Improving rehabilitation and financial assurance outcomes in the resources sector

Progress on reforms

The Mineral and Energy Resources (Financial Provisioning) Act 2018 (the Act) commenced on 1 April 2019. The Act replaces previous financial assurance requirements under the Environmental Protection Act 1994 (EP Act) with the Financial Provisioning Scheme (the Scheme).

The Act also amended the Environmental Protection Act 1994 (EP Act) to require mining companies to develop Progressive Rehabilitation and Closure Plans. Those reforms will commence later in 2019.  Information on the rehabilitation reforms can be found on the Department of Environment and Science website.

Commencement of the Scheme achieves the first major milestone of the Government’s broad reforms to improve rehabilitation of mined land on a progressive basis, rather than at the end of a mine’s life.  The Scheme will reduce the financial risk to Government in the event a holder of a resource authority or small scale mining tenure (holder) fails to meet their environmental and rehabilitation obligations.  Over time, abandoned mines will be rehabilitated and rehabilitation techniques will be improved through grants provided from the Scheme’s Financial Provisioning Fund.

While this milestone has been met, further reforms are still occurring.  The final reform discussion paper on Managing residual risks in Queensland has closed for public comment and the Department of Environment and Science is considering the submissions.

In addition, issues outlined in previous discussion papers by the Department of Natural Resources, Mines and Energy on associated risks and proposed solutions, and the State’s abandoned mines legacy, continue to be progressed. Further information on these initiatives will be made available once the appropriate policy approvals have been obtained.

More information is available:

Managing residual risks in Queensland

The Managing residual risks in Queensland discussion paper submission period has closed and the Department of Environment and Science is considering the submissions received.

The Managing residual risks in Queensland discussion paper outlines a range of proposals to support implementing the residual risk framework in Queensland.

This discussion paper responds to findings of the Government’s review of Queensland’s financial assurance framework.  Supplementary work (Framework for Queensland’s Residual Risk in the Resource Sector) was undertaken by Queensland Treasury Corporation to support the Government with development of this discussion paper.

The discussion paper provides a number of proposals including:

  • principles to be used in developing a standardised risk assessment methodology
  • two options to assist with the estimation of post-surrender costs:
    • a calculation tool to be used in most circumstances
    • an expert panel to be used where the tool is not appropriate
  • clarification of payment requirements
  • identification of the need to record post-surrender management activities including how these could be communicated to land owners
  • identification of key roles in the post-surrender management of land and funds.

A summary of the discussion paper outlining these proposals is provided for your convenience.

Achieving improved rehabilitation outcomes for Queensland mines

The Department of Natural Resources, Mines and Energy released two discussion papers (see discussion papers closed 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

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.

Last updated: 24 May 2019