Mining & Exploration

30 Mar 2012

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Refining New Zealand's Mineral Regime

The Government has been reviewing the regime governing minerals permitting in New Zealand, and is now seeking input on proposals to refine that regime. This FYI explains the review process, and looks briefly at some of the key themes of the proposed refinements.

Background

As part of its strategy of growing New Zealand's minerals sector, the Government initiated a review of the Crown Minerals regime. Building on earlier consultation in 2010, the Ministry of Economic Development has recently released the March 2012 discussion paper "Review of the Crown Minerals Act 1991 Regime". The discussion paper proposes significant changes to the regime, and seeks public comment on those proposed changes by 20 April 2012. The discussion paper can be accessed at the Ministry's website.[1]

Objective of the review and discussion paper

The Government wants to ensure the regulatory framework for minerals permitting (much of which is now more than two decades old) supports its overall strategy of growth for the minerals sector. Its aim is to update the framework to ensure the minerals regime is world class and that New Zealand is seen as a stable and pro-investment environment. To achieve this goal, the Government recognises that the framework must encourage investment in exploration and production in a way that appropriately balances economic benefits with health, safety and environmental (HSE) protections.

The review complements a parallel reform programme focussing on HSE risks that includes:

• the introduction of an environmental management regime for deepwater mining activities, in the form of the Exclusive Economic Zone and Continental Shelf (Environmental Effects) Bill;
• the establishment of a High Hazards Unit to oversee health and safety practices on oil and gas platforms, geothermal installations, mines, tunnels and quarries;
• a review of health and safety regulations applying to well drilling operations, both offshore and onshore; and
• an improvement in oil spill preparedness and a review of minimum insurance requirements for offshore oil installations.

Key proposals of the review

The discussion document outlines a range of proposals (77 in total), and seeks public comment on 57 specific questions. General feedback is also invited.

At a high level, the proposals aim to:

• streamline and simplify processes associated with the Crown Minerals Act 1991, and the underlying regulations and minerals programmes;
• improve transparency, for both industry participants and the public, in the development of new petroleum and minerals opportunities;
• improve regulatory coordination, particularly in relation to HSE matters; and
• accommodate emerging technologies and resources.

A summary of the proposals can be found on the Ministry's website. In a general sense, the proposals can be categorised by reference to a number of key themes and principles:

Distinction between simple and complex mining activities

The discussion paper proposes that the regime distinguish between large, complex, higher-risk operations (referred to as "Tier 1") and smaller, simpler, lower-risk operations (referred to as "Tier 2"). Tier 1 activities would include petroleum (oil and gas), hard rock gold and silver, coal and ironsand, as well as emerging phosphate and sulphide minerals operations. Tier 2 would include aggregate, industrial rock and smaller alluvial gold operations.

The proposal involves differing administrative frameworks and processes for Tier 1 and Tier 2 operations, reflecting the different levels of complexity and likely economic benefit to New Zealand. Tier 1 activities would be subject to a more proactive and "hands on" management framework. Tier 2 operations would have a less onerous management structure.

Permit and work programme management

Proposals around permit allocation processes, acreage, work programme management and relinquishment focus on enabling the Government to better manage risks and create greater value from the Crown's mineral and petroleum estate.

A more flexible approach to work programme compliance is proposed, with permit holders having greater discretion on timing of specific activities within structured "phases" of the permit term. At the same time, a proactive approach of holding annual work programme review meetings with each Tier 1 permit holder is proposed. The review meetings would provide assurance that adequate work programme progress is being made, and allow parties to deal with the issue if it is not.

Transfers and dealings

Industry (and officials) have had an ongoing issue around the extent of the current requirement for Ministerial consent to permit transfers and other transactions affecting ownership of, or production under, a permit. The proposals include a streamlined process for consent to transfer of permit interests by non-operators, and removing the requirement for consent to shorter term gas sales agreements.

Improved stakeholder coordination

Processes for increased coordination and communication between regulatory agencies to assist in streamlining overall permit management are proposed. The recent Government announcement that a "Super Ministry" is to be established (including the Department of Labour and the Ministry of Economic Development) aligns with this proposed approach.

Iwi engagement

The discussion paper notes the need to improve constructive engagement between the Crown and iwi. The Ministry sees this as being necessary to ensure iwi are confident of the opportunity to provide input on petroleum and minerals policy, and on permitting decisions, in a manner consistent with the principles of the Treaty of Waitangi (Te Tiriti o Waitangi). No specific proposals are outlined in the discussion paper, as the intention is that these be developed through further discussion with iwi and affected Maori. The need for permit holders to also foster effective relationships with local communities (including iwi) on an on-going, rather than ad hoc, basis is also emphasised.

Health and safety environment

Introduction of a basic initial HSE competency assessment for geologically and technically complex operations is proposed. The discussion paper seeks input on different implementation options. This proposal furthers the Government's recent work in the area of health and safety, including the creation of a High Hazards Unit to monitor activities in the mining, petroleum and geothermal industries. The assessment would be additional to other regulatory approvals, (including activity specific Resource Management Act consents), that a permit holder may currently require.

Next steps of review

Submissions on the 2012 discussion paper are due by Friday 20 April 2012 at 5pm. Once submissions have been considered, it is anticipated that a first draft of amending legislation will be prepared, along with new regulations and minerals programmes. There will be further opportunity to comment at the drafting stage of these instruments. However, the current submission process represents the best opportunity to influence substantive policy development.

Simpson Grierson's energy and resources team has a wealth of experience around the Crown Minerals regime and would be happy to talk further on any aspect of the review and assist you with the preparation of any submissions you would like to make.

Authors

Robert McLean

Partner - Corporate & Commercial

DDI: +64 9 977 5077

Mobile: +64 21 987 050

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Dave Trueman

Partner - Corporate & Commercial

DDI: +64 4 924 3548

Mobile: +64 21 403 612

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Michelle van Kampen

Senior Associate - Public Sector

DDI: +64 9 977 5258

Mobile: +64 21 221 4206

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