Resource sector must provide for mine site rehabilitation

The Queensland Government has delivered a big increase in financial assurance (FA) to cover costs to rehabilitate or restore the environment if the holder of an environmental authority fails to meet its environmental obligations.

Environment Minister Dr Steven Miles said the government was committed to having the financial assurance it holds, reflect the cost of rehabilitating the environment after resource companies ceased operations.

“We now hold more than $7 billion in financial assurance from mining, gas and oil companies, compared with $1.45 billion in 2008,” Dr Miles said.

“This is important progress, but we know there is more work to do to ensure that when the mining business cycle enters a downturn ordinary Queenslanders aren’t left with the rehabilitation bill.”

Dr Miles said resource companies could, and often did rehabilitate sites as operations progressed and FA was held in case this rehabilitation work was not done.

“The Government’s experts are currently reviewing the state’s FA framework.

“We need to understand the advantages and disadvantages of our current approaches to financial assurance and its capacity to protect the taxpayer.

“At present, the government requires that FA is lodged by a mining or petroleum and gas company prior to the activities under an environmental authority starting.

“For large resource operations, FA amounts are reviewed at least every five years, or sooner if a company changes its plan of operations or increases its level of disturbance.

“When a resource operation changes hands, the former owners’ FA is not discharged until the new owners lodge their FA – FA is not transferrable in this regard.”

Dr Miles said FA was lodged in the form of bank guarantees that are irrevocable, unconditional and payable on demand.

In limited circumstances, cash is accepted.

“One of our key responses to a 2014 Auditor-General report into FA was to develop an FA calculator that accurately assessed the amount of FA required to rehabilitate the environmental disturbance associated with resource activities,” Dr Miles said.

The calculator is in operation, with information available at www.business.qld.gov.au/business/running/environment/licences-permits/financial-assurance-rehabilitation.

“We have also passed new Chain of Responsibility laws that aim to ensure mining, petroleum and gas, or industrial companies that have closed shop and moved on, folded, or gone into liquidation do not leave the taxpayer with the clean-up bill.

“The laws give the government a number of options to pursue ‘related persons’ of a company to have them make good on the company’s environmental responsibilities.

“For example, we can issue related persons with legally enforceable environmental protection orders if the resource companies they are involved with cease operations without complying with their rehabilitation obligations.”

Dr Miles said the government currently held some $7.07 billion in FA comprising $5.92 billion for mining activities and $1.15 billion for petroleum and gas activities.

He said the Government would assess a range of possible alternative FA models.

“It may be that the current model can be improved and enhanced or it may be that an alternative model will deliver better results.

“The smaller mines and the exploration sector, represented by the Association of Mining and Exploration Companies (AMEC), have suggested the current model is not well suited to their operations. As these players are an important source of new jobs and new developments, their views will be closely considered.

“Whatever course is chosen the government will assess the capacity of the FA to achieve a high level of environmental performance, protect the taxpayers, continue to present an incentive to investment, and provide an outcome that satisfies community expectations.

“Queensland is a resource-rich state and investment by resource companies contributes enormously to the state’s bottom line.

“But the government and the community have an expectation that before a company’s activities have ceased, rehabilitation will have been completed.”

Dr Miles said the interdepartmental committee would provide its advice by the end of 2016.

ENDS

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