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TOP 10 LEGAL ISSUES FOR QUEENSLAND EXPLORERS IN 2019

TOP 10 LEGAL ISSUES FOR QUEENSLAND EXPLORERS IN 2019. James Plumb, Partner Tuesday 9 April 2019. Agenda. 1. 2. Natural Resources and Other Legislation Amendment Bill 2019 ( Qld ) Commencement of the new Financial Assurance regime Gas e xport controls

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TOP 10 LEGAL ISSUES FOR QUEENSLAND EXPLORERS IN 2019

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  1. TOP 10 LEGAL ISSUES FOR QUEENSLAND EXPLORERS IN 2019 James Plumb, Partner Tuesday 9 April 2019

  2. Agenda 1 2 Natural Resources and Other Legislation Amendment Bill 2019 (Qld) Commencement of the new Financial Assurance regime Gas export controls Landholder compensation decision - Deimel v Phelps & Anor [2019] QLC 4 Compensation for extinguishment of Native Title – Northern Territory of Australia v Griffiths [2019] HCA 7 3 4 5 Top 10 legal issues for explorers in 2019

  3. Agenda(cont…) 6 Climate change and approvals - Gloucester Resources Limited v Minister for Planning [2019] NSWLEC 7 How to properly execute a document - SantosLimited v BNP Paribas [2019] QCA 11 ‘Pristine Rivers’ – revisiting Wild Rivers Act 2005 (Qld)? Land access update – Land Access Ombudsman, the GasFields Commission (the GasApp), costs Government funding – State and Federal opportunities 7 8 9 10 Top 10 legal issues for explorers in 2019

  4. ISSUE 1: NROLA The Natural Resources and Other Legislation Amendment Bill 2019 (Qld) • Amendments to Mineral Resources Act 1989 (Qld), Petroleum and Gas (Production and Safety) Act 2014 (Qld) and Mineral and Energy Resources (Common Provisions) Act 2014 (Qld) to ‘implement measures to improve performance of the resources tenure management system’. • Cap on life (15 years) of mineral and coal exploration permits – additional 3 years if ‘exceptional events’. • Existing exploration permits (currently unlimited renewals) will only be permitted 10 years further renewals after commencement. Top 10 legal issues for explorers in 2019

  5. ISSUE 1: NROLA(cont…) The Natural Resources and Other Legislation Amendment Bill 2019 (Qld) • Work programs for EPCs, EPMs and ATPs will now be ‘activities-based’ or ‘outcomes-based’. • Relinquishment: • EPCs and EPMs – 50% of an EP area in years 5 and 10 • ATPs – 50% by the ‘relinquishment day’ (the day before the 6th anniversary of the day the ATP took effect) Top 10 legal issues for explorers in 2019

  6. ISSUE 1: NROLA(cont…) The Natural Resources and Other Legislation Amendment Bill 2019 (Qld) • Variation of conditions • Minister may amend tenure conditions at any time (without reference to tenure holder) in circumstances of ‘exceptional events’ (will apply to tenements granted before and after commencement) • holder may only apply to amend conditions when there is an ‘exceptional event’, or when the relevant permit is part of an exploration project • Access for environmental management – clarification that all resource authority holders may access public and private land to carry out rehabilitation and management activities under Environmental Protection Act 1994 (Qld) Top 10 legal issues for explorers in 2019

  7. ISSUE 2: Commencement of FinancialAssurance Regime • Creation of financial provisioning scheme – • EA holders with >$100k rehab costs will transition across to the Scheme Manager risk category assessment (over 3 years) • participation in fund requires payment of prescribed percentageof the estimated rehabilitation costinto a scheme fund, in lieu of surety • Depends on risk category: Top 10 legal issues for explorers in 2019

  8. ISSUE 2: Introduction of FinancialAssurance Regime(cont…) Other features • Ability to provide surety in form of bank guarantee, insurance bond or cash amount instead of making contribution to fund. • If rehabilitation cost greater than $450m, prescribed percentage based on that threshold amount and amount exceeding threshold required to be given as surety. • Progressive rehabilitation and closure plans. Top 10 legal issues for explorers in 2019

  9. ISSUE 3: Gas Export Controls • Australian Domestic Gas Security Mechanism (ADGSM) • Customs Act 1901 (Cth) – an offence to export LNG without permission during a domestic shortfall year • ADGSM engaged when there is not enough gas to meet needs of consumers, because of LNG exports • ALP propose to strengthen controls by: • triggering the ADGSM when prices are ‘too high’; and • introducing a national interest test for new or expanded LNG export facilities • Queensland – Prospective Gas Production Land Reserve – ‘Australian market supply condition’ and ‘Australian manufacturer’s condition’ • Western Australia Domestic Gas Policy Top 10 legal issues for explorers in 2019

  10. ISSUE 4:Compensation for Advanced Activities(Deimel v Phelps & Anor [2019] QLC4) • First judicial determination of compensation for advanced activities under the Mineral and Energy Resources (Common Provisions) Act 2014 (Qld) • Deimel(small scale gold miner) seeking determination of compensation for proposal to dig 40 costeans on Phelps’ property (predominantly running sheep) • Landowners sought compensation for: • impact of costeans • landowner’s time • landowner’s professional fees (valuer) Top 10 legal issues for explorers in 2019

