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 ix The Economic Development and Infrastructure Committee xi Committee contact details xi Terms of reference xiii Chair’s foreword xv List of recommendations xvii List of tables xxi List of figures xxiii List of abbreviations xxv Chapter one: Introduction 1 1.1 Scope of the Inquiry 3 1.1.1 Terms of reference 3 1.1.2 What types of minerals are the focus of the Inquiry? 4 1.2 Inquiry process 5 1.3 Report overview 5 Chapter two: The mining and extractives sectors in Australia 7 2.1 Overview of mineral exploration and mining project development 8 2.1.1 ‘Greenfields’ versus ‘brownfields’ exploration 9 2.1.2 Why is greenfields mineral exploration important? 9 2.1.3 The relationship between junior explorers and large mining companies 10 2.1.4 Declining levels of greenfields mineral exploration 12 2.1.5 Project lead times 15 2.1.6 Global perspective 16 2.2 Mineral exploration and mining in Australia 17 2.2.1 The current resources boom 17 2.2.2 Comparison with other Australian states 18 2.2.2.1 South Australia — a model for increased investment in greenfields mineral exploration 19 Chapter three: The Victorian resource sector 23 3.1 Mineral exploration and mining in Victoria 23 3.1.1 Background 23 3.1.2 Prospectivity and mineral endowment 23 3.2 Victoria’s current mineral prospectivity 32 3.2.1 Mineral sands 32 3.2.2 Gold 34 3.2.3 Brown coal 37 3.2.4 Extractives 39 3.3 Emerging prospectivity for other earth resources 40 3.3.1 Base metals 40 3.3.2 Geothermal 40 3.3.3 Coal seam gas 41 Chapter four: Exploration and mining in Victoria 45 4.1 Mining and the economy 45 4.1.1 Role of mining in Australia’s economy 45 4.1.2 The role of mining in Victoria’s economy 45 4.1.2.1 Economic impacts 46 iii 4.1.2.2 Employment impacts 47 4.1.3 Wider economic benefits of mining 48 4.1.3.1 Regional economic activity 48 4.1.3.2 Regional employment 49 4.1.3.3 Direct and indirect job creation 50 4.1.3.4 Demand for specialised goods and services 51 4.1.3.5 Melbourne as a ‘global’ mining city 51 4.1.4 Presenting the case for the Victorian resources sector 52 4.1.4.1 High‐level government support for the resources sector 52 4.1.4.2 Community perceptions of the resources sector 54 Chapter five: Real and perceived challenges to a successful Victorian resources sector 57 5.1 Human and natural geography 58 5.1.1 Closer human settlement patterns compared to other Australian jurisdictions 58 5.1.2 Restrictions on land access for exploration and mining 63 5.1.2.1 Crown land 63 5.1.2.2 Private land 65 5.1.3 Deep sedimentary cover of potential ore bodies 66 5.1.4 Nuggetty gold 68 5.2 Land use conflicts 70 5.2.1 Agriculture and mining 70 5.2.1.1 Protecting agricultural land 71 5.2.1.2 Striking the balance between agriculture and mining 74 5.2.2 Urban development and mining 76 5.2.3 Environmental values and mining 84 5.3 Financial and regulatory environment 89 5.3.1 Sovereign risk 90 5.3.2 Taxation 91 5.3.2.1 Minerals Resource Rent Tax 91 5.3.2.2 Carbon pricing (the ‘carbon tax’) 92 5.3.3 Perceptions of Victoria as a place to explore and mine 94 5.3.3.1 An international perspective 97 5.3.3.2 What the miners said 101 5.3.3.3 What others said 103 5.3.4 Community education and engagement 104 5.3.4.1 Notification of new licences for residents 105 5.3.5 Lengthy approval periods 110 Chapter six: Victoria’s regulatory environment for the resources sector 113 6.1 Principal Act: the Mineral Resources (Sustainable Development) Act 1990 113 6.2 Review of the MRSDA 116 6.3 Overview of licence types 117 6.3.1 Mineral licences 117 6.3.2 Extractive consents and authorities 119 6.3.2.1 Consent to search for stone 119 6.3.2.2 Work authority 120 6.3.3 Security of tenure 120 6.4 Obtaining a minerals licence 123 6.4.1 Advertising licence applications 126 6.4.2 Assessment of licence applicant 127 6.4.3 Licence approvals and conditions 127 iv 6.5 Obtaining an extractive industry work authority 129 6.6 Work plan approval processes 132 6.6.1 Exploration and mining work plans 132 6.6.2 Extractive work plans 132 6.6.3 Consents and approvals for work authority 134 6.6.3.1 Crown land 134 6.6.3.2 Private land 136 6.6.3.3 Cultural heritage 138 6.6.3.4 Native vegetation 140 6.6.3.5 Water 142 6.6.4 Rehabilitation plan and bond 142 6.6.5 Environmental management plan/program 147 6.6.6 Community engagement plan 148 6.6.7 Planning approval 