ROXBY DOWNS (INDENTURE RATIFICATION) (AMENDMENT OF INDENTURE) AMENDMENT BILL

Introduction and First Reading

Received from the House of Assembly and read a first time.

Second Reading

The Hon. G.E. GAGO (Minister for Agriculture, Food and Fisheries, Minister for Forests, Minister for Regional Development, Minister for Tourism, Minister for the Status of Women) (11:21): I move:

That this bill be now read a second time.

I seek leave to have the second reading explanation inserted in Hansard without my reading it.

Leave granted.

Today is a momentous occasion for the State of South Australia. Just as mining projects at Broken Hill, Mount Isa and Kalgoorlie at the turn of the last Century helped transform the economic future of their respective States, so will the Olympic Dam expansion transform South Australia, by bringing unprecedented wealth and economic opportunity to the State well into the next Century.

Olympic Dam is certainly no ordinary project. It is a highly significant project for the State, being the world's fourth largest copper resource, fourth largest gold resource, and by far the largest known uranium resource. The proposed expansion project will unlock the full potential of the deposit to meet growing world demand for copper and uranium.

In March 1982, the State and project proponents of the time, entered into an Indenture to provide for the establishment and development of the initial Olympic Dam project. The Indenture was first ratified by Parliament through the Roxby Downs (Indenture Ratification) Act 1982. The Ratification Act, incorporating the Indenture, regulates the operations of the mine, associated treatment plant and transport facilities, related infrastructure and the municipality of Roxby Downs.

In response to the proposed expansion of Olympic Dam by BHP Billiton, the State agreed to amend the Indenture on the basis of the benefits which are expected to accrue to the South Australian economy and community, including royalty payments, increased workforce participation and development, local supplier participation, Aboriginal economic development and regional development.

As a result, the Roxby Downs (Indenture Ratification) (Amendment of Indenture) Amendment Bill 2011 (Bill) proposes enhancements to the Roxby Downs (Indenture Ratification) Act 1982 to provide for expanded project components that were not envisaged under the original agreement. The revisions also change the way in which certain other Acts of the Parliament of the State apply to the revised Indenture to ensure its currency with relevant legislation.

The project expansion proposed by BHP Billiton will develop an open pit mine, processing facilities and supporting infrastructure that will operate simultaneously to existing underground mining operations.

This is certainly no ordinary mining project. Its size and scale for a singular mining project is unprecedented in Australia. Over a 40 year development period, the open pit is anticipated to extend more than 4 kilometres long, 3 kilometres wide and 1 kilometre deep, with annual production volumes expected to more than triple current capacity at full production.

Without doubt, the project will deliver considerable economic wealth to the State economy, with BHP Billiton estimating in its EIS that the project will contribute an incredible $45.7 billion in net present value to South Australia's Gross State Product (GSP) over a 30 year timeframe from the start of the expansion.

Furthermore, the expansion will generate considerable employment opportunities for the State. In its EIS, BHP Billiton estimate that the Olympic Dam expansion will generate up to 6,000 new jobs during construction, a further 4,000 full time positions at the expanded open pit mine and an estimated 15,000 new indirect jobs.

The broad-scale benefits achieved through the expansion of Olympic Dam will also substantially contribute to our latest Strategic Plan priorities, including Our Community, Our Prosperity and Our Environment, particularly through targets on total exports, minerals production and processing, regional population levels, and jobs to name just a few.

Such an expansion does not happen overnight and is not without inherent complexity and considerable investment risk. In progressing with the project, BHP Billiton is subject to high up-front costs and a long return on investment.

The State recognises that certainty is of key importance to BHP Billiton in light of the high risk of investment. In this context, the State's objective has been to maximise the benefits to South Australia through the Bill whilst applying effective and efficient regulation of the project and providing certainty to BHP Billiton where possible to secure the long-term investment viability of the project.

