Read: Pitcher Partners urges small miners to reconsider compliance
Described by Mines and Petroleum Minister Bill Johnson as “the biggest issue confronting the WA mining sector”, the recent decision has put mining leases and exploration plans across the State into doubt.
Pitcher Partners Perth Chairman Bryan Hughes explains the implications for the sector.
Q. What has happened?
Back in 2011, two companies lodged mining leases over land on Minderoo pastoral station, owned by Andrew Forrest’s private company. At the time they were lodged, neither was accompanied by a mining proposal or mineralisation report which isn’t uncommon. Mr Forrest objected but was knocked back and eventually the matter reached the High Court. In October, the High Court found in Mr Forrest’s favour, finding that the reports should be lodged contemporaneously — a decision that’s put hundreds of other leases at risk.
Q. What’s the impact of this decision in WA?
The leases in doubt date back more than 11 years. Initially it was thought that more than 50 Western Australian miners with long-standing lease applications may be declared null and void. There are reports that up half the 1200 leases lodged since 2006 could be in trouble. This week, WA Mines and Petroleum Minister Bill Johnson updated Parliament and called it the biggest issue confronting the WA mining sector. Not only will WA legislation be needed to address the issue, but he believes Commonwealth legislation might also need to be changed as the issue affects Native Title.
Q. From a WA business perspective, how important is a quick resolution on this issue?
This will undoubtedly cause those mining companies that have been caught problems when it comes to developing their projects and raising money. These sorts of uncommercial interpretations of established law — which State Government departments have been dealing with in sensible and pragmatic ways — do not help Australia’s, or Western Australia’s, political risk profile for international investors.
Q. What is the implication of having to seek Commonwealth legislation?
The State Government has acted quickly and appropriately to fix this problem caused by a High Court decision. I fear we may see a lesser response from the Federal Government given the lack of understanding of our mining sector, the lack of awareness as to the importance of this issue to WA, and — even worse — the lack of importance of WA to the Federal Government.
I hope they prove me wrong.
Q. If you are holding one or more of the 600-odd licences in doubt, what should your steps as a business be?
Your response depends on the resources you have to deal with this issue, and the timing in which you need to move your project forward. Smaller companies will not be able to go out and re-peg their ground as a back-up, but that is probably the safest first step. I foresee a number of competing claims being lodged by some of the industry’s professional ‘green mailers’. So if your project is of real value, look quickly at what you need to do to minimise those competing claims. Pitcher Partners Corporate Finance Division may be able to assist, as we have been approached by parties who may finance some of these activities designed to protect your current rights.