Mining & Petroleum Law – NSW legislative changes update #2

Maximum term of exploration licences extended from 5 to 6 years

On 1 March 2016 the Mining and Petroleum Legislation Amendment (Harmonisation) Act 2015 (NSW) (Harmonisation Act) commenced by proclamation (except Schedule 2(23) which commenced on 18 December 2015). The object of the Harmonisation Act is to bring the Mining Act 1992 (NSW) (Mining Act) and the Petroleum (Onshore) Act 1991 (NSW) (Petroleum Act) into closer alignment in respect of the administration of titles, conditions, compliance and enforcement. It is the first stage in delivering a single resources act in NSW.

What has changed?  

The provisions relating to the maximum term of assessment leases and exploration licences have changed under the Mining Act. The possible term of certain mining tenements has been extended from a period not exceeding 5 years to a period not exceeding 6 years. Specifically, these changes include:

• the term of an assessment lease may be for a period of up to 6 years (instead of 5 years previously) (section 45 Mining Act);
• the term of an exploration licence may be for a period up to 6 years (instead of 5 years previously) (section 27 Mining Act); and
• the renewal of an exploration licence or assessment lease may be for a period which may not on any one occasion exceed 6 years (instead of 5 years previously) (section 114 Mining Act).

Why is this important?

The changes have been made to bring the maximum term of assessment leases and exploration licences granted under the Mining Act into alignment with the provisions relating to the term of assessment leases and exploration licences granted under the Petroleum Act.

Transitional provisions

Mining proponents should note the following transitional provisions:

• the term of existing tenements does not automatically change (for example, from 5 to 6 years); and
• pending applications for the grant or renewal of an assessment lease or exploration licence made, but not decided, before 1 March 2016 may now be for a period of up to 6 years.

Native title implications

Holders of exploration licences and assessment leases should be careful applying for a renewal for a term longer than the original grant term. Under the Native Title Act 1993 (Cth) (Native Title Act), the renewal of an exploration licence or assessment lease for a term longer than the grant term can trigger the ‘right to negotiate’. Whilst there are exceptions to this rule (potentially where the ‘native title condition’ is imposed), proponents should seek advice before automatically applying for a renewal for a term longer than the original grant term. Non-compliance with the Native Title Act can result in the renewal (potentially) being invalid.

Please contact William Oxby, Partner, Brisbane, +61 7 3258 6469, if you require additional information or your usual Herbert Smith Freehills contact.