Coal Mining in Australia

"A look at the legal and regulatory mechanism around mining down under"

Background Of Mining In Australia

Mining is one of Australia's most important export sectors, and currently comprises 8 per cent of the Australian economy and 40 per cent of its exports. Black coal constitutes a significant part of those exports.Coal mining in Australia has been the subject of criticism-for members of the environmental movement, because of its impact on the rural landscape, and burning coal releases carbon dioxide, which is generally understood to contribute to climate change, global warming and rise in sea levels. The burning of coal produces 42.1% of Australia's greenhouse gas emissions, excluding exported coal, based on 2004 GHG inventory.

1. high-quality black coal, and
2. lower-quality brown coal.

Legal And Regulatory Structure

The Commonwealth (federal government) has the power to make laws under the Constitution of Australia. The Commonwealth has power to legislate in areas of corporations, taxation, native title, overseas trade, trade practices, foreign investment and foreign affairs. However, using such power, the Commonwealth also legislates on broader issues including environmental issues and native title.

The federal government (the Commonwealth of Australia) represents a federation of six Australian states (New South Wales, Queensland, Victoria, South Australia, Tasmania and Western Australia) and the Commonwealth Territories (the Australian Capital Territory and Northern Territory). The Commonwealth has the power to make laws under the Constitution of Australia. The Commonwealth has power to legislate in areas of corporations, taxation, native title, overseas trade, trade practices, foreign investment and foreign affairs. However, using such power, the Commonwealth also legislates on broader issues including environmental issues and native title.

The state and territory governments are given broad legislative power under their respective constitutions. Areas such as mining, roads and traffic, environment, health and criminal law are regulated primarily by laws at this level. Local governments are established by state or territory laws. Local governments typically make and enforce regulations in relation to building and development, town planning, local amenities, environment and land use within their jurisdiction.

Regulating Mining In Australia

Minerals and the mining industry are regulated at the state and territory level. Each state and territory has its own legislation relating to minerals found onshore and offshore within coastal waters. Some Commonwealth laws may affect the mining industry because the Commonwealth legislates over such areas as corporations, competition and trade practices, interstate and overseas trade, taxation, defence and foreign affairs. Mining companies on the Australian Stock Exchange (ASX) must also comply with ASX Listing Rules.

The Principal Laws Regulating Australia's Mining Industry

Each state has a Mining Act and Mining Regulations (or their equivalent) that regulate the ownership of minerals and operation of mining activities in that state. The states have other laws dealing with areas such as mine operation, mine inspection, occupational health and safety, environment and planning. The government department administering mining law in each state administers and sets out guidelines and policy statements relating to state mining legislation.

Mining Rights And Title

The Crown owns all metallic minerals in the ground. Common law presumes that a landowner also owns all minerals on or beneath the surface of that land. However, this principle has been virtually abolished by statute in Australia and all new grants of freehold titles in Australia have provided that all minerals are reserved to the Crown. Any mineral that is lawfully mined becomes the property of the person by or on behalf of whom it is mined at the time the mineral was severed lawfully from the land. Until then it remains the property of the Crown.

What Mining Rights May Private Parties Acquire?

A miner may obtain rights to conduct mining activities on unreserved Crown land or on private land where the permission of the landowner has been granted. The specific mining rights that miners may acquire differ slightly in each state or territory but the rights are based upon three basic stages of development of a mine: initial exploration, further detailed exploration and assessment, and production. Holders of mining rights may also have ancillary rights that relate to those mining activities, such as public road access, access to water and setting up crushing, sizing and grading facilities on the land surface.

What Rights Can Domestic Parties Acquire As Opposed To Foreign Parties?

There is no difference (at law) as to the rights that a domestic party acquires as opposed to foreign parties. This is good for foreign parties. However, a major acquisition of assets by a foreign company may require the approval of the Australian Federal Treasurer, through the Foreign Investment Review Board. The Board has the power to block proposals that are required to be notified to it and which are determined to be 'contrary to the national interest'.

