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A Guide to Tenement Compliance

A Guide for Exploration, Mining and Prospecting Licence Holders and Work Authority Holders

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 (Sustainable Development) (Mineral Industries) Regulations 2013 (MRSDMIR)
  • Mineral Resources (Sustainable Development) (Extractive Industries) Regulations 2010
  • Guidelines for Statutory Reporting - provides advice to mining licensees in the preparation of reports under Schedule 19 of the MRSDMIR.
  • 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

For more information contact us.

Forward

This booklet provides advice to holders of tenements within 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 lies within the Earth Resources Regulation Branch (ERR) of the Department of Economic Development, Jobs, Transport and Resources.

ERR maintains a regulatory staff presence at Ballarat, Benalla, Bendigo, Traralgon and Melbourne. ERR staff, comprising Inspectors and Tenements Officers regularly monitor tenement holders' compliance with relevant legislative 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
  • 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 -

  1. to encourage and facilitate exploration for minerals and foster the establishment and continuation of mining operations by providing for -
    1. an efficient and effective system for the granting of licences and other approvals; and
    2. a process for co-ordinating applications for related approvals; and an effective administrative structure for making decisions concerning the allocation of mineral resources for the benefit of the general public; and
    3. an economically efficient system of royalties, rentals, fees and charges; and
  2. to establish a legal framework aimed at ensuring that -
    1. mineral and stone resources are developed in ways that minimise adverse impacts on the environment and the community; and
    2. consultation mechanisms are effective and appropriate access to information is provided; and
    3. land which has been mined or from which stone has been extracted or removed is rehabilitated; and
    4. just compensation is paid for the use of private land for exploration or mining; and
    5. conditions in licences and approvals are enforced; and
    6. dispute resolution procedures are effective; and
    7. the health and safety of the public is protected in relation to work being done under a licence; and
  3. 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.

Exploration licences (ELs)

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:
a = the $ amount per km2 or GDA94 graticular section
b = the number of km2 or GDA94 graticular sections
c = the fixed $ expenditure

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.

Work on a licence

Low Impact Exploration is defined in the MRSDA and provides for specific exploration activities to be undertaken without an approved work plan. It is the responsibility of the licensee to determine if their proposed exploration fits the definition of “low impact exploration”, and therefore whether a work plan is required prior to undertaking the works.

Before any low impact exploration is undertaken, the licensee must submit a notice to commence work, with all the necessary attachments.

Low impact exploration means exploration that does not involve any of the following:

  1. the use of explosives;
  2. the taking of flora listed under section 10 or Schedule 2 of the Flora and Fauna Guarantee Act 1988, unless that flora is taken from private land that is not owned by a public authority;
  3. the taking of flora from a community listed under section 10 or Schedule 2 of the Flora and Fauna Guarantee Act 1988, unless that community is found on private land that is not owned by a public authority;
  4. the taking of fauna listed under section 10 or Schedule 2 of the Flora and Fauna Guarantee Act 1988;
  5. the taking of any taxon or community of flora or fauna from any habitat or parts of habitat under section 20 of the Flora and Fauna Guarantee Act 1988;
  6. the removal or damaging of more than 1 hectare of native vegetation if that area does not contain any native trees during either the term of the licence or a period of 5 years from the grant of the licence, whichever ends first;
  7. the removal or damaging of more than 15 native trees that have a trunk diameter of less than 40 cm at a height of 1.3 metres above ground level during either the term of the licence or a period of 5 years from the grant of the licence, whichever ends first;
  8. the removal or damaging of more than 5 native trees that have a trunk diameter of 40 cm or more at a height of 1.3 metres above ground level during either the term of the licence or a period of 5 years from the grant of the licence, whichever ends first;
  9. the creation of any road, structure or hardstand area without the consent of the owner or occupier of the land on which it is created;
  10. the use of any closed road without the consent of the owner or occupier of the land on which the road is located or undertaking works on any road without the consent of the owner or occupier of the land on which the road is located;
  11. ground intrusive work that:
    1. is within 200 metres of a waterway; or
    2. is on a slope steeper than 1 vertical : 3 horizontal; or
    3. is of greater than 2 hectares in an area of cultural heritage sensitivity during either the term of the licence or a period of 5 years from the grant of the licence, whichever ends first; or
    4. involves taking water from an aquifer, hydraulic fracturing, or excavation using heavy earth moving equipment.

Rent

From 1 July 2015 the holder of an exploration licence is required to pay rent annually for the period ended 30 June. Rent is payable by 28 July annually.
Failure to pay rent may result in licence cancellation processes being implemented.

Rehabilitation Bond

Before any work can be undertaken on an exploration licence, including Low Impact Exploration, a licensee must submit a bond for an amount determined by the Minister. In most instances, the amount of bond for an exploration licence will be $10,000.

Schedule 18 Expenditure and Activities 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 and where a licence is held in multiple names, separate Infringement Notices will be sent to each licence holder.

