Reform of the Crown Minerals Act
||A key part of this current Government’s efforts to reduce the income gap between New Zealand and our neighbours across the Tasman is to turn a more friendly face toward those wishing to explore and hopefully mine New Zealand’s natural resources. To achieve this, the Business Growth Agenda prepared by the Ministry of Business, Innovation and Employment recommended a review of the Crown-owned minerals regime.
The Crown Minerals (Permitting and Crown Land) Bill, an omnibus bill arising from the review, sought to facilitate natural resources economic development and deliver on one of the key focus areas of the Agenda by amending the Crown Minerals Act 1991, the Conservation Act 1987, the Continental Shelf Act 1964, the Reserve Act 1977 and the Wildlife Act 1953.
The Crown Minerals Amendment Act 2013 came into force on Friday 24 May 2013 and makes a wide range of changes to the Crown Minerals Act 1991 (the Act).
New Minerals Programmes and new Regulations have also been made, setting out detailed rules. The key changes are aimed at supporting the Government’s desire to encourage investment in petroleum and minerals exploration and development while ensuring that operators meet high health, safety and environmental (HSE) standards.
An Act with a purpose
The amended Act now has a purpose provision expressly recording the Government’s support of the prospecting, exploration and mining of Crown-owned minerals for the benefit of New Zealand. The key elements are to provide for the efficient allocation and management of, and fair financial return from, the development of Crown-owned minerals. The purpose statement also emphasises the importance of “good industry practice”, which incorporates ongoing compliance with health and safety and environmental legislation.
There are a number of provisions intended to streamline the permitting process. The notable ones are as follows.
A two-tiered system for permit management
A distinction has been introduced between Tier 1 and Tier 2 operations. New Zealand Petroleum & Minerals (NZP&M) will provide a more hands-on and coordinated regulatory regime with focus on high-risk and high-return Tier 1 petroleum and mineral activities. These include oil and gas, underground operations, and larger gold, silver, coal, metallic mineral, ironsand and platinum group mineral operations.
Tier 1 permit-holders may be required to attend an annual review of its work programme with the Ministry and any relevant regulatory agency, to monitor the permit-holders’ progress against work programme commitments.
In contrast, lower-return industrial mineral Tier 2 operations including alluvial gold, aggregate and limestone will be subject to a simpler and more streamlined regime with reduced compliance costs.
There may be a tension between the Government’s aim of encouraging exploration and mining and a more hands-on approach: Tier 1 projects are the highest value projects and usually attract highly experienced operators.
The holders of these permits are arguably better placed than the Crown to make decisions on the development of the relevant resource, and annual reviews of work programmes could hinder development.
If managed sensibly, the new permit management system will add value, but the Government needs to take care that it does not add unnecessary costs.
Health, safety and environmental assessments
A new direction taken in the amended Act is that it now requires applicants for Tier 1 operations to demonstrate their health, and safety, and environmental capabilities when seeking permits as part of an initial assessment, notwithstanding that their exploration and mining activities will continue to be regulated under separate existing legislation. For large companies bidding for multiple permits, this change could mean multiple assessments are required.
The Act implements some of the health and safety (H&S) recommendations from the report of the Royal Commission of Inquiry on the Pike River Coal Mine Tragedy. This report emphasised the importance of better integration of H&S matters in the permit allocation and management provisions of the Act.
While recognising the need for high standards of HSE practice, there was also concern during the Crown Minerals Act review that the initial HSE assessment would unnecessarily duplicate the existing HSE processes.
However, early indications are that this assessment will focus on capacity, rather than the detailed HSE issues, which will be separately considered under the health and safety and environment legislation. The initial HSE assessment could therefore serve a useful purpose in encouraging companies to focus early in a project on how they will address HSE issues.
Public notification of access arrangements for Crown land
Upon application for access arrangement to mine on conservation land, the Minister of Conservation must now determine whether or not the proposed mining activities are “significant” having regard to the effects the activities are likely to have on conservation values. If considered significant, the Minister must publicly notify the application.
Following notification and recommendations from the Director-General of Conservation, the Minister of Conservation decides whether or not to grant an access arrangement for Tier 2 activities.
However, both the Minister of Conservation and the Minister of Energy and Resources jointly decide whether to enter into an access arrangement for Tier 1 operations by taking into account the direct net economic and other benefits of the proposed activity in relation to which the access arrangement is sought.
This joint decision-making on access to Crown land is a new requirement, which is seen by the opposition as a direct undermining of the Minister of Conservation’s role and responsibility and a significant shift in the guardianship and protection of Crown land.
It was introduced by the Government to provide some balancing of these interests with the Crown’s interest in seeing development of mineral resources. The overall tests for access to Crown land have not changed, however, so it will be interesting to see whether there is in fact a significant difference.
Protest at your own cost
In order to protect deep sea mining operations, the amended Act cracks down on anti-mining protests by creating new offences and penalties. Unlawful protest activities include intentional interference with any operations, structure, ship or equipment used for mining operations offshore.
The fines are up to $50,000 for an individual or up to 12 months’ imprisonment, or up to $100,000 for a body corporate. This is in addition to the existing provisions in the Maritime Transport Act 1994, which was recently held by the High Court to apply beyond territorial waters.
These provisions have caught the media’s attention as they were introduced via Supplementary Order Paper 205 on Easter Sunday during the committee stage and as such bypassed the Select Committee scrutiny process.
The provisions were strongly opposed by former Prime Minister Sir Geoffrey Palmer and environmental groups, owing to New Zealand’s “rich history” of protesting at sea, who described the new law change as “a sledgehammer designed to attack peaceful protest at sea” and an “attack” on democratic freedoms (Joint Statement on Crown Minerals Bill Amendment 2013, p 1).
In response, the Government pointed out that the amendments were aimed at protecting the safety of both workers and protestors, and that protestors are still free to protest in accordance with the new laws.
Iwi engagement on Crown minerals
The Act now provides for all permit holders to report annually to the Minister on the permit-holder’s engagement with iwi and hapū whose rohe (area) includes some or all of the permit area. It will be a matter for permit-holders and iwi to determine how to engage at a local level.
The permit duration for prospecting, exploration (petroleum), exploration (minerals) and mining has been significantly increased to four, 15, 10 and 40 years respectively (with appraisal extension possible for all but prospecting permits).
To encourage prompt prospecting and competition, the Minister may require Tier 1 permit-holders to relinquish up to 50%, 75% and 50% of the prospecting, exploration (petroleum) and exploration (minerals) permit area respectively.
Purpose and legal status of Minerals Programmes clarified
The amended Act clarifies the purpose of the Minerals Programmes, their legal status and the process that must be followed in their preparation. Current permits granted under a previous programme will continue to be managed under that programme until a change to the permit is requested or the permit-holder opts into the new programme.
The Act now makes it clear that where inconsistency arises, the Act or regulation will prevail over the programmes.