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14 December, 2011
DPI presentation to EDIC Inquiry into greenfields mineral exploration and project development in Victoria
Overview
Victoria’schallenges
DPI’sapproaches Prospectivity
Regulation/reform Opportunities Summary
Falling value of the sector
Low levels of exploration activity
Greenfields v brownfields
Pipeline of mining projects
Virtuous /vicious cycle
Findings of the Allens report
Impact of geoscience data
SA case study (lessons and insights for Victoria)
Mineral potential
Room to improve (regulations)
Victoria's regulatory framework
MRSDA phase 1
MRSDA phase 2
Community engagement and landowner rights
Mineral sands
Gas
Base metals
Summary & Conclusions
Victoria's Earth Resources Commodities by Revenue ($m) 2010-11
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Oil Gas LPG Stone/Sand Coal MineralSands
Gold
Valu
e ($
m)
Source: DPI
Victoria’schallenges
DPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities Summary
-400
-300
-200
-100
0
100
200
300
400
ExplorationLicencesGranted
Large MiningLicencesGranted
EnvironmentalEffects
StatementReferrals
EESs Submitted WorkAuthorities
Granted
Number of newmines to
commenceproduction
Number of mineexpansions
1999 - 2009: Victorian Activity Ratios (Minerals)605
697 3 4 2 3
Precompetitive
Exploration2-3 years
ConceptualStudies1 year
Pre-feasibilityStudies3 years
Feasibility Studies
(bankable)2 years
Construction/Pre-production
2- 3 years
Operation to Expansion3-5 years
Inferredresource
IndicatedResource
MeasuredResource
Decision to mine
Victoria: Brownfields exploration - unrelated to discovery activity
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
0.0 10.0 20.0 30.0 40.0 50.0 60.0
Greenfields Exploration Expenditure (annualised $million pa)
Bro
wnf
ield
s Ex
plor
atio
n Ex
pend
iture
(a
nnua
lised
$m
illio
n pa
)
Source: ABS CAT# 8412, March 2011 Release
2003-2011 quarterly 4 pt moving average
Current 2008
Only “Greenfields” (or “grass roots” or “new deposits”) exploration is about new discoveries
Total exploration expenditure” (ABS) includes “brownfields”:
“Existing deposits” – delineating or proving up an existing resource
Expenditure/activity includes anything for an already discovered resource
- to inferred standard or above (i.e. discovery long past)- in existing mines- in in-fill drilling- for mine planning
Globally, on average, total exploration expenditure is about 2.5 times greenfields expenditure
Greenfields (mostly unsuccessful) is “pure discovery” – the primary source of future mines.
Not all “exploration” is discovery oriented
Exploration licence grant rate correlates with greenfield exploration expenditure
0
10
20
30
40
50
60
70
80
90
100
03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11
Expl
orat
ion
Lice
nces
Gra
nted
in
Vict
oria
0
10
20
30
40
50
60
Gre
enfie
ld E
xplo
ratio
n Ex
pend
iture
, $M
Exploration Licence Grants Victoria's New Deposit Exploration Expenditure
Source: DPI for Licence Data and ABS Report 8412, Jun 2011
Victoria’schallenges
DPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities Summary
0
20
40
60
80
100
120
140
160
180
200
1993
/9419
94/95
1995
/9619
96/97
1997
/9819
98/99
1999
/0020
00/01
2001
/0220
02/03
2003
/0420
04/05
2005
/0620
06/07
2007
/0820
08/09
2009
/1020
10/11
Num
ber o
f exp
lora
tion
licen
ces
gran
ted
Gold/Silver/Platinum Mineral Sands Other
Minerals Greenfields Exploration Activity (Victoria) –Insufficient to sustain activity
300 licences = 1 (small) mine 10-15 years later
Victoria’schallenges
DPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities Summary
ShorterCycletimes
New minescoming on stream
Improvedperception
of prospectivity
Increasedgreenfieldsexploration
New depositsidentified
Virtuous Cycle
Victoria’schallenges
DPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities Summary