Key benefits of the project

Regional development is a key outcome of the expansion. The project touches many regional areas in the State, from Roxby Downs, Andamooka and Woomera, to the Upper Spencer Gulf and Eyre Peninsula, and will therefore generate considerable development opportunities in these regional areas particularly through wealth generation, increased employment opportunities, and use of local services.

The expansion includes a doubling of Olympic Dam's current smelting capacity and the Bill provides for BHP Billiton to process ore from other mines. This will not only generate value-adding opportunities to existing and future mines in the region, but also increase the total volume of minerals processing in the State.

Without doubt, increased employment opportunities are a win for the South Australian people, and particularly for our regional communities. To facilitate these opportunities, BHP Billiton will develop an Industry and Workforce Participation Plan that outlines initiatives to maximise opportunities for local industry, workforce and the use of local service providers. Particular emphasis will be placed on opportunities for employment and workforce development for Aboriginal people and support for aboriginal and regional economic development, which is of key importance to the State.

Key outcomes of the Bill

The Bill delivers several key outcomes that maximise economic benefit to the State whilst ensuring that the project is subject to our best practice regulation and environmental compliance regimes.

Whilst BHP Billiton may apply to the Indenture Minister for all other approvals, BHP Billiton is subject to the Environmental Protection Act for environmental authorisations for the project. In this way, the Bill recognises the full independence of the Environmental Protection Authority for environment approvals, licensing and necessary compliance action for Olympic Dam.

Another important revision to the Bill is the enhancement of compliance and enforcement provisions to ensure that the project achieves approved environmental outcomes and brings the existing Act into line with current legislation in the Mining Act and Environmental Protection Act.

As part of this, BHP Billiton will develop a programme for the protection, management and rehabilitation of the environment and will be subject to a strong compliance and enforcement regime. BHP Billiton will also incorporate a Greenhouse Gas and Energy Management Plan into this programme as a commitment to reducing its greenhouse gas emissions.

Furthermore, BHP Billiton will provide the State with rehabilitation security, in the form of a performance bond, to secure the performance of its rehabilitation obligations. This is a cornerstone agreement for the State, providing the State with guaranteed financial security against rehabilitation requirements at Olympic Dam.

Water continues to be a key concern for the State. In recognition of the value of this scare resource, BHP Billiton will pay the Arid Lands Natural Resources Management Board for water extracted from the Great Artesian Basin and saline wellfields for the purposes of its operations. Charges are based on the current levy but are capped at a maximum amount for 30 years to provide certainty to BHP Billiton of the charging regime in the medium term.

The project will also transition the township of Roxby Downs to a major regional centre, with BHP Billiton anticipating in its EIS a doubling of the residential population to approximately 10,000 people. This brings increased commercial opportunities for local and regional businesses both directly and indirectly related to the project. In addition to BHP Billiton's commitment to the provision of certain infrastructure and support, the State will continue to provide infrastructure support to Roxby Downs up to a township population of 9,000 people to facilitate the development of a long-term, sustainable township.

State commitments for project certainty

The State will provide BHP Billiton with an expanded Special Mining Lease (SML) of approximately 60,000 hectares. To provide certainty in the face of long lead times and high investment risk, the SML will be secured with an initial term of 70 years and ability to renew for a 50 year term. To facilitate further investment in the Olympic Dam area, the State has also provided BHP Billiton the opportunity to develop another project under the Indenture.

The State will also facilitate the provision of infrastructure and infrastructure corridors required for BHP Billiton's operations, including granting freehold title for certain project elements.

The royalty rates of the Mining Act will be applied to the project. BHP Billiton will not receive a concession on royalty rates payable and will pay the same rates as other existing mining operations. However, in recognition of the long lead times for development and need for certainty, the Indenture provides that current rates will be held for a term of 45 years.

