Why Tenement Compliance Matters
A Guide for Exploration, Mining Licence Holders and Work Authorities
This booklet provides information to applicants and holders of tenements issued under the Mineral Resources (Sustainable Development) Act 1990. It describes the compliance obligations of a tenement holder.
Other relevant publications are:-
- Mineral Resources Development Regulations 2002
- Mineral Resources (Sustainable Development) (Extractive Industries) Regulations 2009
- Guidelines for Statutory Reporting - provides advice to mining licensees in the preparation of reports under Schedule 15 of the Mineral Resources Development Regulations 2002.
- Exploration Reporting Guidelines - a guide for Exploration and Mining Licence holders for reporting on exploration activities.
See also publications available on the Department's website (see below).
Further Information
Earth Resources Regulation Branch
Department of Primary Industries
16th Floor, 1 Spring Street,
MELBOURNE VIC 3000
Phone (03) 9658 4600 or fax (03) 9658 4460
http://www.dpi.vic.gov.au/earth-resources
Forward
This booklet provides advice to holders of tenements under the Minerals and Extractive sectors, of the various obligations they are required to maintain in order to keep their tenements in good standing.
The granting of a tenement provides certain rights to the tenement holder and also stipulates certain obligations on the holder.
Responsibility for regulating the Mining and Extractive sectors is within the Earth Resources Regulation Branch (ERR) of the Department of Primary Industries.
ERR maintains a regulatory staff presence at Ballarat, Benalla, Bendigo, Traralgon and Melbourne. Staff comprising Inspectors, Regulation Officers, Environmental Officers, Tenements Officers and Compliance Auditing Officers. Staff in ERR regularly monitor tenement holders' compliance with relevant compliance requirements.
The Department strongly recommends that operators become fully aware of their responsibilities, including those under the relevant legislation, tenement conditions and Work Plan conditions to assist them in meeting their compliance obligations.
What is tenement compliance?
Operators holding a tenement issued under the Mineral Resources (Sustainable Development) Act 1990
must comply with a range of legislative requirements. These relate to:-
- Operating conditions
- Work Plans
- Expenditure requirements
- Statutory Returns
- Rent
- Royalty
- Rehabilitation Bond
- Occupational Health and Safety
- Codes of Practice
Tenement holders have a responsibility to ensure they comply with these requirements at all times. Failure to comply can in some instances result in enforcement action including issuing an Infringement Notice, prosecution or the tenement being cancelled.
The Department regularly monitors tenements to ensure they are complying to a satisfactory standard.
The submission of Statutory Returns improves the quality of data collected and enhances the useability of information on the activities and level of work including rehabilitation and safety. The Department uses the information as a basis for establishing whether a tenement holder is fulfilling their obligations.
The Department will investigate operations based on the risk profile of the site. Operations that are not performing satisfactorily will be reviewed.
Introduction
Mineral Resources (Sustainable Development) Act 1990 - MRSDA
The purpose of the MRSDA is to encourage economically viable mining and extractive industries which make the best use of resources in a way that is compatible with the economic, social and environmental objectives of the State.
The objectives of the Act are:-
(a) to encourage and facilitate exploration for minerals and foster the establishment and continuation of mining operations by providing for-
(i) an efficient and effective system for the granting of licences and other approvals; and
(ii) a process for co-ordinating applications for related approvals; and
(iii) an effective administrative structure for making decisions concerning the allocation of mineral resources for the benefit of the general public; and
(iv) an economically efficient system of royalties, rentals, fees and charges; and
(b) to establish a legal framework aimed at ensuring that-
(i) mineral and stone resources are developed in ways that minimise adverse impacts on the environment and the community; and
(ii) consultation mechanisms are effective and appropriate access to information is provided; and
(iii) land which has been mined or from which stone has been extracted or removed is rehabilitated; and
(iv) just compensation is paid for the use of private land for exploration or mining; and
(v) conditions in licences and approvals are enforced; and
(vi) dispute resolution procedures are effective; and
(vii) the health and safety of people is protected in relation to work being done under a licence; and
(c) to recognise that the exploration for, and mining or extraction of, mineral resources and stone must be carried out in a way that is not inconsistent with the Native Title Act 1993 of the Commonwealth and the Land Titles Validation Act 1994.
