Statutes Amendment (Energy and Mining Reforms) Bill

Introduction and First Reading

The Hon. A. KOUTSANTONIS (West Torrens—Treasurer, Minister for Energy and Mining) (15:46): Obtained leave and introduced a bill for an act to amend the Energy Resources Act 2000, the Hydrogen and Renewable Energy Act 2023 and the Mining Act 1971. Read a first time.

Second Reading

The Hon. A. KOUTSANTONIS (West Torrens—Treasurer, Minister for Energy and Mining) (15:47): I move:

That this bill be now read a second time.

I seek leave to have the second reading explanation and explanation of clauses inserted in Hansard without my reading them.

Leave granted.

The state's resources endowment and the opportunities for economic participation in the development of our resources is managed in the community's interests through best practice regulatory frameworks in South Australia. The government of South Australia is committed to the principles of effective and efficient regulation of our energy and mineral resources sectors and frameworks underpinned by transparency, fairness, predictability and reasonableness.

To ensure that we keep to that path, this government continues to review the performance of the Mining Act 1971, the Energy Resources Act 2000 and the Hydrogen and Renewable Energy Act 2023 and associated Regulations with the aim of ensuring they remain fit for purpose. This bill has been developed to deliver four key objectives:

drive productive exploration and mining activity to increase the potential for mineral discoveries and investment in the state;

promote industry competition, compliance and efficiency;

assure that only fit and proper persons who meet the standards expected from our community have control of developing our resources; and

deliver further consistencies across our energy and mining regulatory and licencing frameworks.

The most pressing amendment included in the bill relates to exploration tenure and the maximum 18-year period for mining exploration licences. This maximum period is included in the Mining Act and aims to balance tenure certainty and exploration investment with ground turnover. The first mandatory exploration licence expirations under this policy will come into force in 2027. Whilst the policy rationale for the maximum 18-year period remains valid, the absence of a ministerial discretion to extend the maximum period beyond 18 years does not enable the consideration of special circumstances, where it may be in the best interests of the community to provide an extension.

The bill enables an application for an extension to be made to the minister in two main categories of special circumstance. The first circumstance is where the tenement holder has met their commitments, performed satisfactorily and has the means to continue to do so, and has either made a discovery of minerals, has a new exploration model or is future developing a mineral deposit. The second circumstance is where the tenement holder has been unable to meet the requirements of the expenditure commitment, work program or other requirements under the exploration licence due to circumstances beyond their control and that could not reasonably have been foreseen.

The bill enables the minister to prescribe such other categories of special circumstance as may be required by the regulations. Upon receiving an application, the minister is provided with the discretion under the bill to extend an exploration lease for up to five years. An application for an extension can be made more than once. The minister retains absolute discretion to refuse an application for a special circumstances extension. This modification will provide greater certainty to explorers and their investors while still maintaining the original aims of the maximum 18-year policy, that is to incentivise exploration activity on those tenements in a reasonable timeframe.

Another key matter included in the bill is to provide greater consistency across the three acts for ministerial oversight of changes to the controlling interest of existing tenement holders and licensees. The amendments seek to ensure that the state is equipped to provide the necessary scrutiny of significant proposed acquisitions. The Energy Resources Act and the Hydrogen and Renewable Energy Act already contain change in control provisions, requiring ministerial approval for transactions that constitute a change in control of 20% or more of the voting rights of the licence or an interest in 20% or more of the issued securities of the licence.

The bill amends the Mining Act to introduce a similar change in control provision. The primary difference in the Mining Act change of control provision is that it only requires ministerial approval for transactions that constitute control of 50% or more of the voting rights of the licence or an interest in 50% or more of the issued securities of the licence. Whilst a lower percentage could be prescribed in the regulations, 50% was selected as the threshold for the Mining Act due to the significantly higher number of tenement holders under this act and the potential for a significant processing administrative burden if the 20% threshold was included due to common capital raising practices for small enterprises involved in mining activities.

The change in control provisions being introduced in the Mining Act provide, consistent with the other two acts, that the minister must have regard to the technical capability and financial resources available to the incoming tenement holder and may have regard to any other matters the minister thinks relevant when considering an application for a change in control.

The bill amends all three acts to provide greater clarity on the broad range of matters that may be considered, including whether the applicant is a fit and proper person to hold such control, whether the change in control would be in the public interest; the social, economic and environmental effect of the change in control; the appropriateness of any foreign influence on Australia's energy and mineral resources industry (as relevant) consequent on the change in control; and the extent to which the change in control may affect continued investment in the energy and mineral resources and related industries and infrastructure (as relevant) in Australia.

