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Mining Licence Guidelines

Information to assist applicants for and holders of Mining Licences under the Mineral Resources (Sustainable Development) Act 1990

Contents

Mining Licences

1. Purpose
2. Background
3. Transitional arrangements for existing mining licences
4. Application for a mining licence

  • Ministerial Guidelines – description of mineral resource and economic viability
  • Mineralisation report
  • Competent person to prepare mineralisation report
  • Survey of the boundaries of land applied for

5. Program of Work
6. Work on a mining licence
7. Maintenance and renewal of a mining licence
8. Reporting on licence

Appendix 1 - Ministerial Guidelines for Description of a Mineral Resource

1. Purpose

The purpose of these guidelines is to provide advice to applicants for, and holders of, mining licences under the Mineral Resources (Sustainable Development) Act 1990 (the Act) regarding:

  • general requirements for applicants;
  • the standard of mineral resource identification required in a mining licence application;
  • work that is required to be undertaken on a mining licence; and
  • requirements for the maintenance and renewal of a mining licence.

The guidelines are intended as a guide to the implementation of the Act and the Mineral Resources (Sustainable Development) (Mineral Industries) Regulations 2013 (the Regulations) to demonstrate what is expected from proponents in relation to statutory requirements. However, these guidelines do not necessarily outline the only means of compliance for a proponent. Ultimately all licensing and compliance decisions will be made on a case-by-case basis and will be subject to the Minister's or Department Head's discretion, where relevant. Note, references to 'the Minister' and 'the Department Head' include references to any relevant delegates within the Department of Economic Development, Jobs, Transport and Resources - Earth Resources Regulation ('the department').

These guidelines should be read in conjunction with the “Mining Licence Application Kit", guidelines issued by the Minister for the purposes of describing the mineral resource (section 15(1BB) of the Act), and any other relevant departmental guidelines. Additional information may also be obtained by contacting your local office of the department (contact details and the documents referred to above are available at Earth Resources).

The guideline attempts to distinguish legal requirements (in the Act and Regulations) from other general guidance by using words such as 'must' and 'required'. If there is any inconsistency between these guidelines and the Act or Regulations, the Act and Regulations will prevail. If applicants or licence holders are uncertain about any of their legal obligations they may wish to seek independent legal advice.

2. Background

Amendments to the Act passed in 2010 introduced a number of important changes relating to new and existing mining licences. The amendments came into operation on 1 February 2012. These guidelines also include some of the other significant amendments which have come into effect since then. The following section provides an outline of some of the key amendments as they apply to mining licences.

An important focus of the amendments is to ensure that mining takes place on mining licences, and that mining licences are not used solely to maintain title to ground and rights to resources or to undertake exploration programs.

For new mining licences (those applied for on or after 1 February 2012), the key change is a requirement that identification of a mineral resource be a precondition for the grant of a mining licence. The applicant is required to submit a mineralisation report, which demonstrates a mineral resource, with the licence application. The mineralisation report must be prepared by a competent person (sections 15(1BA) to (1BG) of the Act).

New provisions of the Act that apply to new and existing mining licences and applications include:

  • Changes to the fit and proper person requirements for applicants and licensees, which specify the matters to be considered in determining whether a person is fit and proper and extend the fit and proper test to associates of the applicant or licensee.
  • An ability for the Minister to impose licence conditions relating to work undertaken under the licence. This will allow for licence commitments, which have been confined to expenditure on the licence, to be broadened to specify the work or the type of work which must be undertaken.
  • Changes to licence cancellation provisions to allow for cancellation of a mining licence if mining is stopped for a continuous period of two years (note this is a discretionary power for the Minister and would be applied on a case-by-case basis, taking into account the relevant circumstances).
  • Rent is payable from grant of the licence.

3. Transitional arrangements for existing mining licences

The amendments also include transitional provisions (see Schedule 8 of the Act) that will ensure existing licensees and applicants are not unfairly disadvantaged as the new provisions are introduced. The transitional arrangements applying to existing mining licences, renewals and applications are as follows.