Mineral Resources (Sustainable Development) Act 1990
Exploration licences (EL)
Annual Expenditure Condition
The licence document specifies the annual expenditure requirement (refer to table of claimable items). Commencement of the expenditure requirement on an exploration licence occurs on grant of the licence. The following tables indicate the minimum amounts required. In the case where the area is subject to a tender (section 27 of the MRSDA) or competition by a number of applicants (section 23 of the MRSDA), the expenditure proposed on the application will be used as the licence expenditure requirement.
|
The minimum expenditure for each year is (a x b) + c, where: |
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|---|---|---|---|
| YEAR OF LICENCE | METALLIC* MINERAL $ per km2 or $ per GDA94 graticular section | NON-METALLIC** MINERAL $ per km2 or $ per GDA94 graticular section | FIXED EXPENDITURE |
| 1 | $150 | $75 | $15,000 |
| 2 | $200 (or $150***) | $120 (or $100***) | $15,000 |
| 3 | $200 | $120 | $15,000 |
| 4 | $200 | $120 | $15,000 |
| 5 | $300 | $150 | $15,000 |
| 6 to 10 | $500 (or $300***) | $250 (or $150***) | $15,000 |
| 11 plus | $1,000 (or $300***) | $500 (or $150***) | $15,000 |
* eg gold, silver, lead, zinc, silver, antimony, diamonds
** eg mineral sands, gypsum, diatomite, kaolin, peat, feldspar
*** Rate applicable to exploration licences granted as a strategic licence surrounding an existing mining licence operation
Note: -ELs applied for before 1 July 2005 are calculated using a $ per km2rate
-ELs applied for after 1 July 2005 are calculated using a $ per GDA94 graticular rate (refer to Department's website at http://www.dpi.vic.gov.au/earth-resources for further details of the GDA94 survey standards)
Rehabilitation Bond
Departmental policy requires that a Work Plan specifying work other than “Low Impact Exploration” should be lodged no later than the first anniversary of the grant of the licence. Whenever a Work Plan specifying work other than “Low Impact Exploration” is lodged, a rehabilitation bond must also be lodged.
Low Impact Exploration is defined by the Mineral Resources (Sustainable Development) Act 1990, section (4) as:
Exploring for minerals on land –
without using equipment (other than non-mechanical hand tools) to excavate on the land; and
without using explosives on the land; and
without removing or damaging any tree or shrub on the land; and
without disturbing any Aboriginal cultural heritage within the meaning of the Aboriginal Heritage Act 2006 that is recorded in the Victorian Aboriginal Heritage Register under that Act; and
without disturbing any place or object on the Victorian Heritage Register, or any archaeological site or relic included on the Heritage Inventory, under the Heritage Act 1995.
Mineral Resources Development Regulations 2002
Schedule 14 (Activity and Expenditure) Return
Required once every year (due for either the period ending 30 June, 30 September, 31 December or 31 March) commencing at grant of the licence, to cover details of Expenditure and Work Conducted.
Failure to submit the return by the due date will result in an Infringement Notice being issued.
Mineral Resources (Sustainable Development) Act 1990
Mineral Resources Development Regulations 2002
Schedule 16 (Technical) Return
Required once every year (due for either the period ending 30 June, 30 September, 31 December or 31 March) commencing at grant of licence to cover details of technical results of the exploration work.
Information provided from licensee returns is used to monitor compliance obligations, including expenditure, site status, rehabilitation and the health and safety of the workforce.
Failure to comply with the above requirements may be judged as an indication of the lack of a genuine intent to do work, which may lead to licence cancellation processes being implemented.