Importantly, the bill will provide the ability for the minister under all three acts to impose conditions on any approval of a change in control. The Energy Resources Act and the Hydrogen and Renewable Energy Act already include offences associated with failing to obtain approval for a change in control and this bill introduces consistent offences in the Mining Act. To strengthen the enforcement provisions associated with change of control, the bill increases the maximum associated penalty amount from $250,000 to $16.5 million. This reflects the necessity for the penalty to be commensurate with the significance of these acquisitions and is consistent with the minimum penalties available to ASIC under the Corporations Act for contravention of civil penalty provisions. The relevant court retains the discretion to impose a penalty at a level appropriate to the circumstances of the offence up to this maximum amount.

Another significant matter that is dealt with in the bill is addressing inefficient turn-over of ground in the event of material non-compliance by the tenement or licence holders under the three acts. The current remedy is the suspension or cancellation of the tenement or licence. A new forfeiture to the Crown process is introduced where the state is entitled to terminate or suspend a tenement or licence. This process enables the minister to efficiently transfer the tenement or licence to a suitable person to continue energy resource and mining activity. This would predominantly be available for a material breach of the act, licence or tenement, where the minister is satisfied that the matter is of sufficient gravity to justify the forfeiture. This may include, but is not limited to, situations where a breach of the change in control provisions has occurred.

Consistent with the existing cancellation and suspension provisions in the Mining Act, the bill includes a right of appeal to the ERD Court (and to SACAT in the case of the ER Act). The South Australian government is responsible for ensuring that the financial cost of rehabilitating mines does not fall to the state alone. The financial assurance framework under the Mining Act attempts to secure sufficient funds from tenement holders to cover the costs of rehabilitating disturbed land. Unfortunately, even with best endeavours, it is not always possible to accurately estimate the cost of managing a rehabilitation liability throughout the life of a mine.

To mitigate these costs, the Mining Act established a Mining Rehabilitation Fund that draws its revenue from a limited scope of fines and penalties paid for breaches of the Act. The bill enables the regulations to prescribe a scheme which will enable broader use of the fund as a financial assurance mechanism, by allowing voluntary payment of amounts into the fund and expanded use of the funds for land rehabilitation including legacy mines throughout the state. This mechanism will operate alongside the existing financial assurance framework which requires a mineral tenement holder to lodge a bond as security for rehabilitating land disturbed by mining operations. These reforms are intended to provide the government and regulators with the option of an additional tool to ensure financial assurance across the life cycle on resource development.

This bill and its tightly targeted amendments aim to address pressing issues that will ensure South Australia maintains an international reputation for adhering to leading practice for contemporary energy and mining resource regulation. These amendments will also provide the minister the discretion necessary to further drive productive exploration and mining activity to realise the potential for mineral discoveries and investment in this state. I commend this bill to members.

Explanation of Clauses

Part 1—Preliminary

1—Short title

2—Commencement

These clauses are formal.

Part 2—Amendment of Energy Resources Act 2000

3—Amendment of section 86AAB—Approval of change in control of holder of licence

This clause amends section 86AAB of the principal Act to insert a list of matters that the Minister may, in considering an application for approval for a change in control under the section, have regard to (so far as they may be relevant) and expressly provides for the imposition of terms and conditions on an approval.

4—Amendment of section 86AAC—Offences

This clause amends section 86AAC of the principal Act to substantially increase penalties for offences against the section, and also inserts a new offence relating to a contravention of approval conditions.

5—Insertion of Part 11 Division 12AA

This clause inserts new Division 12AA into Part 11 of the principal Act as follows:

Division 12AA—Forfeiture and transfer of licence

91AB—Forfeiture of licence

This section provides a scheme for the Minister, by notice in the Gazette, to cause the forfeiture of a licence to the Crown. In addition the Minister may direct the former licensee to take, or cease, specified actions and activities, with failure to comply with a direction constituting a criminal offence.

91AC—Transfer of forfeited licence

This section enables the Minister to approve the transfer of a licence forfeited under proposed section 91AB to a person, and makes procedural provisions accordingly.

91AD—Exclusion of compensation

This section provides that no compensation is payable as a result of the transfer or forfeiture of a licence under the proposed Division, or the expropriation or diminution of rights of the holder of licence as a result of the forfeiture or transfer.

6—Amendment of section 124—Decisions etc subject to review

This clause consequentially amends section 124 of the principal Act to add forfeiture decisions to those that may be the subject of a review.

Part 3—Amendment of Hydrogen and Renewable Energy Act 2023

7—Amendment of section 52—Approval of change in control of holder of licence

This clause amends section 52 of the principal Act, setting out matters to which the Minister may have regard when determining an application under the section.

8—Amendment of section 53—Offences

This clause amends section 53 of the principal Act to substantially increase penalties for offences against the section, and also inserts a new offence relating to a contravention of approval conditions.