Existing mining licences will continue and licensees will not be required to identify a mineral resource (or provide a mineralisation report) in the current term of the licence. However, future licence renewals will require that a mineral resource has been identified or they are currently mining (clause 2(1)(b), Schedule 8 of the Act).

Applications for mining licences and renewal of mining licences made within 12 months of the amendments coming into operation are allowed 12 months from application to submit a mineralisation report in order to progress the licence or licence renewal application. A decision cannot be made in relation to such an application until the Minister receives the mineralisation report (clause 2, Schedule 8 of the Act).

Generally, a retention licence cannot be applied for over a mining licence. However, within the first 12 months of the amendments coming into operation, the holder of a mining licence or a mining licence applicant (or a person who has the consent of such a licence holder or applicant) may apply for a retention licence over the area of a current mining licence or mining licence application. Applicants are allowed a further 12 months from application to submit a mineralisation report in order to progress the retention licence application. A decision cannot be made in relation to such an application until the Minister receives the mineralisation report (see clause 3, Schedule 8 of the Act). The retention licence application would otherwise need to meet the application requirements, and would be assessed against the same criteria, as would normally apply for a retention licence.

If a retention licence is granted a new work plan must be submitted that is compliant with the work plan requirements for a retention licence (these requirements are set out in the Regulations).

A mining licence holder seeking to move to a retention licence under the transitional provisions will also need to consider any other necessary consents and approvals that may be required. In particular, native title requirements must be satisfied prior to the grant of a retention licence so the applicant will need to ensure that they are compliant with any relevant native title obligations. This includes holders of mining licences that were granted prior to native title.

A planning permit would not be required for a retention licence as the work is exploration under the Act (and not mining). Therefore, in circumstances where a mining licence holder obtains a retention licence over the relevant area, the existing planning permit for mining could lapse or be surrendered. Alternatively, the licensee may wish to retain the planning permit with a view to returning to mining at some future time. However, this is a matter licensees should discuss with their local Council, including whether or not the permit may lapse after a period of non-use.

Equally, an Environment Effects Statement (EES) is unlikely to be required for activities under a retention licence. Whether or not the EES previously undertaken for mining might be relevant for future mining approval over the same land would depend on the circumstances. This is a matter that would need to be discussed on a case-by-case basis with the Department of Environment, Land, Water & Planning.

4. Application for a mining licence

Ministerial Guidelines – description of mineral resource and economic viability

The identification of a mineral resource is a precondition for the grant or renewal of a mining licence (refer to section 15 of the Act). The applicant must describe the mineral resource in accordance with guidelines issued by the Minister (section 15(1BB) of the Act). A copy of the guidelines is provided at Appendix 1. As outlined in those guidelines, for the grant of a mining licence, a minimum of an indicated resource as defined by the Australasian Joint Ore Reserves Committee (JORC) Code is generally required (note, some limited exceptions apply).

The Ministerial Guidelines also provide what is required in relation to establishing the economic viability of the mineral resource for the purposes of the application. For details, refer Appendix 1. See also 'Mineralisation report' below.

The one circumstance in which the grant of a mining licence will not require identification of a mineral resource is where the licence is solely for mining infrastructure used for the purpose of mining under another mining licence, that is, an infrastructure mining licence (see section 15(1BB) of the Act).

Mineralisation report

Unless mining is already underway, the applicant is required to submit a mineralisation report, which demonstrates a mineral resource, with the application. The mineralisation report must be prepared by a competent person and set out the following exploration results in relation to the mineral resource (section 15(1BE) and (1BF) of the Act):

  • the type or types of minerals identified; and
  • the location, depth, quantity and extent of the mineral or minerals; and
  • the method by which that extent has been determined; and
  • analytical results obtained from samples of those minerals.

The mineralisation report must also include an analysis of whether the exploration results indicate that there is a reasonable prospect that the mining of the described mineral resource will be economically viable (section 15(1BE)(b) of the Act).