Mining licences (MIN)
Annual Expenditure Condition
Commencement of the expenditure requirement (refer to table of claimable items) on a mining licence occurs:-
- If Low Impact Exploration* is being undertaken, from the date of grant of the licence (Note- section 39 (4)(b) of the MRSDA, provides that certain requirements must also be met before commencing low impact exploration, e.g. obtained all required consents, Public Liability Insurance, and obtained consent or reached compensation with owners/occupiers).
- If exploration other than Low Impact Exploration is being undertaken, from the date of approval of the work plan (Note- section 39 (4)(a) of the MRSDA, provides that certain requirements must also be met before commencing work (other than Low Impact Exploration), e.g. Approved Work Plan, Rehabilitation bond, obtained all required consents, Public Liability Insurance, given notice to the Director of Mines and owners/occupiers and obtained consent or reached compensation with owners/occupiers).
- In any other case, from the date of registration of the Work Authority
The following tables indicate the minimum annual amounts required. In the case where the area is subject to a tender (section 27 of the MRSDA) or competition by a number of applicants (section 23 of the MRSDA), the expenditure proposed on the submitted application will be used as the licence expenditure requirement.
| METALLIC MINERAL** (excluding Underground operations) | |
|---|---|
| AREA OF LICENCE | EXPENDITURE |
| 5 hectares or less | $15,000 per annum |
| Greater than 5 hectares and up to 10 hectares | $20,000 per annum |
| Greater than 10 hectares and up to 25 hectares | $23,000 per annum |
| Greater than 25 hectares | $900 per hectare |
| NON-METALLIC MINERAL*** | |
|---|---|
| AREA OF LICENCE | EXPENDITURE |
| 5 hectares or less | $5,000 per annum |
| Greater than 5 hectares | $10,000 plus $200 per hectare per annum |
Note: Expenditure requirements do not apply to a licence for the mining of Gypsum.
* Refer definition of Low Impact Exploration
** eg gold, silver, lead, zinc, silver, antimony, diamonds
***eg mineral sands, gypsum, diatomite, kaolin, peat, feldspar
Mineral Resources (Sustainable Development) Act 1990
Mining licences
Annual Expenditure Condition (cont.)
| UNDERGROUND METALLIC MINERAL OPERATION | |
|---|---|
| AREA OF LICENCE | EXPENDITURE |
| 5 hectares or less | $14,000 per annum |
| Greater than 5 hectares to 10 hectares | $19,000 per annum |
| Greater than 10 hectares to 25 hectares | $22,000 per annum |
| Greater than 25 hectares | $850 per hectare per annum |
The MRSDA -section 14(6) allows a mining licensee to conduct mineral exploration only for a specified period of up to two years. The following table relates to this case.
| EXPLORATION ON A MINING LICENCE (METALLIC AND NON-METALLIC) (Multiply the number of hectares by the "$ per hectare" rate and add to the "Fixed Expenditure" rate) | ||
| AREA OF LICENCE | FIXED EXPENDITURE | $ PER HECTARE |
| 5 hectares or less | $15,000 | - |
| Greater than 5 hectares and up to 260 hectares | $15,000 | 100 |
| Greater than 260 hectares | $20,000 | $150 |
Revised Rehabilitation Bond
Revised bonds are required to be submitted within one month after being requested in writing by the Department. In calculating bond amounts, the Department consults with relevant parties including the licensee, land owner, Council and where crown land is involved , the Crown Land Manager.
Failure to lodge a revised rehabilitation bond may result in enforcement action, including the issuing of a notice prohibiting any further work until the required bond has been submitted.
Work Plan
Licence conditions provide that preliminary details of the Work Plan, must be submitted within six months of grant (or longer if approved by the Department Head). If exploration work is being undertaken, the licensee must submit a Work Plan within three months of grant (or longer period if approved by the Department Head).
Failure to comply with these requirements may be judged as an indication of the lack of a genuine intent to do work, which may lead to licence cancellation processes being implemented.