9—Insertion of Part 4 Division 3 Subdivision 15A

This clause inserts new Subdivision 15A into Part 4 Division 3 of the principal Act as follows:

Subdivision 15A—Forfeiture and transfer of licence

55A—Forfeiture of licence

This section provides a scheme for the Minister, by notice in the Gazette, to cause the forfeiture of a licence to the Crown. In addition the Minister may direct the former licensee to take, or cease, specified actions and activities, with failure to comply with a direction constituting a criminal offence.

55B—Transfer of forfeited licence

This section enables the Minister to approve the transfer of a licence forfeited under proposed section 55A to a person, and makes procedural provisions accordingly.

55C—Exclusion of compensation

This section provides that no compensation is payable as a result of the transfer or forfeiture of a licence under the proposed Subdivision, or the expropriation or diminution of rights of the holder of licence as a result of the forfeiture or transfer.

10—Amendment of section 107—Appeals to ERD Court

This clause consequentially amends section 107 of the principal Act to add forfeiture decisions to those that may be the subject of an appeal.

Part 4—Amendment of Mining Act 1971

11—Amendment of section 15AL—Release of material

This clause amends section 15AL of the principal Act by deleting subsection (2) of the section.

12—Amendment of section 28—Preliminary

This clause amends section 28 of the principal Act by amending terms and phrases used in that section.

13—Amendment of section 29A—Application for exploration licence

This clause amends section 29A of the principal Act by deleting subsection (8) of the section.

14—Amendment of section 30AAA—Expenditure

This clause amends section 30AAA(12) of the principal Act to change the mandatory 'will' to a permissive 'may'.

15—Amendment of section 30A—Term and renewals of licence

This clause makes a consequential amendment to section 30A(7)(c) of the principal Act.

16—Insertion of sections 30AAB and 30AAC

This clause inserts new sections 30AAB And 30AAC into the principal Act as follows:

30AAB—Special circumstances extension

This section establishes a scheme whereby a holder of an exploration licence can be granted an extension of the licence for up to 5 years, including by imposing limits on when such an extension may be granted.

30AAC—Minister may refuse certain applications

This section sets out circumstances in which the Minister may refuse an application for an exploration licence, or an extension of an exploration licence.

17—Insertion of Part 8B Division 6A

This clause inserts new Division 6A into Part 8B of the principal Act as follows:

Division 6A—Change in control of tenement holder

56PA—Interpretation

This section defines terms and phrases used in the proposed Division.

56PB—Approval of change in control of holder of tenement

This section provides a scheme in respect of applications for a change in control of the registered holder of a mineral tenement, including by setting out matters to which the Minister must have regard when determining such applications.

56PC—Offences

This section creates a number of offences relating to changes in control of the registered holder of a mineral tenement under the proposed Division.

18—Insertion of Part 8B Division 8A

This clause inserts new Division 8A into Part 8B of the principal Act as follows:

Division 8A—Forfeiture and transfer of mineral tenement

56XA—Forfeiture of mineral tenement

This section provides a scheme for the Minister, by notice in the Gazette, to cause the forfeiture of certain mineral tenements to the Crown. In addition the Minister may direct the former tenement holder to take, or cease, specified actions and activities, with failure to comply with a direction constituting a criminal offence

56XB—Transfer of forfeited mineral tenement

This section enables the Minister to approve the transfer of a mineral tenement forfeited under proposed section 56XA to a person, and makes procedural provisions accordingly.

56XC—Exclusion of compensation

This section provides that no compensation is payable as a result of the transfer or forfeiture of a mineral tenement under the proposed Division, or the expropriation or diminution of rights of the holder of mineral tenement as a result of the forfeiture or transfer.

56XD—Appeal to ERD Court against forfeiture

This section provides a right of appeal to the ERD Court in respect of a forfeiture decision.

19—Amendment of section 56Y—Extension of term of tenement

This clause amends section 56Y(1) of the principal Act to include exploration licences in the scope of that subsection.

20—Amendment of section 62AA—Mining Rehabilitation Fund

This clause amends section 62AA of the principal Act by inserting new subsections (4a) and (4b) which provide a regulation making power to establish a scheme setting out the manner and circumstances in which the holder of a mineral tenement may pay a prescribed amount into the fund. The clause also makes consequential amendments to the section.

21—Amendment of section 70—Forfeiture and transfer of mineral tenement

This clause amends section 70 of the principal Act to remove a regulation making power, and to add miscellaneous purposes licences to the list in subsection (1).

22—Amendment of section 70C—Review of programs

This clause amends section 70C of the principal Act to enable the Minister to seek further information from persons who have submitted revised program, and to provide an additional ground relating to the rejection of a proposed revised program.

Debate adjourned on motion of Mr Batty.