Tuesday, April 28, 2009

Mining is a risky business

Despite growing and widespread community opposition to large-scale mining on the Darling Downs, Queensland’s miners are continuing to act as if they have a natural right to anything of value lying beneath the earth’s surface. This confidence is totally at odds with the plethora of regulatory barriers and conditions that could potentially stop the establishment and operation of a new mine. In truth, the processes leading to entry into mining should be perceived by everyone as highly risky.

The main barrier currently standing in the way of a new mine getting established is its capacity to meet the Environmental Impact Study terms of reference. These days, the terms of reference for an EIS are meant to protect the public interest associated with large projects. In the case of a large scale mine, the public interest could be violated, to an unacceptable extent, in a number of ways including any one of the following:

­ Threats to local water supplies and quality
­ Destruction of amenity values
­ Threats of native flora and fauna
­ Creation of a large number of neighbours (as would happen in areas with high incumbent populations) that subsequently suffer economic, social and environmental impacts in the form of tremors, dust, noise, artificial light and dislocation
­ Threats to the quality of any near-by horticultural production
­ Inability to return rural lands to their original condition
­ Inability to offset collateral loss of rural production and jobs.

Given that a mining proposal could easily fail to satisfy the EIS terms of reference, state governments should be very cautious about the conditions under which they allow a would-be miner to explore for minerals and subject its plans to the EIS process. It should be made clear to the proponent, for example, that they are embarking on a risky undertaking and that all of the financial risk lies with them. Thus any pre-emptive investment in land and the cost of preparing and submitting the EIS are all at the proponent’s risk.

Where a mining proposal clearly contravenes the public interest it should be stopped before it goes to the EIS stage. This was recently done in the case of a proposed mine (near Proserpine) using the Mines and Energy Legislation Amendment Act 2008 (part 5). Thus it is possible for the government to save the proponent the cost of the EIS and in the process put a quick stop to the uncertainty surrounding irresponsible proposals. In the process the whole mining industry would be implicitly cautioned against the risk and futility of endeavouring to establish a mine that poses a demonstrative threat to the public interest.

Whether or not a prospective miner buys the land sitting on top of the mineral resource is not relevant to the application and findings of an EIS. Indeed the pre-emptive purchase of land by a prospective miner can only be explained in terms of locking in a ‘pre-emptive price’ or a stunt aimed at convincing authorities that they have made some sort of immutable commitment. The latter rationale is clearly misguided because if the EIS fails the land can be re-sold. Prospective miners could avoid this risk (ie, re-selling the land) by not buying any land until after the EIS is completed and an Environmental Authority granted.

The inherent risks surrounding establishment of a mine in Queensland could be made more apparent if responsibility for the licensing of new mines was handed over to an independent authority with no obvious reliance on the revenue flowing from royalties. In keeping with the trend in other areas of governance it would be appropriate for a national authority to take over responsibility for operational licensing of all large-scale mines. Making a national authority responsible for the licensing function would have the added advantage of allowing for more overt recognition of national obligations such as reducing greenhouse gases and adding to world-wide food security. Under this proposal, state EPAs would continue to manage EIS processes; only the review and final licensing function would be deferred to an independent national authority.

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