Latrobe Valley coal mine rehabilitation bonds

The Victorian Government has responded to the final report of the reopened Hazelwood Mine Fire Inquiry recommendations, to ensure adequate provision is made for Latrobe Valley coal mine rehabilitation into the future.

What did the report recommend?

The government report recommended that the Minister for Resources should consider increasing the bonds to provide greater security to the State.

What decision was made?

In accordance with the government's report, the Minister for Resources required a further rehabilitation bond from each coal mine in a three-stage process to establish:

  1. further bonds totalling 50 per cent of the Latrobe Valley coal mines' self-assessed rehabilitation liability, to be provided to the Victorian Government by June 2016 (completed).
  2. further bonds totalling 100 per cent of the self-assessed rehabilitation liability, to be provided to the Victorian Government by December 2016 (completed).
  3. further bonds to reflect the independently assessed rehabilitation liability in line with the new Rehabilitation Bond Policy for the Latrobe Valley Coal Mines, to be provided to the Victorian Government in June 2017 (completed).

The Minister's third and final Statement of Reasons explains the requirement for further rehabilitation bonds from the Latrobe Valley coal mines.

Learn more about the Minister's first statement and second statement of reasons for his decisions to require further bonds.

What are the next steps?

A regional strategy is being developed for rehabilitation of the Latrobe Valley coal mines. This will modernise the regulation of Victoria's coal mines to ensure transparency and clarity for community and industry. For further details see the media release on Building a Healthier and Safer Latrobe Valley.

Latrobe Valley Mine Rehabilitation Bond Policy

Communities and government expect that the full costs of mine rehabilitation are borne by the mine operator and not left to the taxpayer. To this end, the state expects to be financially assured for these costs through a rehabilitation bond.

Under the Mineral Resources (Sustainable Development) Act 1990 and the associated Mineral Resources (Sustainable Development) (Mineral Industries) Regulations 2013, mine operators are obligated to:

  • Rehabilitate land that has been mined in accordance with an approved rehabilitation plan.

  • Enter into a rehabilitation bond with the form and amount to be determined by the Minister for Resources.

In accordance with Action 166 of the Hazelwood Mine Fire Inquiry: Victorian Government Implementation Plan, the Victorian Government has reviewed and updated its Rehabilitation Bond Policy as applied to the Latrobe Valley coal mines.

Key reforms to the Rehabilitation Bond Policy include:

  • Calculating bonds using a new, independently developed Rehabilitation Liability Assessment Framework (RLA Framework) and Cost Calculator, commissioned by the department. The RLA Framework uses a probabilistic methodology to assess rehabilitation liability

  • Undertaking rehabilitation liability assessment every five years.

  • Continuing to set rehabilitation bond amounts that are equal to 100 per cent of an assessed rehabilitation liability.

  • Continuing to require rehabilitation bonds in the form of a bank guarantee, but allowing the minister to consider bonds in a hybrid form, where the bank guarantee is complemented by a portion of the bond in the form of a Parent Company Guarantee (PCG) that meets certain conditions set by the state.

The full Rehabilitation Bond Policy for the Latrobe Valley coal mines is included below.

Page last updated: 13 May 2019