Exploration cost of new mines (35 year history):
Tier 1 (World class mine):
$2.6 billion ($ of the day) per mine* – total exploration (including delineation)
@40% greenfields: > $1.0 billion to find a tier 1 (world class) mine
Victorian greenfields exploration rate: $25 million pa
Small mine (Victoria):
$150 million (current dollars) greenfields exploration costs
* Basis: Tier 1 base metals deposits (14% of deposits accounting for 2/3 of NPV from new mines)Source: Richard Schodde (Minex Consulting), Theo Murphy Think Tank 2010
Victoria’schallenges
DPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities Summary
Much available land is subject to licences
Victoria’schallenges
DPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities Summary
… more about driving demand, farm-ins and enabling work than eviction
Exploration licence cycle time - faster turnover drives greater discovery activity (2003/4 - 2010/11)
0%
1%
2%
3%
4%
5%
6%
7%
2.00 3.00 4.00 5.00 6.00
Licence Cycle Time, Years
Vict
oria
's G
reen
field
s Ex
plor
atio
n Ex
pend
iture
, % o
f Aus
tral
ia
Sources: ABS, DPI
2003/20042008-2011
Victoria’schallenges
DPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities Summary
Reviewed $46 million of Victorian government programs in pre- competitive geoscience for impact on greenfields exploration activity and improving perceptions of mineral prospects in the jurisdiction.
“Victoria’s earth resources programs have produced high quality, world class outputs”
“… the reason that these programs may have been ineffective in stimulating greenfields exploration is because the principal source of market failure is not missing information”
“…. an analysis of the impact of geological data stocks on perceived prospectivity (contained in a report by the Fraser Institute) also proved uncompelling”
The earth resources programs were not materially affected by either:
• the quality of products, or systematic failures in the way programs were delivered, or
• exceptionally burdensome aspects of Victoria’s regulatory or policy environment.
Allen Consulting Group Report August 2011
Victoria’schallenges
DPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities Summary
Recommendations:
Objectives: “articulate clear objectives from the start”
Measures: “KPIs for determining success or otherwise”
Evaluation: needed, “after an appropriate length of time”
Focus: “build on what has been achieved”
Leverage: “company generated data …. publicly accessible sooner …. by voluntary disclosure”
Industry consultation:
“consult with parties outside Australia, or outside Victoria”
Allen Consulting Group Report August 2011
Victoria’schallenges
DPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities Summary
Victoria’schallenges
DPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities Summary
Fraser Survey: Data availability isn't enough
AlbertaBritish
Columbia
Manitoba
New Brunswick Nfld./Labr
NWT
Nova Scotia
Nunavut
Ontario Quebec Saskatchewan
Yukon
Alaska Arizona
CaliforniaColorado
Idaho Michigan
Minnesota Montana
Nevada New Mexico
South Dakota
Utah
Washington
Wisconsin
Wyoming
New South Wales
Northern Territory Queensland
South Australia
Tasmania
Victoria Western Australia
Indonesia
New Zealand
Papua New Guinea
Philippines
Botswana
Burkina Faso
DRC (Congo)
Ghana
Guinea (Conakry)
Madagascar Mali
Namibia
Niger
South Africa
Tanzania Zambia
Zimbabwe
Argentina
Bolivia
Brazil
Chile
Colombia
Ecuador
Guatemala
Honduras
Mexico
Panama
Peru
Venezuela
Bulgaria
China
Finland
Greenland
India
Ireland
Kazakhstan
Kyrgyzstan
Mongolia
Norway
Romania
Russia
Spain
Sweden
Turkey
Vietnam
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
Mineral Prospectivity
Geo
logi
cal D
atab
ase
Ran
king
Source: Fraser Institute Survey of Mining Companies 2010/2011
Old mining?
High New Potential
Current Mining Jurisdictions
Problem children?
