards introducing mandatory and standardised CRFD for medium and large listed and...

More
Climate-related financial disclosure Q&A on exposure draft legislation

This short Q&A explains what is in the 12 January 2024 exposure draft legislation.

More