Government of Western AustraIia

Department of Mines and PetroIeum

Mineral Titles
Government of Western AustraIia
Department of Mines and PetroIeum
Environment
Government of Western AustraIia
Department of Mines and PetroIeum
Petroleum
Government of Western AustraIia
Department of Mines and PetroIeum
Mining Rehabilitation
Fund (MRF)
www.dmp.wa.gov.au
Questions & Answers
The Mining Rehabilitation Fund
(MRF) Model
1. Why do we need to move from the current mining
security bonds system to the new MRF model?
The principal objective of a mining securities system is to
ensure that suffcient funds are available to government to
rehabilitate mine sites in the event that operators do not
fulfl their mine rehabilitation and closure obligations.
Mining security bonds, otherwise known as environmental
bonds or unconditional performance bonds, were originally
introduced in the late 1980s as added assurance against
companies failing to adequately rehabilitate mine sites.
Whilst the mining security bonds system cover a proportion
of mine rehabilitation costs, the Government would need to
contribute the majority, and this is unsustainable. However,
mining operators have expressed concern that increasing
bonds to cover the full cost of rehabilitation would have a
fnancial impact on the mining sector.
The MRF will secure ongoing funding for the State to
rehabilitate abandoned mine sites in Western Australia, and
fund the cost of administration.
This model was chosen following extensive consultation
with industry, Government and conservation/community
stakeholders.
2. What are the benefts of the MRF?
The MRF enhances the States ongoing capacity to manage
and rehabilitate abandoned mines, leading to better
environmental and community safety outcomes.
3. How is the Mining Rehabilitation Fund (MRF) structured?
The Mining Rehabilitation Fund (MRF) is a special purpose
account under the Financial Management Act 2006. Most
holders of mining tenements under the Mining Act 1978 will
be required to pay a levy into the Fund, with the exception
of tenements covered by State Agreements, and tenements
with closure liability estimates below a threshold.
The levy will consist of annual Fund contributions,
calculated as a percentage likely initially to be 1% of
each tenements closure liability estimate. The closure
liability estimate for a tenement will be assessed in
accordance with a per-hectare levy calculator (currently
being developed).
4. What is the States current fnancial exposure to
abandoned mines?
It is estimated that the Governments current liability
for rehabilitating existing abandoned mines exceeds
$100 million.
In addition, there are around 300 sites currently on
care and maintenance (i.e. not operating, but where
companies still hold the tenements). A number of these
sites are likely to be abandoned over the next decade,
which would add to the governments liability.
5. What is happening with the existing security
bond policy?
The MRF legislation does not make any changes to the
Mining Act 1978, and environmental security bonds
can still be applied to any Mining Act tenements in
accordance with that Act.
The Ministerial Advisory Panel on Reforming
Environmental Regulation (MAP), which includes
representatives from industry, community and
government, will provide advice to the Minister by the
end of 2012 on the development and implementation of
compliance measures in the environmental regulatory
framework within the mining portfolio. This will include
advice on the security bond policy. Any changes
to environmental securities or other compliance
mechanisms will be undertaken in a separate
legislative package.
www.dmp.wa.gov.au
Consultation
6. What consultation has been undertaken?
An extensive and ongoing consultation program
commenced in mid-2010. This included consultation
with industry peak bodies, community/conservation
stakeholders, and other Government agencies.
Stakeholders have representatives on Ministerial Advisory
Panel on Reforming Environmental Regulation, which is
providing advice to the Minister on the MRF as part of a
wider environmental reform program.
Further consultation and regional briefngs will be
undertaken regarding the MRF regulations and the
reform process.
Who is included in the MRF?
7. Who is liable to pay the MRF levy?
It will be a legal requirement for most tenement holders
operating on Mining Act tenure to provide annual levy
contributions to the MRF. Penalties apply for non-payment.
The tenement holder who holds the mining tenement
on the due date for data submission is liable to pay the
levy for that year. This liability and any penalty amount
accruing because of late payment, remains with that
tenement holder even if the tenement is transferred after
the due date.
If a tenement is transferred after the due date,
adjustments for levy payment are a matter for the parties
to the transaction to negotiate.
8. Will State Agreements be included in the MRF levy
system?
Mining tenements held by State Agreement proponents
can be included in the levy system, if they are specifcally
identifed in a Schedule to the MRF Regulations. This will
cover both existing and new State Agreements.
Existing State Agreement tenements will only be included
in the Schedule to the MRF Regulations following close
consideration of the effects of the applicable State
Agreement Act, consultation with the proponents and
stakeholders, and Government approval of their inclusion.
9. Will uranium mines be included in the MRF?
Like all other mining operations, uranium mines will be
included in the MRF.
10. Will care and maintenance mine sites be included in
the MRF?
Holders of tenements that are in care and maintenance
will be required to pay into the MRF in the same way as
operational sites.
11. Will petroleum and geothermal energy activities be
included in the MRF?
