Improving rehabilitation and financial assurance outcomes in the resources sector

Progress on reforms

On 15 February 2018, the Honourable Jackie Trad MP, Deputy Premier, Treasurer and Minister for Aboriginal and Torres Strait Islander Partnerships, introduced the Mineral and Energy Resources (Financial Provisioning) Bill 2018 (the Bill) into the Queensland Legislative Assembly. In Report No. 6, published on 20 April 2018, the Economic and Governance Committee recommended the Bill be passed.

This marks a milestone in the financial assurance reform process for the resources sector.  Once enacted, the Bill will reduce financial risks to the State and achieve improved outcomes for the environment by establishing a financial provisioning scheme for the mineral and energy resources sector and implementing mining rehabilitation reforms.

The financial provisioning scheme will replace the current financial assurance requirements for environmental authorities for resource activities (authorities) and small scale mining tenures (SSMT) under the Environmental Protection Act 1994 (EP Act). The scheme will manage the financial risk to the State if the holder of an authority or a SSMT does not comply with their environmental management and rehabilitation obligations. The scheme is managed by a scheme manager.

The Bill also introduces new progressive rehabilitation and closure plan requirements for site-specific mining lease environmental authorities through amendments to the EP Act.

More details regarding the Mine Rehabilitation Reforms can be found on the Department of Environment and Science website – https://www.ehp.qld.gov.au/management/env-policy-legislation/mining-rehabilitation-reforms.html.

Draft Regulation and Scheme Manager Guidelines

Note: The Draft Regulation and Draft Scheme Manager Guidelines have been prepared in accordance with the Mineral and Energy Resources (Financial Provisioning) Bill 2018 and are released for the purpose of consultation.  A final version of the Regulation and Scheme Manager Guidelines is subject to the passage of the Bill by Parliament.

Draft Mineral and Energy Resources (Financial Provisioning) Regulation 2018 (Draft Regulation)

The Bill includes a regulation making power for various subject matters. The Draft Regulation will support the effective operation of the financial provisioning scheme, once the Bill is enacted, by:

  • setting a prescribed percentage as part of the formula to calculate the contribution to be paid to the scheme fund
  • defining a ‘prescribed insurer’ for issuing of insurance bonds as an approved form of surety
  • setting an assessment fee.

The Draft Regulation (supported by draft Explanatory Notes) is released for consultation. 

How to make a submission

Submissions can be made to the email address: financial.assurance@treasury.qld.gov.au.

Submissions close on: 9 July 2018

Draft Scheme Manager Guidelines

Under the Bill, the scheme manager must, for an authority with an estimated rehabilitation cost (ERC) amount equal to or more than $100,000:

  • make an allocation decision, allocating the authority to one of four risk categories – very low, low, moderate or high; and
  • determine whether the authority holder is to pay a contribution to the scheme fund or give a surety to the scheme manager.  

A holder of an authority with an ERC less than $100,000 is required to give a surety to the scheme manager in an amount equal to the ERC for the authority.

A holder of a SSMT is required to give a surety to the scheme manager in the amount prescribed under the EP Act.

The Bill enables the scheme manager to make guidelines about the operation of the scheme.

The draft scheme manager guidelines will support the effective operation of the financial provisioning scheme, once the Bill is enacted.

The following draft scheme manager guidelines are released for consultation:

The draft guideline Forming the Scheme Manager’s Opinion is based on the report Design of the Risk Assessment Process for the Financial Assurance Scheme.

The Risk Category Allocation Information Sheet will assist in understanding the risk category allocation framework under Part 3 of the Bill and how the draft scheme manager guidelines apply to this framework.

How to make a submission

Submissions can be made to the email address: financial.assurance@treasury.qld.gov.au.

Submissions close on: 23 July 2018

Achieving improved rehabilitation outcomes for Queensland mines

The Department of Natural Resources, Mines and Energy has released two discussion papers (see discussion papers open for consultation below) on improving outcomes for abandoned mines and other proposals to reduce the financial, safety and environmental risks for the state. Reform ideas include development of:

  • a monitoring and reporting regime for sites in care and maintenance
  • a change of control test to empower the government to assess the technical competency and financial capability of a new acquirer of an existing resource authority
  • a framework that allows the government to temporarily hold ownership of disclaimed resource authorities in order to facilitate a return to production by a new owner

Submissions can be made to financial.assurance@treasury.qld.gov.au and will close on 16 July 2018.

More information

For more information on the reforms, email the Financial Assurance Reform team financial.assurance@treasury.qld.gov.au.

The Queensland Government is working to ensure that reform of the current financial assurance arrangements for the resource sector protects the State’s finances while achieving the best balance between a viable resources sector and the environment.

The reform package proposes to deliver:

  • a higher level of environmental performance
  • rehabilitation investment in the State’s resources industry
  • better protection of the State’s financial interests.

Background

review of Queensland’s financial assurance framework (PDF 1,570 K) in November 2016 found that current resource sector financial assurance arrangements could be improved.

The review recommended a package of reforms to deliver positive environmental outcomes, improve rates of site rehabilitation, and ultimately reduce the amount of rehabilitation required at the end of a resource site’s life cycle.

The package of reforms includes:

  • reforming the current resource sector financial assurance framework
  • improving mine rehabilitation in Queensland
  • expanding the range of surety providers available for the provision of financial assurance
  • improved management of sites in care and maintenance
  • expansion of the abandoned mines program to improve management of legacy issues
  • review of existing approval conditions on the sale of resource assets
  • improved data analysis, information systems and governance framework
  • residual risk policy development.

More information on the review and its findings is available in the Review of Queensland’s financial assurance framework (PDF 1,570 K).

The Queensland Government provided in principle approval to implement the reforms outlined in the review. A project management office was established in Queensland Treasury with representatives from the Department of Environment and Science and the Department of Natural Resources, Mines and Energy to consult with stakeholders and progress implementation.

Risk assessment process

As part of the proposed package of reforms an assessment will be undertaken on individual resource environmental authority holders to determine the financial provisioning they will be required to provide under the proposed tailored solution. Please click here for a summary of the reforms and proposed assessment. Independent consultants KPMG and Australia Ratings were commissioned by the Government to assist with the design of the risk assessment process. Consultation was undertaken with peak industry bodies, individual companies, and environmental bodies. Findings have now been released in the report Design of the Risk Assessment Process for the Financial Assurance Scheme, available for stakeholder feedback. Please provide the feedback to the email address financial.assurance@treasury.qld.gov.au.

Discussion papers open for consultation Submission close date
There are currently no discussion papers open for consultation

Discussion papers closed Date closed
Financial Assurance Review – Providing Surety22 September 2017
Financial assurance framework for reform 15 June 2017
Better Mine Rehabilitation for Queensland 15 June 2017
Achieving improved rehabilitation for Queensland: other associated risks and proposed solutions 16 July 2018
Achieving improved rehabilitation for Queensland: addressing the state’s abandoned mines legacy 16 July 2018

Stakeholder consultation reports  
Consultation Report – Financial Assurance Framework Reform
Consultation Report – Better Mine Rehabilitation for Queensland
Consultation Report – Financial Assurance Framework – Providing Surety

Future discussion papers Expected publication*
Residual risk discussion paperThird Quarter 2018

*Publication date will be dependent on timing of Cabinet endorsement for release

Last updated: 15 June 2018