Jurisdictions marked red are known to host iconic mines / deposits
What are we doing? – Ongoing Support
Victoria’schallenges
DPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities Summary
Providing for a well fed pipeline Assisting projects to emergefrom the pipeline
Maintaining an engaged, aligned& positive industry
Maintaining informed, engaged & positive communities
Geological and resource information (GeoVic)
- closing critical data gaps- tenement data (licences)- Commonwealth (and State) acreage release
Targeted engagement focused on potential
Coordinating efficient approvals across government (scaled facilitation)
Understanding Victoria’s competitive potential & endowments
Targeted engagement – relevant developers (case by case, e.g. mineral sands, gas)
Industry level engagement – reform alignment, monthly meetings, roadshows
Regulatory alignment & streamlining- identifying future pathways & policy options- legislative reforms- administrative reforms- whole of government scanning & networking
General information- DPI website- Resources Roundup, - Discovery periodical
Community engagement framework (see later)
Public meetings (emerging issues)
Ensuring rights are clarified
Regional offices
Working with DPI Regional Directors
What are we doing? – Initiatives
Victoria’schallenges
DPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities Summary
Initiatives
- Rediscover Victoria – supporting geological data availability & modelling
- VicGCS – Gippsland basin wide models/geophysics for geological carbon dioxide storage potential
- Clean Coal Victoria – planning and community engagement for coal’s long term future
Plus:
- ETIS, CarbonNet
- VGBO (DBI)
- Case by case infrastructure support
- Policy support (e.g. with Cth)
South Australia engaged with industry from a standing start –improved alignment, improved promotion, improved support
Quarterly Greenfields Exploration Intensity
0.0
20.0
40.0
60.0
80.0
100.0
120.0
Sep-03
Dec-03
Mar-04
Jun-0
4Sep
-04Dec
-04Mar-
05Ju
n-05
Sep-05
Dec-05
Mar-06
Jun-0
6Sep
-06Dec
-06Mar-
07Ju
n-07
Sep-07
Dec-07
Mar-08
Jun-0
8Sep
-08Dec
-08Mar-
09Ju
n-09
Sep-09
Dec-09
Mar-10
Jun-1
0
Quarters
$/sq
km
NSW VIC QLD SA WA TAS NT
Global Commodities BoomGFC
SAMPEG,PACE commence SA
Significant increase from low base
PACE/SAMPEGStrong outreach/engagement focus (25% geosurvey)
Government expenditure on collaborative drilling 11% of total state greenfields exploration + government geologists on the rigs as outreach (Rediscover Victoria = 3%, no outreach)
Systems approach - leveraged
Triple bottom line balance
Centre for Exploration
Geophysics
Geochemical information
Data delivery/geological models
SAMPEG global outreach
Cultural significance facilitation
Drilling collaboration
Data and assistance was provided to progress companies & projects to the feasibility stage to ensure “a constant supply of projects in the pipeline”
Allen Consulting Group 2011
Population Density Impacts Proportion of Mining Contribution to GSP*
0
5
10
15
20
25
30
35
0 0.25 0.5 0.75 1 1.25
Area per person, sq km
% M
inin
g C
ontr
ibut
ion
WA
Qld
SAVicVic 1995
ACTTas
NSW* excludes NT (at 5 sq km/person), for
graphical representation purposesSA 1995
Cause and effect are separated:
“In South Australia they have been plugging away for a long time, but the new mines are still really few and far between” Tim Goldsmith (Global Leader, Mining, PWC, EDIC submission August 2011.