150 6.6.7.1 Statutory endorsement of work plan 150 6.6.8 Environment Effects Statement 152 6.6.8.1 Environment Protection and Biodiversity Conservation Act 1999 (Cwlth) 155 6.7 Final approval of work authority 155 6.8 Compliance with the Native Title Act 1993 (Cwlth) 156 6.8.1 Traditional Owner Settlement Act 2010 158 6.9 Royalties and charges 159 6.9.1 Mineral royalty rates 160 6.9.1.1 Gold royalty rates 161 6.9.1.2 Brown coal royalty rates 161 6.9.2 Extractive royalty rates 162 6.10 The Mining Warden 163 Chapter Seven: Streamlining Victoria’s regulatory environment 167 7.1 Complex regulatory environment for exploration and mining 168 7.1.1 Victoria’s complex regulatory environment 170 7.1.1.1 Other Australian jurisdictions 173 7.1.2 Overlapping regulations and levels of government 175 7.1.3 Lengthy approval times 177 7.1.3.1 Inter‐agency referrals 180 7.1.3.2 Streamlining the approvals process 188 7.1.4 Improving regulator quality 195 7.2 The planning process 197 7.3 The Environment Effects Statement process 200 7.3.1 The mining industry’s view 201 7.3.2 The extractives industry’s view 203 7.3.3 Other stakeholder views 205 7.4 Cultural heritage and native title 207 7.4.1 Cultural heritage 208 7.4.2 Native title 211 7.5 Native vegetation management 213 7.5.1 Native vegetation management — the resource sector’s view 215 7.5.1.1 Extractives industry 215 7.5.1.2 Explorers and miners 215 7.5.1.3 More flexible native vegetation management 217 7.6 Improved engagement with the resources sector 218 7.6.1 Other jurisdictions 220 v 7.6.1.1 South Australia 220 7.6.1.2 Western Australia 222 7.6.2 Changing the regulatory environment: a ‘one‐stop‐shop’ or ‘lead agency’? 224 7.6.2.1 Managing the ‘every agency believes it is the lead agency’ problem 226 7.6.2.2 Separation between regulation and facilitation roles 227 Chapter eight: Government support for the mineral resources sector 229 8.1 Victorian Government initiatives 229 8.1.1 Existing initiatives 230 8.1.1.1 Rediscover Victoria 230 8.1.1.1.1 Drilling initiative 230 8.1.1.1.2 3D Victoria 232 8.1.1.2 Victorian Geological Carbon Storage (VicGCS) 232 8.1.1.3 CarbonNet 233 8.1.1.4 Energy Technology Innovation Strategy 234 8.1.1.4.1 2005 — ETIS 1 234 8.1.1.4.2 2008 — ETIS 2 235 8.1.1.4.3 2011 — New Funding 236 8.1.1.4.4 Evaluation of ETIS 236 8.1.1.5 Brown Coal Innovation Australia 237 8.1.2 Previous initiatives 238 8.1.2.1 Victorian Initiative for Minerals and Petroleum 238 8.1.2.1.1 Minerals component 239 8.1.2.1.2 Evaluation of VIMP 239 8.1.2.2 Developing Gold Undercover 239 8.2 Australian Government 242 8.2.1 Existing initiatives 242 8.2.1.1 Geothermal Drilling Program 242 8.2.1.2 Carbon Capture and Storage Flagships Program 242 8.2.1.3 Emerging Renewables 243 8.2.2 Future tax reform targeting mineral exploration 244 8.2.3 Council of Australian Governments’ regulatory reform agenda 245 8.2.3.1 National Partnership Agreement to Deliver a Seamless Economy 245 8.2.3.2 National Productivity Compact: Regulatory and Competition Reform for a more Competitive Australia 247 8.3 Other Australian jurisdictions 248 8.3.1 Western Australia 248 8.3.1.1 Exploration Incentive Scheme 248 8.3.1.1.1 Exploration and Environmental Coordination 248 8.3.1.1.2 Innovative Drilling 248 8.3.1.1.3 Geophysical and Geochemical Surveys 249 8.3.1.1.4 3D Geological Mapping 249 8.3.1.1.5 Promoting Strategic Research with Industry 250 8.3.1.1.6 Sustainable Working Relations with Indigenous Communities 250 8.3.2 Queensland 250 8.3.2.1 Smart Exploration 250 8.3.2.2 Smart Mining — Future Prosperity 251 8.3.2.2.1 Collaborative Drilling Initiative 251 8.3.2.2.2 Cluster Formation Initiative 251 8.3.2.2.3 Industry Network Initiative 251 8.3.2.2.4 Outcomes of SMFP 252 vi 8.3.2.3 Coastal Geothermal Energy Initiative 252 8.3.2.4 Greenfields 2020 253 8.3.3 New South Wales 254 8.3.3.1 Exploration NSW 254 8.3.3.1.1 Minerals program 254 8.3.3.1.2 Information program 254 8.3.3.2 New Frontiers 255 8.3.3.2.1 Minerals program 255 8.3.4 Northern Territory 256 8.3.4.1 Bringing Forward Discovery 256 8.3.4.1.1 Geoscience programs 256 8.3.4.1.2 Geophysics and drilling collaborations 256 8.3.4.1.3 Project facilitation and promotion 257 8.3.5 Tasmania 257 8.3.5.1 TasExplore 257 8.4 International jurisdictions 257 8.4.1 Canada 257 8.4.1.1 Flow‐through share scheme 258 8.5 An identified model for success — South Australia 259 8.5.1