How Are Mining Rights Protected?

The legislation of each state prohibits prospecting or mining minerals otherwise than in accordance with the terms of valid mining tenement. As a general rule, mining rights may not be granted to third parties over the land that is subject to an existing mining tenement, unless the holder of the existing mining rights gives consent. These and other mining rights can be protected or enforced through an independent judicial system.A mining court or tribunal has been set up in each state or territory, and is given the jurisdiction to determine all suits concerning mining tenements and may exercise any other jurisdiction vested by that particular state or territory. Mining rights obtained through contractual arrangements are also protected under contract law.

What Surface Rights May Private Parties Acquire?

A holder of mineral rights is generally given rights on the land surface to carry out mining purposes. These rights may depend upon the stage of mining operation, and may include rights to access water and public roads; construct, maintain and use buildings, plants, roads and railways; and conduct primary treatment operations and other acts ancillary to mining. Where the holder is seeking to engage in these ancillary activities on private land, rights must be obtained from private landowners by means of purchases, leases, easements and the like. The general laws of contract applies between private entities. Mining legislation may also set out requirements for certain terms relating to access and compensation arrangements with landowners.

Is There Any Distinction Between The Duties, Royalties And Taxes Payable By Domestic Parties And Those Payable By Foreign Parties?

Although there is no obvious distinction between specific mining taxes such as duties and royalties paid by domestic parties compared to those paid by foreign parties, parties must consider more general taxation matters such as withholding taxes, thin capitalization rules, double tax agreements and foreign tax credits.

Business Structures

Mining activities can be conducted by corporations, partnerships or by way of joint ventures; however, mining projects are usually conducted under joint venture arrangements. The JV can be either incorporated or unincorporated. An incorporated JV uses a company as a project vehicle, and as such, is governed by its constituent documents. The typical unincorporated JV will be governed by a joint venture agreement.

Restrictions And Limitations

This pertains to importing machinery and equipment or services into Australia in connection with mining activities. An import permit is required to import used agricultural, earthmoving and mining machinery and is assessed by the Australian Quarantine & Inspection Service. Also, all machinery imported into Australia requires a cleanliness declaration which states that the machinery is clean and free of all soil, plant and animal debris. There are occupational health and safety laws in each state and territory of relevance to the use of plant and equipment.

Restrictions On The Processing, Export, Or Sale Of Metallic Minerals

Other than export controls that exist for the sale of uranium, there are no general restrictions or limitations imposed on the processing, exporting or selling of metallic minerals. There are no general restrictions or limitations in relation to the use of the proceeds from the export or sale of metallic minerals. Generally, foreign and Australian currency can be transferred in and out of Australia without restriction. Virtually all exchange controls in Australia have been removed.

Steps Ahead

There are several ways of establishing mining links in Australia:

1. Either the Indian Counterpart can simply purchase the coal from Australia, or
2. The Indian Company can invest a substantial amount and lease out coal mines in Australia on a long-term basis, or
3. The Indian company can enter into a JV with an Australian Company for the purposes of coal mining operations, or
4. Such other options that can be explored.

Approach

Archer Jurists LLP has its Associate Law Firms in Australia who can help in facilitating and obtaining various clearances, as per their law, for the purposes of carrying out mining activities in Australia.

Disclaimer–This is purely an informational note that is meant only for private circulation and intended solely for the use of the individual or entity to whom it is addressed. It is not an advertisement or any form of solicitation. It may not be quoted or referred to in any public document or shown to or shared with any third party, including any government authority, agency or other official body, without our consent. The information contained in this document is for information purposes only. The author provides no warranty about the content or accuracy of content enclosed. Information provided is subjective. This document is not a legal opinion and we strongly recommend that the recipients should seek legal advice for specific situations and not act solely on the basis of anything stated herein.