The Olympic Dam expansion is one of the most significant development projects in South Australia. The provisions of this Bill strengthens the State's commitment to effective and efficient regulation of mining projects, whilst seeking to facilitate the long-term investment viability of the project for BHP Billiton and maximising the benefits that this project can bring to the State over the next Century.

I commend this Bill to Members.

Explanation of Clauses

Part 1—Preliminary

1—Short title

2—Commencement

These clauses are formal.

3—Interpretation

This clause sets out definitions for the purposes of the amendment Bill.

4—Amendment provisions

This clause is formal.

Part 2—Amendment of Roxby Downs (Indenture Ratification) Act 1982

5—Amendment of section 4—Interpretation

This clause proposes the insertion of certain definitions into the Act.

6—Amendment of section 7—Modification of State law

The proposed amendment to section 7(2)(a) revises the names of the Acts listed in subsection (2). Other amendments are made to section 7 related to the modification of State law for the purposes of the Indenture.

7—Amendment of section 8—Licences etc required in respect of the mining and milling of radioactive ores

The proposed amendments to section 8 substitute references to 'Joint Venturers' with 'Company'.

8—Amendment of section 9—Application of Aboriginal Heritage Act to the Stuart Shelf Area and the Olympic Dam Area

Some amendments in this clause delete obsolete provisions. Other amendments are consequential or related, or update the scheme to conform with current provisions of the Development Act 1993.

9—Substitution of section 12

This clause inserts proposed section 12:

12—Special provisions in relation to local government

This section contains special provisions concerning local government related to the administration of the municipality.

10—Insertion of Parts 4, 5 and 6

This clause inserts proposed Parts 4, 5 and 6:

Part 4—Special provisions relating to Projects

13—Unlawful abstraction, removal or diversion of water

This section provides for an offence of unlawfully abstracting, removing or diverting water.

14—Protection of infrastructure and equipment

This section provides for offences relating to the protection of Desal Infrastructure and equipment.

15—Access to desalination plant land

This section provides for an offence for a person to access desalination plant land without authorisation from the Company.

16—Access to SML1 land

This section provides that the holder of a licence under the Petroleum and Geothermal Energy Act 2000 will not be entitled to access any part of the area of a Special Mining Lease (or to be granted any such access) unless a statement of environmental objectives is in place in accordance with clause 19(13) of the Indenture.

17—Application of Land Acquisition Act 1969

The Minister may acquire land in accordance with the Land Acquisition Act 1969.

18—Approvals and declarations

Subsection (1) of this section relates to the validity of certain Project Approvals. Subsection (2) extends subsection (1) to project approvals given before the Ratification Date. Subsection (3) is a provision concerning the declaration made under section 46 of the Development Act 1993 in relation to the Indenture on 21 August 2008.

Part 5—Authorised investigations

19—Appointment of authorised officers

The Minister may appoint persons to be authorised officers.

20—Authorised investigation

This section sets out the scope of an authorised investigation.

21—Powers of entry and inspection

An authorised officer may, for the purposes of an authorised investigation, enter and inspect land.

Part 6—Other matters

22—Water requirements

This section provides that any charges for the distribution of potable water or the provision of sewerage services within the town must comply with the requirements of clause 13(22) of the Indenture.

23—Supply of electricity

This section provides that any tariffs imposed by a power distribution authority must not, in respect of electricity supplied to consumers within the town, exceed the rates that apply under clause 18(16) of the Indenture.

Part 3—Variation of Indenture and SML1

11—Variation of Indenture

This clause provides that the amendments to the Indenture are ratified and approved.

12—Variation of SML1

This clause provides that the amendments to SML1 are ratified and approved.

13—Variation Date

This clause makes provision for the Variation Date, and prescribes procedures related to the extension of the Variation Date.

Schedule 1—Variation Deed

The Schedule contains the Variation Deed.

Debate adjourned on motion of Hon. S.G. Wade.

The PRESIDENT: Could we have some quiet in the chamber. The chamber has been pretty noisy this morning.