Mineral Resources Development Regulations 2002
Mining Licences
Schedule 15 (Expenditure and Activities) Return
Required after grant, once every twelve months for the period ending 30 June to cover details on “Expenditure” and “Work” carried out.
Failure to submit the return by the due date will result in an Infringement Notice being issued.
Schedule 16 (Exploration Results) Return
Required to be submitted after grant, once a year for the period ending 30 June to cover technical results of exploration work.
Rent
Required to be paid every six months after grant of a Work Authority for periods ended 30 June and 31 December.
Failure to pay rent may result in licence cancellation processes being implemented.
Royalty Return
Required for minerals (other than gold) to be submitted once a year (ending 30 June).
| MINERAL | ROYALTY |
|---|---|
| Lignite (brown coal) | The determined amount per gigajoule unit of coal produced |
| Tailings from Crown land disposed of under section 14(2)(b) of the Act | $1.43 per cubic metre |
| All other minerals, excluding gold | 2.75% of the net market value |
Failure to pay royalty may result in licence cancellation processes being commenced.
Information provided from licensee returns is used to monitor compliance obligations, including expenditure and the status of the site, rehabilitation and the health and safety of the workforce.
Failure to comply with the above requirements may be judged as an indication of the lack of a genuine intent to do work, which may lead to licence cancellation processes being implemented.
Mineral Resources (Sustainable Development) Act 1990
Exploration and mining licences
Minimum Annual Expenditure Requirements
Tenement holders must be able to meet their individual licence expenditures. Failure to maintain the required expenditure may result in the licence being considered for cancellation.
Holders should be aware that there is provision to apply for a variation to the expenditure amount, where extenuating circumstances occur, such as ill health, poor weather, equipment failure or safety issues. Should you be unable to meet your annual expenditure for a valid reason, you should lodge an application under section 34 of the MRSDA, for consideration of a variation to the expenditure amount. Applications may be considered for a temporary variation in part or in full.
Each application will be considered on its merits and will be dependent on the Department’s acceptance of the reasons given. You should provide full details as to why the variation is being requested and also the period for which the variation is being sought.
It is important to lodge a variation application prior to the period in which the reduction is expected to occur. The Department is less likely to agree to retrospective variations.
The Need to Maintain Expenditure Records
Holders of an Exploration or Mining Licence under the MRSDA must report the details of expenditures made on the licence in annual statutory returns (refer to table for list of items that are eligible to be claimed)
The purpose of the annual statutory returns is to provide a record of the amount that the licence has expended on the operation. From this information the Department can assess whether the annual expenditure commitment is being met.
The Department monitors the results of these returns and will closely examine licences that are not meeting their expenditure requirement.
The Department may also examine licences that are reporting satisfactory expenditure. This may be undertaken where it appears that the reported expenditure is substantially higher than what would normally be spent for that type of operation, or where the reported expenditure does not appear to be reflected in the actual on-site work.
In cases where a licence has been audited and there is doubt as to the accuracy of the reported expenditure, the Department may request that the licensee provide documentation to substantiate the expenditure being reported. Substantiation may include:-
- Wages and Salaries- Group Certificates/ number of hours worked where claiming own labour
- Equipment Plant and Machinery- receipts for purchase of equipment, hiring costs, maintenance, contractors
- Administration- receipts for payment of rent, purchase of consumables
- Rehabilitation- receipts for purchase of seedlings or plants, etc.
- Exploration- receipts for analysis work, testing, etc.
All licensees should retain documentation which substantiates expenditures, in case an audit is required. Expenditure records should be retained for at least five years. Failure to verify expenditure claims may result in the Department’s records being adjusted to reduce the claimed amount. Failure to maintain expenditure to the Department’s satisfaction may result in licence cancellation.
