Jurisdiction - Australia
Reports and Analysis
Australia – SA In 2012.

10 November, 2012

 

Legal News & Analysis – Asia Pacific – Australia – Energy & Project Finance

 

In brief
 
  • The SA Government has been actively encouraging investment in a number of ways – in addition to PACE 2020, it has signed a Memorandum of Understanding on Trade and Economic Development with the People’s Republic of China and released discussion papers aimed at developing important relationships with China and India.
  • A “Roadmap for Unconventional Gas” is being developed to avoid the regulatory issues seen in North America and Eastern Australia, and to enable efficient and effective exploration, development and production.
  • A major overhaul of the SA mining legislation and regulation has taken nplace, with an aim to deliver mining lease approvals within six months of lodgement of lease applications.
  • A final standard form Deed of Access in relation to the Woomera Prohibited Area was released and the moratorium on the granting of new non-Defence entrants access to the WPA for exploration and mining was lifted.
 
It has been a busy year in the South Australian energy and resources space. Several new mines have either commenced production or are well underway, there’s been a lot of M&A activity and some exciting developments in Government strategic policy, as well as a series of interesting native title decisions. At the same time, BHP Billiton announced that it is investigating an alternative, less capital-intensive design for its expansion of Olympic Dam.
 
This article looks at developments in 2012 in South Australia. 
 
Market movements and investment initiatives
 
New project wrap-up
 
A number of exciting copper, gold and uranium projects have  kicked off in SA over the past 12 months:
 
  • Oz Minerals Limited commissioned its underground expansion at Prominent Hill – Ankata – and announced its plans for the Carapateena deposit.
  • Tasman Resources Limited and Rio Tinto Limited commenced drilling at their copper gold joint venture at Vulcan, which is being touted as the next Olympic Dam.
  • The Beverly uranium mine expansion Beverly North is also underway.
 
Iron ore is also starting to take off with four new projects under construction – Iron Chieftain, Peculiar Knob, Wilcherry Hill and Wilgerup, and there are several others in the development stage. These are particularly important because of the plans for deep water port expansions that will come with them.
 
Market buoyancy has also seen Murray Zircon Limited bring its Mindarie mineral sands mine out of mothballs and its new Program for Environmental Protection and Rehabilitation has been approved, marking its ability to recommence operations.
 
Not to be left behind, the petroleum sector has been busy exploring new opportunities in the State’s deep shale, and both Beach Energy Limited and Santos Limited have successfully drilled pilot wells for shale gas in the Cooper Basin.
 
Moving with PACE (and other DMITRE initiatives) 
 
In addition to its Program for Accelerating Exploration – PACE 2020, the SA Government’s Department of Manufacturing, Innovation, Trade, Resources and Energy (“DMITRE”) has been actively encouraging investment in a number of ways. At the strategic level, these initiatives include:
 
  • The Governments of South Australia and the People’s Republic of China signed a Memorandum of Understanding on Trade and Economic Development to assist the two parties to further develop bilateral trade and economic cooperation and investment opportunities.
  • DMITRE has released two discussion papers – South Australia – China: A Shared Future and South Australia – India Economic Directions Paper to aid in public discussion aimed at forming two separate strategy documents to develop those important relationships. DMITRE is currently undertaking  public roundtables with industry representatives with a view to releasing those plans at the end of 2012.
 
A roadmap for unconventional gas
 
DMITRE’s Petroleum group has also been developing the “Roadmap for Unconventional Gas”.
 
Born from a desire to avoid some of the regulatory issues seen in North America and Eastern Australia, the Roadmap aims to “inform industry strategies; government policies; and public perceptions… [to] facilitate the efficient, profitable and welcomed deployment of capital, technologies and infrastructure for the commercialisation of unconventional gas in the State”.
 
Tackling the topic from regulatory, technical and investment perspectives, the Roadmap is eagerly awaited by industry.
 
South Australia also signed the National Partnership Agreement on Coal Seam Gas and Large Coal Mining Development, established through negotiations with the Queensland, New South Wales, Victoria and Northern Territory Governments (Northern Territory is yet to sign). The National Partnership Agreement aims to “strengthen the regulation of CSG and large coal mining development by ensuring that future decisions are informed by substantially improved science and independent expert advice”.
 
Streamlining regulation
 
DMITRE has also been actively working to address some of the regulatory hurdles faced by investors. 2011 saw a major overhaul of the SA mining legislation and regulation to develop a more streamlined process and DMITRE currently aims to deliver mining lease approvals within six months of lodgement of lease applications. 
 
Woomera access
 
Another big issue in SA in recent times has been access to the Woomera Prohibited Area (“WPA”). 2012 has also seen the next major step in implementing the Hawke Review’s reforms with the release by the Woomera Prohibited Area Coordination Office of the final standard form Deed of Access and the completion of the initial “moratorium phase” of the reform, which will now see new applications made by non-Defence entrants for access to the WPA for exploration and mining
being considered. 
 
“Arkaroola will be protected for all time”
 
Meanwhile, the SA Government and the courts have been quick to step in to balance resource stakeholder interests with environmental interests and native title rights.
 
Since the then Premier Mike Rann’s announcement in August 2011 that mining would be banned in Arkaroola,the Arkaroola Protection Act 2012 (SA) was passed to establish the Arkaroola Protection Area and the site has been entered on the State and Australian heritage registers. 
 
Starkey v State of South Australia
 
The Full Court of the Supreme Court also caught the industry’s attention 
with its decision in Starkey & Ors v State of South Australia [2011] SASCFC 164 (“Starkey”).
 
In a provision unique to SA, the Aboriginal Heritage Act 1988 (SA) allows traditional owners to delegate to the Minister their power to grant or refuse an application for consent to damage, destroy or interfere with the relevant heritage sites. The Court found  in Starkey that despite the delegation by the traditional owners of their powers to the Minister, the Minister still owed them procedural fairness leaving open all Ministerial decisions to judicial review. 
 
2013 – a year of opportunity
 
All up, 2012 has had its ups and downs in SA but with a Government which is, in its own words, “unashamedly pro-mining” [see: www.pir.sa.gov.au/minerals/press_and_events/news_releases/marathon_accepts_
compensation_for_arkaroola], and considerable mineral and gas resources in the ground, SA remains a great place to invest.
 

 

For further information, please contact:

 

Tanya Denning, Partner, Ashurst

tanya.denning@ashurst.com

 

Mary Seely, Ashurst

mary.seely@ashurst.com

 

Alex Eyre, Ashurst

alex.eyre@ashurst.com

 

Ashurst Energy & Project Finance Practice Profile in Australia

 

Homegrown Energy & Project Finance Law Firms in Australia

 

 

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