Competent person to prepare mineralisation report

The Act requires that the mineralisation report must be prepared by a competent person. The definition, as prescribed in the Regulations, is generally consistent with the JORC Code definition of competent person, and means:

(a) a person who:

(i) is a Member or Fellow of The Australasian Institute of Mining and Metallurgy, or of the Australian Institute of Geoscientists, or of a Recognised Professional Organisation with enforceable disciplinary processes including the power to suspend or expel a member; and

(ii) has a minimum of five years' experience which is relevant to the style of mineralisation or type of deposit under consideration and to the activity being undertaken; or

(b) in the case of —

(i) coal seam gas; or

(ii) a mineral deposit that is easily and readily assessed visually at the ground surface [1]

a person who the Minister has determined, on a case by case basis, has the relevant experience in mining or mineral exploration appropriate to the described mineral resource.

In the Regulations, a Recognised Professional Organisation means an organisation included in a list of recognised overseas professional organisations as published on the Australasian Joint Ore Reserves Committee (JORC) website or the Australian Stock Exchange (ASX) website.

For further guidance on what might constitute relevant experience for the purposes of (a)(ii) above, refer to the JORC Code (see in particular pages 4-5, 2012 edition).

Applicant to Survey boundaries of land

A mining licence application must also include a survey of the boundaries of the land proposed to be covered by the licence in accordance with section 15(1BH) and Division 3A of the Act. 

5. Program of work

A mining licence application must also include a program of work. The Regulations require that the program of work describe the location and types of work to be undertaken. What is an appropriate program of work will depend on the circumstances, though generally it is expected that the program of work under a mining licence should reflect a clear intention to establish a mine and should provide a time schedule for and details of proposed work, which may include:

  • further geological evaluation required to convert indicated resources to measured resources or reserves;
  • preparation of a full feasibility study;
  • formal decision to proceed to mining;
  • project financing;
  • obtaining of approvals, consents and land access agreements;
  • preparation of detailed mine design;
  • mine and infrastructure construction;
  • mine and infrastructure commissioning; and
  • mining and ore treatment.

The components of a full-feasibility study for a major project would normally include:

  • A resources statement that is at least at indicated status, and preferably with at least a core at measured status, with tenure secure
  • An all-of-life mining plan that attaches to the stated resources
  • A detailed mine and production plan for the first three years of commercial operation
  • An all-of-life production plan that scales mining and product rates to grades and overburden
  • An associated all-of-life production plan for each product dependent on the feasibility study, and process mass balances to match
  • A marketing plan, at least at a Memorandum of Understanding level with a clear pathway to contracts for the proposed production and products
  • A certified +/- 15% all-of-life capital cost assessment that reflects the all-of-life plan
  • A +/- 5% all-of-life operating costs assessment that reflects the all-of-life plan
  • A development schedule and assessment of the owner's team and feasibility study costs
  • An associated Net Present Value analysis
  • An Environment Effects Statement if required or planning permit application
  • A land acquisition strategy and cost analysis/land access plan with evidence of secured option for use of required land
  • A water and tailings plan including detailed design and impacts modelling
  • A community engagement plan including evidence of community support for the proposed operation
  • A detailed risk assessment that describes work that has been undertaken to obtain an adequate residual level of risk (no avoidable catastrophic or high risk potential left in the project).

Potential additional feasibility study components:

  • Go/no go recommendation for proceeding to mining

The list above is what the department considers would generally be relevant for a full feasibility study. However, strict compliance with this list is not necessarily required. If a licence is granted, the licence holder may be required to provide independent verification by a suitably qualified person that the feasibility study has been prepared and meets accepted industry standards. Alternatively, the licensee may choose to provide the full documentation of the relevant studies in-confidence to the department for the department to undertake an analysis.