Mineral Resources (Sustainable Development) Act 1990
Exploration and mining licences
Compliance with section 15(6)
Section 15(6) of the MRSDA provides that an applicant for a licence must satisfy the Minister that the applicant:-
a. is a fit and proper person to hold the licence; and
b. intends to comply with this Act; and
ba. genuinely intends to do work; and
c. has an appropriate program of work; and
d. is likely to be able to finance the proposed work and rehabilitation of the land
Otherwise, a licence cannot be granted. Similarly, a renewal application cannot be granted unless the applicant satisfies the Minister as to the matters specified in sections 15(6) (a), (b), (c) and (d). Further, the holder of a granted licence, may have the licence cancelled if the Minister is not satisfied that the licensee continues to meet section15(6) of the MRSDA.
Any non-compliance may affect your ability to satisfy future eligibility to be granted licences under the MRSDA.
Mineral Resources (Sustainable Development) Act 1990
Expenditure-What can be claimed*
It is important to be aware of the various items that can and cannot be claimed as expenditure on an EL or MIN.
| Is it claimable? | |
|---|---|
| Wages and Salaries | Yes |
| Land Access Compensation- (including Native Title) | Yes |
|
Office Work:
|
Yes |
|
Ground Exploration:
|
Yes |
| Airborne Surveys | Yes |
| Drilling | Yes |
|
Other Exploration:
|
Yes |
|
Mining:
|
Yes |
|
Overheads: (Overheads should be no more than 20% of the total claim)
|
Yes |
| Rehabilitation | Yes |
|
Other:
|
No |
*Note: Claims for expenditure can only be made for expenses incurred after the licence has been granted
Mineral Resources (Sustainable Development) Act 1990
Work authorities (WA)
Revised Rehabilitation Bond
Revised bonds are required to be submitted within one month after being requested in writing by the Department. In calculating bond amounts, the Department consults with relevant parties including the licensee, land owner, Council and where crown land is involved , the Crown Land Manager.
Failure to lodge a revised rehabilitation bond may result in enforcement action, including the issuing of a notice prohibiting any further work until the required bond has been submitted.
Mineral Resources (Sustainable Development) (Extractive Industries) Regulations 2009
Schedule 2 (Annual report)
Submitted annually (no later than 31 July) for the period ending 30 June. The report details the amount of stone extracted/sold together with the value of sales. The report also includes details of the amount of stone sold or removed from Crown land for the purposes of payment of royalty by no later than 31 July.
Failure to submit the return by the due date will result in an Infringement Notice being issued.
Schedule 3 (Royalty Rates)
Depending on the type and amount of stone reported in Schedule 2, royalty is payable at the following rates:-
| TYPE OF STONE | RATE PER CUBIC METRE | RATE PER TONNE |
|---|---|---|
| All stone (except dimension stone and marble) | $1.43 | $0.87 |
| Dimension stone and marble | $8.07 | $3.23 |
Note: Royalty is required to be paid on stone production from Crown land only (not private land).
The WA holder should maintain detailed records of stone produced from Crown land. Crown land can occur at the surface or from 15.24 metres depth from the surface, depending on the particular land title details of the extraction site. Operators should check the Land Title circumstances and the Approved Work Plan in order to be aware if stone is being produced from Crown land and therefore becomes subject to a royalty payment.
Other reports
The Mineral Resources (Sustainable Development) (Extractive Industries) Regulations 2010 also prescribes for submission of the following reports where applicable:-
- Regulation 12- Information relating to injuries arising out of work done under work authority for the periods 1 January to 30 June and 1 July to 31 December
- Regulation 13- Information relating to reportable events at quarries, required as soon as practicable after the event has occurred.
- Regulation 14- Report relating to declared quarries. This is required for an extractive industry work authority that relates to a declared quarry. The report covers matters described in Regulation 14 and should be submitted for each period of six months ending on 30 June or 31 December (or other dates as nominated by the Minister)
NOTE:
The expenditure and royalty rates referred to in this publication were correct at the time of printing. However, you should always check the current rates with the Department of Primary Industries, as they may change from time to time.
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