Petroleum and geothermal energy activities are not
included in the MRF as they do not operate on Mining Act
titles. The Petroleum Division of the Department of Mines
and Petroleum will continue to follow existing processes
when dealing with environmental rehabilitation for
petroleum and geothermal energy activities.
12. How does the MRF link to obligations under the
Contaminated Sites Act?
The obligation to pay levies into the Fund is independent
of any obligations under the Contaminated Sites Act 2003
(CSA). Classifcation of sites as contaminated under
the CSA is a matter for the CEO of the Department of
Environment and Conservation, and any responsibility
for remediating sites arising under the CSA is in addition
to environmental responsibilities arising because of
mining approvals or tenement conditions. The extent of
any responsibility under the CSA which can extend to
directors of insolvent bodies corporate would be a factor
taken into consideration when making decisions about
declaring land to be an abandoned mine or expending Fund
money on the rehabilitation of an abandoned mine
How the MRF will work
13. What is the Mining Rehabilitation Advisory Panel?
A Mining Rehabilitation Advisory Panel (MRAP) will be
established under the MRF legislation. This statutory
panel will provide advice to the Director General of the
Department of Mines and Petroleum on MRF matters. The
Ministerial Advisory Panel on Reforming Environmental
Regulation will provide advice as to the role and constitution
of MRAP. These details will be formalised in regulations to
be made under the new MRF Act.
14. How will the levy amount be calculated?
Tenement holders will be required to submit data to the
department on the number of hectares of disturbed land
in each tenement. This is then assessed against criteria,
currently under development, which approximate the cost
in dollars per hectare to rehabilitate the disturbed land
to provide an equitable basis for levy calculation. These
amounts are then totalled to determine the closure
liability estimate.
The levy will be charged annually at a percentage, likely
initially to be set at 1% of the closure liability estimate.
Mining tenements with a closure liability estimate below
a threshold, likely initially to be set at $20,000, will not be
charged a levy.
Per-hectare dollar amounts, the levy percentage, and the
threshold will be set in regulations to be made under the
new Act and will be the subject of further consultation.
15. Will the MRF be tenement or project based?
Contributions to the MRF will be on a per tenement basis.
However, mining tenements may include more than one
mining project, and mining projects may also cover more
than one tenement.
16. When will the annual MRF levy commence?
Subject to parliamentary processes, it is anticipated that the
MRF levy will commence from 1 July 2013.
All tenement holders levy liabilities will be assessed
annually, as of the due date for data, and Notices of
Assessment will be sent, specifying the date on which the
levy payment is due. The due date for payment will not be
less than 30 days from the date of the Notice
of Assessment.
www.dmp.wa.gov.au
17. How much money will the MRF collect?
While the levy calculator is still being developed, it is
estimated that the levy contributions will collect between
$33 million and $45 million during 2013/14. By 2015/16,
the capital component of the Fund will increase to
between $102 million and $161 million.
The MRF account balance and levy percentage will
be monitored to ensure that the Fund is appropriately
managed to meet current and emerging rehabilitation
liabilities, as well as administrative costs, without
accruing excessive surplus funds.
18. What can MRF money be spent on?
As the MRF is a special purpose account under the under
the Financial Management Act 2006, funds must be
spent in accordance with the purpose stated in the MRF
legislation.
The principal amount will only be able to be spent on
rehabilitating abandoned mines, and affected land, where
payments have been, or should have been, made into
the Fund.
Interest earned on the principal amount will be able to be
spent on:
rehabilitatinglandaffectedasaresultofmining
operations on mine sites abandoned before or
after the establishment of the Fund;
administeringtheFund,includingenforcingthe
new legislation; and
fundingprogramsorinformationrelatingtomine
site rehabilitation.
19. Can the MRF be spent on rehabilitation work outside
the boundary of declared abandoned mine land?
Yes. The effect of an abandoned facility such as a
tailings dam on the environment may extend beyond the
boundaries of the abandoned mine, and the legislation
provides for expenditure from the Fund to rehabilitate
affected land.
20. How will MRF administration be staffed and funded
within the department?
Additional staff will be employed by the department
as required to manage administration of the MRF. A
proportion of existing staff resources from support
areas within the department will also be used in the
administration and auditing of the MRF.
MRF administration costs will be fully funded out of the
interest earned on the Fund.
21. Will the MRF cause additional administrative burdens
upon industry?
There will be a minimal administrative impact. However,
information required for levy assessments will be
closely related to information already submitted by
many operators in Annual Environmental Reports to the
department.
22. How and when does data need to be submitted?
Tenement holders will be able to submit data to
the department electronically via an online
lodgement facility.
Data will need to be entered into the system annually by
a due date which will be set in the MRF regulations. Levy
data can be amended or updated at any time prior to the
due date.
Tenement holders who are required to submit an Annual
Environmental Report (AER) to the department may submit
levy data with their AER, provided that the levy data is
received by the due date.
23. What if the data submitted is incorrect or late?
If a tenement holder realises that incorrect data has been
lodged prior to the due date for data, the tenement holder
can amend the data themselves.
