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Resources and Energy Alert: Western Australian tenement holders liable for Mining Rehabilitation Fund levy - 28 Nov 2012

A new Act introduced in Western Australia this month will assist the State Government to rehabilitate land affected by mining operations where the original operator does not fulfil its mine rehabilitation and closure obligations.

At the moment, the unconditional performance bonds levied on resources and energy companies for the rehabilitation of mining operations cover only 25 - 30 percent of Western Australia’s contingent liability for the rehabilitation of abandoned mine sites and mining operations. On the back of a review conducted by the Department of Mines and Petroleum in 2010, the State has since increased unconditional performance bonds in an effort to minimise this liability, with the aim of having those bonds cover 50 percent of closure liability by 2014.

The Mining Rehabilitation Fund Act 2012 (WA), assented to early this month, is a further initiative designed to secure adequate ongoing funds for the State to rehabilitate affected land.

Partner Jonathan Fulcher and solicitor Monica Franz outline the levy and explain what the funds collected will be used for.

Key points

  • All tenement holders under the Mining Act 1978 (WA) will be required to pay a levy into a Mining Rehabilitation Fund.
  • The Fund will be used to rehabilitate abandoned mine sites and affected land (which includes land outside an abandoned mine site that has been affected by mining operations carried out in, on or under the site).
  • The Regulations associated with the Act (yet to be released) will prescribe the levy amount and information required to assess that amount.

Rehabilitation levy liability

Under the Mining Rehabilitation Fund Act 2012, all holders of a mining authorisation, being:

  • a mining tenement as defined in the Mining Act 1978 (WA), other than a mining tenement granted or held pursuant to a State agreement; and
  • specified kinds of mining tenements or rights granted or held pursuant to a State agreement, as identified in the Regulations,

are liable to pay the rehabilitation levy.

The person who holds the mining authorisation on the date on which liability arises for a particular year will be liable to pay the levy for the year.

Mining authorisation holders will need to wait for the release of the Regulations for information on the amount of the rehabilitation levy. However, in the second reading speech to the Legislative Assembly, Premier Colin Barnett stated that the intention was that the levy be a percentage, initially proposed to be one percent of a figure approximating the total mine closure cost per annum.

Obligations on mining companies

The mining authorisation holder will be required to lodge prescribed information on or before the prescribed date each year to allow the State to assess the rehabilitation levy liability. The information and timeframe, along with the amount of the levy liability, will be prescribed in the Regulations.

The holder of the mining authorisation will be notified of the levy through an assessment notice, which will specify:

  • date of issue; 
  • levy amount; 
  • due date for payment of the levy (which cannot be sooner than 30 days from the date of issue); and 
  • any other prescribed matter.

The State may reassess the amount of the levy if it considers that there has been an error in a previous levy assessment, or for any other appropriate reason. However, reassessment may not occur more than two years after the initial assessment.

The Act provides an objection procedure if the holder of the mining authorisation believes there is an error in the assessment or reassessment notice, or if the person issued the notice does not believe that they are liable to pay the levy.

Penalty provisions have been included for failing to provide the prescribed information before the prescribed day, or for providing false and misleading information. The penalty provisions incur a fine of $20,000, and further penalty provisions of up to $10,000 may apply for contravening the Regulations.

Management of the Fund

The levy will be used to minimise the State’s unfunded liability for rehabilitating abandoned sites and mining operations. The principal amount of the levy (the money paid into the levy) will fund:

  • the rehabilitation of abandoned mine sites and affected land in relation to which levy payments have been, or should have been made; and 
  • refunds due after objections or assessments result in a reduction of the payable amount.

The interest earned on the Fund will be used to finance:

  • the rehabilitation of abandoned mine sites and affected land, whether or not a levy payment has been or should have been made in relation to the site; 
  • programs or information dealing with mine site rehabilitation generally; and 
  • administration and enforcement costs related to the Fund and the new Act.

When will the Act come into effect?

Clauses 1 (short title) and 2 (commencement) have come into effect as of 5 November 2012. The remaining operational clause of the Act will come into effect when gazetted.

Currently the State is working on the Regulations, which will be distributed for public comment before coming into effect.

For more information about the Mining Rehabilitation Fund Act 2012 (WA), please contact HopgoodGanim’s Resources and Energy team.