South Australia’s mining initiatives in the past year auger well for 2013

By Michael Sheng; Tanya Denning and Mary Seely, Ashurst
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The past year was a busy one in the South Australian energy and resources space. Several new mines either commenced production or are well underway, there was 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.

Investment initiatives

A number of exciting copper, gold and uranium projects have kicked off in South Australia in the past 12 months.

Michael Sheng Partner Ashurst Shanghai
Michael Sheng
Partner
Ashurst
Shanghai

Oz Minerals commissioned its underground expansion at Prominent Hill – Ankata – and announced its plans for the Carapateena deposit. Tasman Resources and Rio Tinto 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 deepwater port expansions that will come with them.

Market buoyancy has also seen Murray Zircon bring its Mindarie mineral sands mine out of mothballs and its new programme for environmental protection and rehabilitation has been approved, marking its ability to recommence operations.

The petroleum sector has been busy exploring new opportunities in the state’s deep shale, and both Beach Energy and Santos have successfully drilled pilot wells for shale gas in the Cooper Basin.

Government strategies

In addition to PACE 2020, the government’s Department of Manufacturing, Innovation, Trade, Resources and Energy (DMITRE) has been actively encouraging investment. At the strategic level, these initiatives include:

Tanya Denning Partner Ashurst Adelaide
Tanya Denning
Partner
Ashurst
Adelaide

The governments of South Australia and China signed a memorandum of understanding to assist the two parties to further develop bilateral trade and economic co-operation and investment opportunities.

In late 2012, DMITRE released engagement strategies aimed at developing strong, productive and long-term relationships with both China and India.

Both strategies take a whole-of-state approach and span diverse industry areas including investment, trade, business, education, tourism, science, culture and sport.

DMITRE’s petroleum group has also been developing a “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 other state governments of Queensland, New South Wales, Victoria and the Northern Territory (Northern Territory is yet to sign).

The national partnership agreement aims to “strengthen the regulation of coal seam gas and large coal mining development by ensuring that future decisions are informed by substantially improved science and independent expert advice”.

DMITRE has also been actively working to address some of the regulatory hurdles faced by investors. South Australia saw a major overhaul in 2011 of its mining legislation and regulation to develop a more streamlined process, and DMITRE aims to deliver mining lease approvals within six months of lodgement of lease applications.

Access to Woomera

The past year has seen the next major step in implementing the Hawke review’s reforms with the release by the Woomera Prohibited Area (WPA) co-ordination 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.

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 state premier Mike Rann’s announcement in August 2011 that mining would be banned at 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 SA state

The full court of the state supreme court also caught the industry’s attention with its decision in Starkey & Ors v State of South Australia [2011]. In a provision unique to South Australia 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 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.

The past year has had its ups and downs in SA, but with a government which is in its own words “unashamedly pro-mining”, and considerable mineral and gas resources in the ground, SA remains a great place to invest.

Michael Sheng is a partner at Ashurst in Shanghai, and Tanya Denning is a partner at Ashurst in Adelaide. Mary Seely, a senior associate at Ashurst in Adelaide, also contributed to this article

(Ashurst)

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