Schedule 22 Technical Report

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 the licensee returns is used to monitor compliance obligations, including expenditure, site status and rehabilitation.

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 (MINs)

Annual Expenditure Condition

The licence document specifies the annual expenditure requirement (refer to table of claimable items). Commencement of the expenditure requirement on a mining licence occurs on grant of the licence.

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 year
Greater than 5 hectares and up to 10 hectares $20,000 per year
Greater than 10 hectares and up to 25 hectares $23,000 per year
Greater than 25 hectares $900 per hectare
NON-METALLIC MINERAL***
AREA OF LICENCE EXPENDITURE
5 hectares or less $5,000 per year
Greater than 5 hectares $10,000 plus $200 per hectare per year

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

UNDERGROUND METALLIC MINERAL OPERATION
AREA OF LICENCE EXPENDITURE
5 hectares or less $14,000 per year
Greater than 5 hectares to 10 hectares $19,000 per year
Greater than 10 hectares to 25 hectares $22,000 per year
Greater than 25 hectares $850 per hectare per year

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). Should you wish to apply for an extension to this time frame, or should you wish to apply for consent to carry out exploration only in accordance with section 14(6) of the MRSDA, such a request should be made within 6 months after the registration of this licence.

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.

Schedule 19 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 and where a licence is held in multiple names, separate Infringement Notices will be sent to each licence holder.

Schedule 22 Technical Report

Required to be submitted after grant, once a year for the period ending 30 June to cover technical results of exploration work. 

This is not a requirement for a mining licence that covers an area of 5 hectares or less and was granted prior to 1 February 2012.

Rent

Required to be paid every six months from the date of registration of the licence, for periods ended 30 June and 31 December and is payable within 28 days of the specified date.

From 1 July 2015 the holder of a mining licence is required to pay rent annually for the period ended 30 June. Rent is payable by 28 July annually.

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.

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.

Prospecting Licences (PLs)

Annual Expenditure Condition

The annual expenditure requirement on a PL is $15,000 per year and is specified on the licence document (refer to table of claimable items). Commencement of the expenditure requirement on a prospecting licence occurs on grant of the licence.

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.

Rent

Required to be paid every six months from the date of registration of the licence for periods ended 30 June and 31 December and is payable within 28 days of the specified date.

From 1 July 2015 the holder of a prospecting licence is required to pay rent annually for the period ended 30 June. Rent is payable by 28 July annually.

Failure to pay rent may result in licence cancellation processes being implemented.

Schedule 20 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 and where a licence is held in multiple names, separate Infringement Notices will be sent to each licence holder.

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 MRSDA $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.

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.

Exploration, prospecting 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 a 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.

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:-

  1. is a fit and proper person to hold the licence; and
  2. intends to comply with this Act; and
       ba. genuinely intends to do work; and
  3. has an appropriate program of work; and
  4. 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 section 15(6). Further, the holder of a granted licence may have the licence cancelled if the Minister is not satisfied that the licensee continues to meet section 15(6) of the MRSDA.

Any non-compliance may affect your ability to satisfy future eligibility to be granted licences under the MRSDA.

Expenditure-What can be claimed*

It is important to be aware of the various items that can and cannot be claimed as expenditure on a licence.

  Is it claimable?
Wages and Salaries Yes
Land Access Compensation- (including Native Title) Yes

Office Work:

  • Literature research
  • Draughting
  • Report preparation
  • Data (reprocessing/compilation/review)
  • Consultants studies
  • 3D modelling
  • Cartography
Yes

Ground Exploration:

  • Mapping
  • Sampling
  • Geophysical surveys
  • Vehicles
Yes
Airborne Surveys Yes
Drilling Yes

Other Exploration:

  • Costeaning
  • Trenching
  • Ditchwitching
  • Shaft sinking, refurbishment/widening
  • Assaying and other chemical analysis
  • Mineralogical and Petrological testing
  • Mill processing and testing
Yes

Mining:

  • Capital cost of plant, machinery and other equipment
  • Cost of hire or rent of plant, machinery and other equipment
Yes

Overheads: (Overheads should be no more than 20% of the total claim)

  • Aboriginal Heritage Surveys
  • Equipment maintenance (fuel, running costs etc)
  • Accommodation (include supporting details, e.g. location and period of accommodation)
  • Construction materials
  • Rent
  • Tenement Management
  • Field material
  • Consumables (office supplies etc)
  • Administration
Yes
Rehabilitation Yes

Other:

  • Insurance
  • Departmental Fees (except rent)
  • Bonds
  • Transfer expenses
  • Royalties
  • Legal expenses
  • Advertising, Company Prospectus
  • Title Searches, Fines
No

*Note: Claims for expenditure can only be made for expenses incurred after the licence has been granted

Mineral Resources (Sustainable Development) (Extractive Industries) Regulations 2010

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.

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 Earth Resources Regulation Branch of the Department of Economic Development, Jobs, Transport and Resources, as they may change from time to time.