Overview of the Mineral and Energy Resources (Financial Provisioning) Bill 2018.

On 14 November 2018, the Queensland Parliament passed the Mineral and Energy Resources (Financial Provisioning) Bill 2018. The bill acts as an important step towards implementing Queensland’s Mined Land Rehabilitation Policy and will feature a pooled financial provision fund and scheme manager.

The Act introduces two major reforms for the Queensland resource industry. It will:

  1. Replace the current financial assurance regime with a new financial provisioning scheme for all resource authorities to better deal with the environmental impacts of resource activities; and
  1. Introduce new progressive rehabilitation requirements for mining leases, through progressive rehabilitation and closure plans (PRC plans) for site specific application.

Key Changes

  • The Bill was passed with amendments to the PRC plan requirements. These now include a new public interest test for non-use management areas. This aims to provide clarity around what the rehabilitation outcomes will be for areas such as final voids which are currently defined as non-use management areas under existing environmental authorities (EA).
  • Documents created by the scheme manager will now be subject to the Right to Information Act 2009, although exemptions can be sought to protect confidential information.
  • Existing Financial Assurance Calculators will be replaced by the Estimated Rehabilitation Cost calculator.

What happens now?

  • Transitional period
    • Commencement of the financial assurance scheme is expected to occur in the first half of 2019.
    • From the commencement of the Act, any financial assurance currently held for an EA will be treated as surety under the new Act.
    • For 3 years after the commencement of the Act, EA holders will be assessed and receive an initial risk allocation decision. Each resource activity will be categorised by level of environmental risk under the Act.
  • Resource Risk Allocation Decision
    • Guidelines are available here to assist in determining what risk allocation the resource activity will receive.
    • Annual reviews will be conducted on the anniversary of the EA grant to re-assess the resource risk allocation.
    • Fees for these assessments will be determined using a sliding scale structure which ranges from $250-45,000 p.a depending on the value of the ERC. Payments must be made within 30 business days after the risk allocation decision.
  • Calculating contributions to the Financial Provisioning Fund
    • Participation in the Financial Provisioning Fund is only for EA holders allocated a risk category of very low, low or moderate. High risk projects will require to pay a Surety.
    • The value of the contribution is calculated by multiplying:
      • the risk allocation decision, whereby a prescribed percentage of the ERC is assigned. These are: Very low: 0.5%, Low: 1.0%, Moderate: 2.75%.
      • the cost estimated by the Department of Environmental Services for rehabilitating the land on which the resource activity is carried out.
    • If the ERC exceeds $450 million, the resource authority holder is required to pay the prescribed percentage for this value, as well as an additional surety for the value beyond $450m.
    • Independent Expert Report for use in the Estimated Rehabilitation Cost Calculator
      • MEC Mining provide independent expert reports (shadow tenders) for material movement rates to replace default rates in the financial assurance calculator.
      • In many instances the default rates in the calculator are based on small quantities and not representative of the cost advantages achieved when large volumes of material movement are involved.
      • MEC Mining will calculate and provide rates that can be used in the calculator and are accepted by the regulator.
  • Sureties
    • EA holders in the high risk category and holders of small scale mining tenures will be required to provide the state with surety.
    • If required, the scheme manager also has discretion to require an EA holder in lower risk categories to give a surety, rather than pay a fund contribution to preserve the financial viability of the fund.
    • A surety can be provided as a bank guarantee, insurance bond, or a cash payment, which is a wider range of acceptable sureties than provided for under the existing financial assurance guidelines.

Development of the PRC Plan

  • Progressive rehabilitation
    • All holders of site specific EAs for a mining lease are required to submit a PRC plan.
    • Once noticed is given to the EA holder to supply a PRC plan, there will be a period of at least six months given to comply with the notice.
  • Landform and Rehabilitation Plans
    • There is usually a variety of possible landform shape options that satisfy landform criteria and also achieve a cut to fill balance, however the cost of each option can vary greatly even when cut to fill volumes are similar.
    • MEC Mining uses sophisticated simulation techniques to create the landform design to meet set criteria while allocating material movement to the lowest cost method and simultaneously optimising the material movement vector within each movement method to reduce operational costs.
  • Landform Optioneering and Optimisation
    • Commonly, ambiguity or a low level of detail in EA agreements means that the rehabilitation concept is not always clear.
    • By optioneering the landform designs you can quickly evaluate various landform criteria options to understand landform shape and the cost of constructing a variety of options. This allows efficient decision making and enables more productive engagement with regulators.

Optimisation of the PRC Plan

  • Equipment Selection
    • Before going to tender for rehabilitation work it is prudent to understand the optimal equipment specification to undertake the rehabilitation work.
    • MEC Mining will advise which equipment to use to achieve to lowest possible cost including strategies around dozer blade selection and truck tray volume specification.
  • Dozerpush Plans and Designs
    • MEC Mining dozer push rehabilitation plans include: target cut to fill surfaces compatible with GPS guidance software, push vector layers and can be provided with stacked sequence surfaces for complicated tasks.
    • The dozer push designs and push vectors are optimised to minimise the overall cost of completing the bulk push by solving for the lowest overall push distances and grades to complete the cut/fill operation.
    • MEC Mining will incorporate scrapers and truck shovel movement where required and create plans that are ready for the execution team.
  • Cost Estimation
    • Optimised landform designs are accompanied by a cost estimate to construct the landform.
    • Cost estimates are built on dozer push distance and grade simulations and haul distances for trucked material where required.
    • The cost estimates are detailed and robust and can be used as the basis for issuing tenders and/or comparing tenders for rehabilitation work packages.
  • Project Management
    • MEC Mining provide project management for rehabilitation on active mine sites.
    • MEC Mining personnel stationed on site will monitor progress to provide surety around compliance to plan which minimises cost and ensures compliance to the PRC Plan.
    • We have a dozer push training package which is crucial for educating dozer operators on how to work efficiently and prevent costly rehandle.
    • MEC Mining will work with owner teams or contractors to achieve the best overall outcome for the site.

If you would like to find out more about how MEC Mining can assist you, feel free to contact enquiries@mecmining.com.au