  11. Compensation Breakdown Top 10 legal issues for explorers in 2019

  12. ISSUE 5: Timber Creek ‘Most significant native title decision since Mabo’ High Court determination regarding compensation payable by the NT to the Ngaliwurru and Nungali Peoples for loss, diminution, impairment or other effect on native title rights and interests – 127ha near Timber Creek High Court determined compensation payable at $2.5m. Three components: economic loss – found to be equivalent to 50% of freehold value of land affected; cultural loss - award of $1.3 million for “cultural loss” – compensation for loss of connection, acknowledging deep spiritual relationship with land; and interest (simple rate of 4%pa above the Reserve Bank cash rate) Implications - 280 million ha of land in Australia affected Top 10 legal issues for explorers in 2019

  13. ISSUE 6: Gloucester Resources Limited v Ministerfor Planning [2019] NSWLEC 7 Background • Proposal to develop 2 Mtpa (predominantly) metallurgical coal open cut mine approximately 5km south of Gloucester NSW. • GRL appealed the decision by the Minister for Planning to refuse development consent for the Rocky Hill Coal Project. • A community group, Groundswell Gloucester Inc, joined the appeal and sought to bring additional arguments centred around climate change. Top 10 legal issues for explorers in 2019

  14. Issues in appeal Court rejected GRL’s appeal of the decision on the basis of: • the incompatibility of the proposed mine with the existing, approved and likely preferred uses of land in the vicinity of the proposed mine, under cl 12 of State Environmental Policy (Mining, Petroleum Production and Extractive Industries) 2009; • the adverse visual impacts of the mine; • the adverse social impacts of the mine, including social impacts caused by the noise, dust and visual impacts of the mine; Top 10 legal issues for explorers in 2019

  15. Issues in appeal(cont…) • the economic and public benefits of the mine are uncertain and overstated and not shown to be greater than the public costs of the mine; and • the public interest because: • of the matters in (a) to (d) above; and • it is contrary to the principles of ecologically sustainable development because the direct and indirect greenhouse gas emissions of the mine will contribute to climate change. Top 10 legal issues for explorers in 2019

  16. Why were the climate change arguments important? Scope 3 Emissions • Court took into account scope 3 emissions - indirect emissions associated with the transportation and burning of coal mined at Rocky Hill • Court rejected market substitution argument – i.e. that the emissions would occur regardless of whether the project was approved or not due to other coking coal projects being developed anyway, or that it was required to meet current or future demand for coking coal Top 10 legal issues for explorers in 2019

  17. ISSUE 7: Santos v BNP Paribas [2019] QCA 11 • Santos was unable to enforce a performance security (in the form of a bank guarantee) for $AUD55 million because the letter of demand did not comply with signing requirements. • Comparison: Top 10 legal issues for explorers in 2019

  18. Issues in appeal • Performance security is ‘as good as cash’ … Santos required to deliver letter of demand on the face of which all essential matters appeared…’. • Application of strict compliance principle required statement of signatory’s authority, not necessarily the exact words in the draft letter of demand but a statement to that effect. • Signature coupled with a position description did not amount to representation that authorised representative or authorised signatory. • No clear representation that Mr Simpson was an authorised representative of Santos for the purpose of executing the letter of demand. Top 10 legal issues for explorers in 2019

  19. ISSUE 8: ‘Pristine Rivers’ • Wild Rivers Act 2005 (Qld) – limited development near designated rivers (mostly in north and west of the State). • Strongly opposed by miners, indigenous communities and farming industry – declaration of Wenlock, Archer, Stewart and Lockhardt river systems (following lobbying by the Wilderness Society) successfully challenged. • Repealed and replaced by strategic planning controls in 2014. Repeal was opposed at the time by Jacki Trad as opposition environment spokesperson. • Concerns raised (eg. AgForce) that commitments being sought regarding the introduction of ‘re-badged Wild Rivers legislation’ during the next term of government • Speculation it will apply to new permits and projects within designated protected zones Top 10 legal issues for explorers in 2019

  20. ISSUE 9: Land access update • Office of Land Access Ombudsman (Jane Pires) – commenced 14 September 2018 – primary role is to investigate disputes between parties to CCAs or MGAs (https://www.lao.org.au/) • Note: no jurisdiction over CCA negotiations • GasFieldsCommission Queensland (http://www.gasfieldscommissionqld.org.au/about-us/) released the GasApp in 2018 • ‘Compensation estimator’ caused some concern – early figures raised questions • Changes made to estimator during December 2018 Top 10 legal issues for explorers in 2019

  21. ISSUE 9: Land access update(cont…) • Changes under Mineral, Water and Other Legislation Amendment Act 2018 (Qld) to commence shortly: • Arbitration vs. Land Court • Authority holders liable for costs of ADR facilitator, and costs thrown away Top 10 legal issues for explorers in 2019

  22. ISSUE 10: Government incentives • Federal - Junior Minerals Exploration Incentive • distribute tax losses as a credit to Australian resident shareholders • up to $1.5 million per company in FY 2019-20 • Queensland - Collaborative Exploration Initiative (CEI) • up to $300k to meet 75% of direct activity costs of exploration in NW Queensland • drilling and non-drilling activities (seismic, airborne and ground geophysics, geochemical surveys) • WA: Exploration Incentive Scheme ($10m pa) – co-funding exploration drilling up to 50% of total costs (up to $200k) Top 10 legal issues for explorers in 2019

  23. ISSUE 10: Government incentives(cont…) • NT: Geophysics and Drilling Collaborations Program – co-funding drilling and geophysical data programs (up to $125k). • VIC: TARGET – co-fund minerals (gold, base metals) exploration programs up to 50%. • NSW: New Frontiers Cooperative Drilling Program – up to $200k in funding (2014 – 2017). Top 10 legal issues for explorers in 2019

  24. James Plumb Partner D | +61 (0) 7 3000 8367 M | +61 (0) 407 757 636 E | jplumb@carternewell.com

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