Mining and the Tooth Fairy

By Andrew Goode, Mellor Olsson Lawyers

I last wrote about the new Mining Act and its impact on the rural community in my March 2011 Article.

Since then I suspect the general public has become much more aware of the conflicts between miners and rural landowners in relation to exploration and mining of farmland, particularly in New South Wales and Queensland. Townspeople are also becoming more concerned about the impact of mining and the Queensland government is apparently looking at potential exclusion zones.

As I previously said it is clearly in the interests of the mining industry to look at ways to make exploration and mining more acceptable to landowners to avoid future protests and court challenges.

I suspect the public is also starting to think that more ought to be done to protect Australian farmers where they deal with well resourced multi-nationals.  As I previously wrote, miners should be required to pay the landowner’s reasonable legal, valuation and other costs upfront during negotiations rather than the landowner having to initially pay those costs which puts them under unnecessary pressure.  Unfortunately that requirement is not contained in the SA Act, or probably elsewhere, although some miners do adopt that practice.

While following the mining debate, an article in the Australian (15 August) which caught my eye, said that in Western Australia freehold land owners have a right to veto mining, although the WA Government retained a right to compulsorily acquire the land.

The Australian quoted a leading WA barrister, George Irving who said that while the WA Government can compulsorily acquire the freehold land, it had never happened.  I talked to George Irving and he confirmed that was his understanding.  He also confirmed that the veto relates only to mining the top 30 metres of soil, subject to the land being used for specified purposes, which include cultivation.  Cultivation is defined to include land used for stock grazing.  The WA Act however says you do not need the landowner’s consent where the mine will be more than 30 metres below the surface. 

A legislative change to our Mining Act of this kind might help landowners to balance the books to some extent in negotiations with miners. 

Recent media reports have also suggested in some eastern states landowners have been offered compensation up to two times more than the market value for their land.  If an extra layer of compensation was provided that might also, in some cases at least, help landowners to overcome some of the angst of having their land mined.  I expect many landowners would still wish they have never heard of the miner but it might at least soften the blow.

It’s hard to see a multinational miner not going ahead with a mining project if it had to pay double the market value to the landowner to reflect the special circumstance of rural landowners who suffer the loss of the family home, a possible relocation away from their community, and a severe disruption to the livelihood.

If you think any Government is likely to increase the compensation level however you probably believe in the tooth fairy too.  The WA right to veto however is certainly a valuable precedent and hopefully will be considered in any future review of our Act, if it was not raised last time.

Perhaps the current Senate enquiry into coal seam gas will find a better way to reconcile the interests of miners and farmers.  At least the Senate enquiry might produce a useful road map.

When you think how important mining is to Australia, (and potentially disruptive to manufacturing with the high Australian dollar) it is surprising these issues are left to individual states, rather than the Federal Government, notwithstanding any potential limitation of the Constitution.

Details:  agoode@mellorolsson.com.au   or    8414 3400

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