Qld legislates for resources action

AN OLD legal loophole that has allowed a small company to sit on an undeveloped coal resource for more than 13 years has finally been closed up by the Queensland Government, which is eyeing the rich royalties it will receive when the resource is finally mined.
Qld legislates for resources action Qld legislates for resources action Qld legislates for resources action Qld legislates for resources action Qld legislates for resources action


Staff Reporter

A long-running dispute between BHP Billiton Mitsubishi Alliance Coal Operations and Cherwell Creek Coal has seen the two companies at loggerheads over who has the right to mine an area in the Bowen Basin that could yield more than 12 million tonnes of high-quality coking coal.

At the core of the dispute was BMA’s intention to build a new $1 billion mine to expand its Peak Downs operation – but the expansion would require land that overlaps Cherwell Creek's interests.

The new legislation will see an amendment to the Mineral Resources Act 1989, which in turn will terminate Cherwell Creek’s exploration permit for the area and also reject Cherwell Creek’s applications for mineral development licenses.

These areas will in turn become available to BMA, which holds mining lease 1775.

But according to the notes on the amendment, Cherwell’s exploration and development licenses have been rejected because, “Cherwell has had more than 13 years to prove up and develop any coal resource in the area, and has been unable to do so”

Crucially, the Department of Mines and Energy also said Cherwell has only drilled in an area subject to the application for Mineral License Development 364, which means Cherwell applied for Mineral Development License 366 over an area it had never drilled.

Hence, the Government has decided to allow BMA to use the land covered by License 366 for new infrastructure for the Peak Downs Mine, and the area under License 264 for infrastructure relating to the development of the Caval Ridge Mine.

“BMA and Cherwell Creek have shown a propensity to litigate this dispute,” the Bill notes said.

“Deciding Cherwell Creek’s applications administratively would almost certainly lead to further litigation, causing further uncertainty and delay and leaving BMA’s current and future mining tenure problems unresolved. A legislative solution for this dispute is therefore required.”

To allow Cherwell Creek to recoup any lost opportunity, the laws will also provide the company with the right to apply for compensation from BMA for the loss of opportunity to commercialise the coal resource.

The State Government, however, will come out of the process with no obligations at all, with provisions in the amendments making it clear that “compensation is not payable by the state to Cherwell Creek or any other person for anything done under the Bill”

Queensland Mines and Energy Minister Geoff Wilson said the legislation confirmed BMA's tenure over the land and gave Cherwell Creek the means to claim compensation from BMA if it can establish its tenure had value.

"As Queensland's Mines Minister, I am obliged to safeguard our reputation as one of the best and most reliable producers of coal in the world, along with the jobs of workers in our booming industry.”

He said an ongoing dispute between the two mining companies could jeopardise jobs in the Bowen Basin and lead to a loss of around 12 million tonnes of high-quality coking coal.

"Last year, the Peak Downs mine yielded coal exports of more than $1.2 billion and more than $80 million in coal royalties to the state.

"These royalties help build our schools and hospitals, put police on the beat and teachers in our classrooms," Wilson said.

"Cherwell Creek has had more than 13 years to develop a coal resource. We have to weigh up what's best for Queensland and, in this case, it's the jobs of thousands of workers and the production of high-quality coking coal.”

"We came up with a solution that is in the best interests of Queensland," he said.