ECONOMIC DEVELOPMENT AND INFRASTRUCTURE
COMMITTEE
Inquiry into greenfields mineral exploration and project development in Victoria
May 2012
ORDERED TO BE PRINTED
Victorian Government Printer
Parliamentary Paper
No. 136 Session 2010–11
Parliament of Victoria Economic Development and Infrastructure Committee Inquiry into greenfields mineral exploration and project development in Victoria ISBN: 978‐0‐9808214‐2‐0
Economic Development and Infrastructure Committee Parliament House, Spring Street EAST MELBOURNE VIC 3002
Phone: +61 3 8682 2832 Email: [email protected] Website: <http://www.parliament.vic.gov.au/edic>
This report is also available online at the Committee’s website. Cover design by Matt Clare of Mono Design. Rear cover image provided by Iluka Resources. This report is printed on recycled paper.
Table of Contents
Committee members and staff The Economic Development and Infrastructure Committee Committee contact details Terms of reference ix xi xi xiii
List of recommendations List of tables List of figures xvii xxi xxiii
1.1.1 1.1.2 1.2
Terms of reference What types of minerals are the focus of the Inquiry? Inquiry process
‘Greenfields’ versus ‘brownfields’ exploration Why is greenfields mineral exploration important? The relationship between junior explorers and large mining companies Declining levels of greenfields mineral exploration Project lead times Global perspective Mineral exploration and mining in Australia The current resources boom
2.1.1 2.1.2 2.1.3 2.1.4 2.1.5 2.1.6 2.2 2.2.1 2.2.2 2.2.2.1
9
10 12 15 16 17 17
South Australia — a model for increased investment in greenfields mineral
23 23 23 32 32 34 37 39 40 40 40 41
3.1.1 3.1.2 3.2
Background Prospectivity and mineral endowment Victoria’s current mineral prospectivity
3.2.1 3.2.2 3.2.3 3.2.4 3.3
Mineral sands Gold Brown coal Extractives Emerging prospectivity for other earth resources
3.3.1 3.3.2 3.3.3
Base metals Geothermal Coal seam gas
4.1.1 4.1.2 4.1.2.1
Role of mining in Australia’s economy The role of mining in Victoria’s economy Economic impacts
iii
4.1.2.2 4.1.3
Employment impacts Wider economic benefits of mining Regional economic activity Regional employment Direct and indirect job creation Demand for specialised goods and services Melbourne as a ‘global’ mining city Presenting the case for the Victorian resources sector High‐level government support for the resources sector Community perceptions of the resources sector
47 48 48 49 50 51 51 52 52 54
4.1.3.1 4.1.3.2 4.1.3.3 4.1.3.4 4.1.3.5 4.1.4 4.1.4.1 4.1.4.2
5.1.1 5.1.2 5.1.2.1 5.1.2.2 5.1.3
Closer human settlement patterns compared to other Australian jurisdictions 58 Restrictions on land access for exploration and mining Crown land
63 63
Deep sedimentary cover of potential ore bodies Nuggetty gold
66
5.2.1.1 5.2.1.2 5.2.2 5.2.3 5.3
Protecting agricultural land Striking the balance between agriculture and mining Urban development and mining Environmental values and mining Financial and regulatory environment Sovereign risk
71 74 76 84 89
91 92 94
5.3.2.1 5.3.2.2 5.3.3 5.3.3.1 5.3.3.2 5.3.3.3 5.3.4
Minerals Resource Rent Tax Carbon pricing (the ‘carbon tax’) Perceptions of Victoria as a place to explore and mine An international perspective What the miners said
97
101 103 104 105 110
What others said Community education and engagement Notification of new licences for residents Lengthy approval periods
5.3.4.1 5.3.5
113 116 117 117 119 119 120 120 123 126 127 127
6.1 6.2
Principal Act: the Mineral Resources (Sustainable Development) Act 1990
6.3.1 6.3.2 6.3.2.1 6.3.2.2 6.3.3 6.4 6.4.1 6.4.2 6.4.3
Mineral licences Extractive consents and authorities Consent to search for stone Work authority Security of tenure Obtaining a minerals licence Advertising licence applications Assessment of licence applicant Licence approvals and conditions