The Act will provide several mechanisms for correcting an
error recognised after the due date, including reassessment
of a levy amount on the CEOs initiative, lodgement of
objections by tenement holders, and a SAT review for a
tenement holder unsatisfed with the determination of
an objection.
It will be an offence to knowingly provide false or
misleading information.
It will be an offence not to submit information by the
prescribed date. An infringement notice may be issued and
penalties will apply. The CEO may estimate the levy amount,
to enable a Notice of Assessment to be issued.
The CEO will have the power under the legislation to
require a person to provide information or documents or
answer questions.
24. How long do we need to keep records for the MRF levy?
Two years (for MRF purposes only; other record-keeping
requirements may apply). This timeframe is consistent with
similar legislation administered by
the department.
Levy Payment
25. What payment types will be accepted (e.g. EFT, cheque,
credit card)?
The department can only accept payment by EFT (Electronic
Funds Transfer) or cheque.
26. Will part payments be accepted?
Only full payment of the MRF levy can be accepted. Part
payments will be treated as late payments.
27. How long do tenement holders have to pay the Notice of
Assessment?
The due date for payment will be specifed in the Notice of
Assessment and will not be less than 30 days after the date
of the Notice.
The legislation does not include any provision for extensions
of payment time.
www.dmp.wa.gov.au
DMPAUG12_122046
28. Are there penalties for late payment of the Notice
of Assessment?
Late payments will incur penalty interest (simple interest,
not compounding) at a rate to be set in the regulations,
likely to be 20% per annum.
The department will also have the capacity to recover
unpaid levies and penalty amounts in court.
Penalties will only be waived if the CEO considers that
there are good reasons for doing so.
29. Can the MRF levy be waived?
There is no provision to waive the MRF levy.
30. What if the Notice of Assessment is incorrect?
Formal objections can only be made to the CEO upon
receipt of a levy Notice of Assessment or Notice of
Reassessment, through the objections process specifed
in the MRF levy legislation. When an objection is lodged,
the CEO will review the classifcation and advise the
outcome of this review.
If a person is still dissatisfed with the CEOs decision on
an objection, they may apply to the State Administrative
Tribunal for a review of the decision.
31. Can we pay multiple Notices of Assessment with one
cheque/EFT payment?
It is preferred that Notices of Assessment are paid
individually. There could be administrative processing
delays and issues if clear and specifc instructions are
not provided.
32. Does GST apply?
GST does not apply to the MRF levy.
Abandoned Mines & Rehabilitation
33. What is an abandoned mine, and what are the
declaration criteria?
Before the CEO can declare land to be an abandoned
mine, the CEO must be satisfed that mining operations
have been carried out on the land and have ceased.
Criteria for declaration of an abandoned mine are yet
to be determined, and will be applied fexibly on a case-
by-case basis. However, consideration is likely to
include matters such as the value of any remaining
resources, heritage and scientifc value, safety and
environmental issues.
An abandoned mine may occupy part or all of an existing
mining tenement or may be on land that is no longer, or
(in the case of some pre-1904 Act mining sites) never has
been, the subject of a tenement.
Declaration of land as an abandoned mine means only
that money can be spent from the Fund to rehabilitate the
abandoned mine or affected land. It does not guarantee
that all or part of the lands rehabilitation
will be funded.
34. How are abandoned mines prioritised for rehabilitation?
The process for prioritisation of abandoned mines is yet
to be determined. However, it is likely to consider similar
criteria to those used to declare an abandoned mine
(see number 33).
35. Who will be undertaking the mine site rehabilitation?
It is intended that the actual task of rehabilitation will be
undertaken by contractors.
The department will be responsible for managing and
monitoring the rehabilitation of sites declared as abandoned
mines, acting in accordance with procurement guidelines
and Government contracting best practice.
36. How is the department going to ensure mining
companies rehabilitate their sites?
The department is currently working with the Ministerial
Advisory Panel on Reforming Environmental Regulation
on appropriate compliance measures and penalties to
deter unlawful behaviour, including abandoning mine sites
without meeting rehabilitation and closure obligations.
Unconditional performance bonds can still be applied at any
time.
The department recognises that an effective and robust
compliance system is critical for maintaining community,
industry and government confdence in the
regulation of mining, including abandoned mines
and mine site rehabilitation.
37. How long will it take to rehabilitate all abandoned mine
sites?
Mine site rehabilitation in Western Australia will be an
ongoing process.
Auditing and Transparency
38. What reporting and transparency programs are being
implemented for the administration of the MRF?
The Fund will be subject to public scrutiny as part of the
departments statutory reporting requirements. It will also
be subject to audit by the Offce of the Auditor General.
39. How will you ensure that mining companies submit
accurate data?
The department will audit selected sites and take
enforcement action for any false or misleading submissions.
40. What level of public reporting will occur on the MRF?
Industry, community and Government stakeholders are
currently being consulted on the transparent reporting
requirements for the MRF, via the Ministerial Advisory Panel
on Reforming Environmental Regulation.
The Fund will also be subject to public scrutiny as part of
the departments statutory reporting requirements.