6. Work on a mining licence

The purpose of a mining licence is to undertake mining and activities leading to or ancillary to mining. While exploration can be undertaken on a mining licence, “exploration only” will only be permitted in very limited circumstances. These circumstances include a temporary mine closure, during which further exploration is undertaken to identify mineral resources required to recommence mining. “Exploration only” on a mining licence can only be approved by the Minister for a period of up to two years (see section 14 of the Act). Where there is a genuine commitment to mine within a reasonable time period, then it is expected that in most cases the proponent would be allowed to remain on the licence.

The work undertaken on a mining licence must reflect the work program that was submitted with the licence application, and may be subject to conditions relating to the type of work, its timing and/or expenditure on the licence. Work on the licence may include any or all of the items listed previously in relation to the program of work (see “Application for a mining licence”). Expectations about the scale and nature of work and level of expenditure will be based on the size of the mineral resource and the likely capital expenditure on the project, as outlined in the licence application, considered against accepted industry standards (the summary of a pre-feasibility study provided with the application would be relevant to this assessment).

Obtaining approvals for work on the mining licence may involve a range of processes, including:

  • an Environment Effects Statement process;
  • application to Council for a planning permit;
  • application to the Environment Protection Authority for a works approval and discharge licence;
  • preparation of a Cultural Heritage Management Plan;
  • negotiating and securing native vegetation offsets;
  • application for a take-and-use licence under the Water Act 1989; and
  • preparation of a work plan.

Licence holders should refer to the Mining Licence Work Plan Guidelines for guidance on work plan requirements.

7. Maintenance and renewal of a mining licence

The holder of a mining licence is required to comply with the Act, Regulations and any conditions placed on the licence, including those relating to the program of work, and to carry out the work in accordance with the approved work plan. Failure to comply with these requirements may result in licence cancellation or non-renewal. Prior to the introduction of the retention licence, some mining licence holders have held land solely for the purpose of evaluation. Under the new licensing regime, work on a mining licence must be directed at establishing and operating a mine. The Act also specifically provides that a mining licence may be cancelled if mining on the licence has stopped for a continuous period of two years (note, this is a discretionary power for the Minister – it would be exercised on a case-by-case basis, taking into account the relevant circumstances).

A mining licence can be granted for up to 20 years, or longer with the Minister's agreement. There are no limits to the number of renewals of a mining licence. However, renewal should not be considered as automatic or as a right. A renewal application will be considered on the basis of the licensee's record of compliance and various other matters, including whether or not mining will be feasible in the foreseeable future. Matters that may be considered include:

  • if mining is taking place at the time of the renewal application, whether there is a reasonable prospect that mining will continue after the renewal, or
  • if mining had taken place but is suspended at the time of the renewal application, whether there is a reasonable prospect that mining will recommence within two years of the suspension if the licence is renewed.

As noted previously, the renewal of mining licences, other than infrastructure mining licences, that are current when the amendments come into operation will require that a mineral resource is identified (either to JORC indicated standard or relevant alternative as outlined in ministerial guidelines (Appendix 1)). A mineralisation report must also be included with the renewal application (clause 2, Schedule 8 of the Act). However, if mining is taking place at the time of the renewal application, a mineralisation report is not required.

8. Reporting on licence

Reporting requirements are provided by the Regulations. Licensees will be required to provide an annual activity and expenditure report and a technical report in relation to mining and other activities undertaken under the licence. Among other reporting requirements, licence holders are required to report on (see Schedule 19 of the Regulations):

  • wages and salaries
  • equipment, plant and machinery
  • administration and consumables
  • land disturbance and rehabilitation
  • exploration
  • mining work
  • environmental management activities.

Appendix 1

Ministerial Guidelines for Description of a Mineral Resource

 


[1] For example, some gypsum deposits.

 

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Published by the Department of Economic Development, Jobs, Transport and Resources, Earth Resources Regulation, October 2015

© The State of Victoria 2015.

This publication is copyright. No part may be reproduced by any process except in accordance with the provisions of the Copyright Act 1968.

Authorised by the Department of Economic Development, Jobs, Transport and Resources - Earth Resources

ISBN 978-1-74326-063-0 (online)

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