iv 6.5 6.6
Obtaining an extractive industry work authority Work plan approval processes Exploration and mining work plans Extractive work plans Consents and approvals for work authority Crown land Private land Cultural heritage Native vegetation Water Rehabilitation plan and bond Environmental management plan/program Community engagement plan Planning approval Statutory endorsement of work plan Environment Effects Statement
Environment Protection and Biodiversity Conservation Act 1999 (Cwlth)
Final approval of work authority
Compliance with the Native Title Act 1993 (Cwlth) Traditional Owner Settlement Act 2010
Royalties and charges
129 132 132 132 134 134 136 138 140 142 142 147 148 150 150 152 155 155 156 158 159 160 161 161 162 163
6.6.1 6.6.2 6.6.3 6.6.3.1 6.6.3.2 6.6.3.3 6.6.3.4 6.6.3.5 6.6.4 6.6.5 6.6.6 6.6.7 6.6.7.1 6.6.8 6.6.8.1 6.7 6.8
6.9 6.9.1 6.9.1.1 6.9.1.2 6.9.2 6.10
Mineral royalty rates Gold royalty rates Brown coal royalty rates Extractive royalty rates The Mining Warden
168 170 173 175 177 180 188 195 197 200 201 203 205 207 208 211 213 215 215 215 217 218 220
Victoria’s complex regulatory environment Other Australian jurisdictions Overlapping regulations and levels of government Lengthy approval times Inter‐agency referrals Streamlining the approvals process Improving regulator quality
7.1.1 7.1.1.1 7.1.2 7.1.3 7.1.3.1 7.1.3.2 7.1.4
The mining industry’s view The extractives industry’s view Other stakeholder views Cultural heritage and native title Cultural heritage Native title Native vegetation management Native vegetation management — the resource sector’s view Extractives industry
7.3.1 7.3.2 7.3.3 7.4 7.4.1 7.4.2 7.5 7.5.1 7.5.1.1 7.5.1.2 7.5.1.3 7.6
Explorers and miners More flexible native vegetation management Improved engagement with the resources sector
v
7.6.1.1 7.6.1.2 7.6.2 7.6.2.1 7.6.2.2
South Australia Western Australia
220 222 224 226 227
Changing the regulatory environment: a ‘one‐stop‐shop’ or ‘lead agency’? Managing the ‘every agency believes it is the lead agency’ problem Separation between regulation and facilitation roles
229 230 230 230 232 232 233 234 234 235 236 236 237 238 238 239 239 239 242 242 242 242 243 244 245 245
8.1 8.1.1 8.1.1.1
Victorian Government initiatives Existing initiatives Rediscover Victoria
8.1.1.1.1 Drilling initiative 8.1.1.1.2 3D Victoria 8.1.1.2 8.1.1.3 8.1.1.4
Victorian Geological Carbon Storage (VicGCS) CarbonNet Energy Technology Innovation Strategy
8.1.1.4.1 2005 — ETIS 1 8.1.1.4.2 2008 — ETIS 2 8.1.1.4.3 2011 — New Funding 8.1.1.4.4 Evaluation of ETIS 8.1.1.5 8.1.2
Brown Coal Innovation Australia Previous initiatives
8.1.2.1.1 Minerals component 8.1.2.1.2 Evaluation of VIMP 8.1.2.2 8.2
Developing Gold Undercover Australian Government
8.2.1.1 8.2.1.2 8.2.1.3 8.2.2 8.2.3 8.2.3.1 8.2.3.2
Geothermal Drilling Program Carbon Capture and Storage Flagships Program Emerging Renewables Future tax reform targeting mineral exploration Council of Australian Governments’ regulatory reform agenda National Partnership Agreement to Deliver a Seamless Economy National Productivity Compact: Regulatory and Competition Reform for a more
8.3 8.3.1 8.3.1.1
Other Australian jurisdictions Western Australia Exploration Incentive Scheme
248 248 248 248 248 249 249 250 250 250 250 251 251 251 251 252
8.3.1.1.1 Exploration and Environmental Coordination 8.3.1.1.2 Innovative Drilling 8.3.1.1.3 Geophysical and Geochemical Surveys 8.3.1.1.4 3D Geological Mapping 8.3.1.1.5 Promoting Strategic Research with Industry 8.3.1.1.6 Sustainable Working Relations with Indigenous Communities
Smart Exploration Smart Mining — Future Prosperity
8.3.2.1 8.3.2.2 8.3.2.2.1 Collaborative Drilling Initiative 8.3.2.2.2 Cluster Formation Initiative 8.3.2.2.3 Industry Network Initiative 8.3.2.2.4 Outcomes of SMFP