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Even once a quarry is active after planning and environmental approvals, mining lease compliance presents a new lot of challenges.
Even once a quarry is active after planning and environmental approvals, mining lease compliance presents a new lot of challenges.

A broader view of compliance obligations

Compliance never stops in the quarrying industry. As Simon Ball explains, even when operators have satisfied their planning and environmental approvals, there are numerous, ongoing compliance issues that require attention.

Increasing community expectations about environmental impacts are driving greater scrutiny of quarry operations.

In particular, efforts are being directed towards querying whether quarry operations are being managed in compliance with the statutory approvals that form the basis of their licence to operate.

Typically, people tend to focus squarely on planning and environmental approvals when considering their compliance obligations. Such an approach will not be sufficient for modern quarry operators and may subject their operations to unaccounted areas of risk.

Instead, quarry operators need to take a broader view of their compliance obligations and ensure they turn their attention towards the other types of approvals that can cause them compliance issues. It is imperative that quarry operators realise these regulations are dynamic and are located in a constantly changing space that is trending towards ever increasing compliance obligations.

When compliance obligations change, the result is often a significant transformation in what is expected from quarry operators, even in respect of continuing to run operations. We outline an example of such a change below, where legislative amendments in New South Wales had a consequential impact on certain quarry operators.

Mining lease conundrum

In November 2011 the NSW Mining Act 1992 (Mining Act) was amended to require quarry operators to obtain a mining lease (as the appropriate approval) for all minerals, even where such minerals are privately owned (see definition in boxout).

Prior to this date, quarry operators in NSW, when quarrying privately owned resources, effectively did not need a mining lease under the Mining Act to satisfy their compliance obligations.

This legislative change provided accommodation in the form of a 12-month transition period, to allow affected parties to obtain the required mining lease.

It would appear that in some corners of the industry, there was a lack of understanding of these new obligations. Often confusion arose because the minerals subject to mining operations were privately owned, and in many instances undertaken in campaign mining operations. The continued operation of these habitual campaigns illustrated that, in many cases, quarry operators did not understand the new compliance obligations instituted throughout NSW in 2011.

"An exploration licence can be obtained over land that allows one to go on and explore for minerals."

The quarrying industry was, for the most part, affected by the obligation for mining leases in respect of the following primary materials: clay/shoal, kaolin, quartzite, marine aggregate, dimension stone and structural clay.

The Mining Act provides for various authorisations in NSW; the primary ones for the purposes of a quarry operation are exploration licences and mining leases.

An exploration licence provides the holder with a right to prospect and test for the mineral bearing qualities of the land subject to it. This is distinguished from a mining lease, which allows and permits the person who holds it to mine and prospect on the land subject to it.

The Mining Act makes it illegal to either prospect or mine for minerals listed in the Mining Act without such an authority. To do so constitutes a criminal offence under NSW law and carries significant penalties.

In addition, the Mining Act provides for extensive compliance powers that the regulator can exercise when it suspects or has evidence of an operator in breach of its compliance obligations. These powers include stop work orders and prohibition notices, and it is likely these could, if triggered in relation to an operation that’s not being carried out in compliance with it, stop the operation from proceeding.

It is clear that from a practical perspective, the activation of compliance powers, such as stop work orders, could have significant commercial ramifications on quarry operations while the compliance issue is resolved and the required exploration licence or mining lease obtained.

There are some upsides to quarrying a material that is classified as a mineral for the purposes of the Mining Act.

One advantage is that an exploration licence can be obtained over land that allows one to go on and explore for minerals (in accordance with an access agreement with the landholder or determined by the Land and Environment Court).

Another key factor of which the quarrying industry needs to be aware is that if a mining lease is obtained, there are numerous conditions that will attach to it. The mining lease conditions will constitute another level of compliance that quarry operators must be aware of, understand and comply with.

As such, it is important for quarry operators to be fully aware of their compliance obligations and ensure their operations are managed and undertaken in accordance with them.

Privately owned minerals


A privately owned mineral is one that has been retained by the owner of the land at the grant of the estate in fee simple.

To determine whether a mineral is privately owned requires one to obtain the original grant of estate in fee simple for the relevant lot of land and to examine the exact wording of that title (or the relevant legislation in force at the time when such a grant was made).

There have been numerous changes in the common wording and applicable legislation in this area, so it is important that people, especially quarry operators, check this carefully. As an example, very early grants of estate in fee simple included the phrase “all minerals and natural materials that may be of use to the colony”, and this wording evolved through to various Crown Lands Acts with specific definitions of what a mineral is. Such definitions may differ from the definition of mineral in the relevant mining legislation.

While there is now a mandate for quarry operators to hold a mining lease in NSW – irrespective of whether the minerals listed in the Mining Act are privately owned – it is important to note that if the minerals are privately owned, only one-eighth of the applicable royalty needs to be paid.

 












ABOUT THE AUTHOR
Simon Ball

Simon Ball is a partner at Minter Ellison, Sydney.









Sunday, 19 August, 2018 06:16am
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