Greenfields exploration crudely relates to economic output - some leaders, some laggers
0
100
200
300
400
500
600
- 10,000 20,000 30,000 40,000 50,000 60,000
GSP Contribution from Minerals & Petroleum (Sm)
Gre
enfie
lds
Min
eral
s Ex
plor
atio
n Ex
pend
iture
($m
)
Victoria
Source: ABS 2009-2010
QldSANT
Tas NSW
WA
Vietnam Turkey
Sweden
Spain
Russia
Romania
Norway
Wyoming
Western Australia
Utah
South Australia
Mali
Saskatchewan
Queensland
Papua New Guinea
Greenland
Ecuador
Argentina
Zimbabwe
Arizona
Victoria
Kazakhstan
Alberta
British Columbia
Manitoba
New Brunswick
Nfld./Labrador
NWT
Nova Scotia
Nunavut
Ontario
Quebec
Yukon
Alaska
California
Colorado
Idaho
Michigan Minnesota
Montana
Nevada
New Mexico
Washington
Wisconsin
New South Wales
Northern Territory Tasmania
Indonesia
New Zealand
Philippines
Botswana
Burkina Faso
DRC (Congo)
Ghana Guinea (Conakry)
Madagascar
Namibia
Niger
South Africa
Tanzania Zambia
Bolivia
Brazil
Chile
Colombia
Guatemala
Honduras
Mexico
Panama
Peru
Venezuela
Bulgaria
China
Finland
India
Ireland
Kyrgyzstan
Mongolia
0
10
20
30
40
50
60
70
80
90
100
0.4 0.5 0.6 0.7 0.8 0.9 1
Mineral Prospectivity
Polic
y Po
tent
ial I
ndex
Sco
re
Source: Fraser Institute Survey of Mining Companies 2010/2011
Generally not known for large deposits
Iconic Mines / Deposits
Criticalchallenge
Australian range
Better than many
Best practicegap
Perceived prospectivity a major challenge(& streamlining needs work)
Victoria’schallenges
DPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities Summary
Victoria
“If there is no geological endowment or you think it is a long shot, it does not matter how good we make the rules and regulations, people are not going to bother coming here”.
Tim Goldsmith, Global Leader, Mining, PWC, EDIC submission August 2011
“The best indicator of prospectivity is a recent success” Richard Schodde, EDIC presentation August 2011
Victoria ranked lowest “room to improve” from changing policy settings in Australia (Fraser Institute global survey), 9/79 globally.
Perceptions, based on success, are the key
Victoria’schallenges
DPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities Summary
World Class Resources:“Giant deposits are of academic interest…, may not necessarily be economic. …What you are really looking for are things that can be turned into mines of large size and long life, and can actually have an impact on society.”
Richard Schodde, Theo Murphy Think Tank 2010 proceedings.The future of Australian resource discovery and utilisation.
$-
$10
$20
$30
$40
$50
$60
$70
$80
0 200 400 600 800 1000 1200 1400 1600
Orebody Size (million tonnes ore)
$/t R
even
ue in
Gro
und
Grande Cote
MadagascarKwale
Coburn
Bubble sizes represent total in ground value
Xolobeni
Large, and globally competitive resources
Announced projects(global)
Mineral sands
Victorian fine grainedmineral sands
Distinctive endowment v competitive endowment
Victoria’schallenges
DPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities Summary
- Geological data and information relevant to competitive potential
- Competitive, coordinated and accessible regulatory and approvals regime
Plus (most importantly)
• Outreach into the (global) industry – Understand Victoria’s competitive position (& risks) in earth resources & develop policies & programs to attract appropriate explorers and developers
• Outreach into the community – active engagement based on benefits and rights, build community confidence
• Effective use of land area – maximise value by ensuring active & financially capable tenure holders
In summary, an outward and systematic approach seems to work best
Victoria’schallenges
DPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities Summary
Victoria’schallenges
DPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities Summary
Mineral Resources (Sustainable Development) Act 1990 To encourage economically viable mining and extractive industries which make the best use of resources in a way that is compatible with the economic, social and environmental objectives of the State. Environmental Effects Act 1978 To set out the approval process for public works (including mining) that require assessment of the environmental effects. Planning and Environment Act 1987 To establish a framework for planning the use, development and protection of land in Victoria in the present and long‐term interests of all Victorians. Environment Protection Act 1970 To create a legislative framework for the protection of the environment in Victoria having regard to the principles of environmental protection. Occupational Health and Safety Act 2004 To secure the health, safety and welfare of employees and other persons at work; to eliminate, at the source, risks to the health, safety or welfare of employees and other persons at work; to ensure that the health and safety of members of the public is not placed at risk by the conduct of undertakings by employers and self‐employed persons; and to provide for the involvement of employees, employers, and organisations representing those persons, in the formulation and implementation of health, safety and welfare standards. Aboriginal Heritage Act 2006 To provide for the protection of Aboriginal cultural heritage in Victoria.
Traditional Owners Settlement Act 2010 To advance reconciliation and promote good relations between the State and traditional owners and to recognise traditional owner groups based in their traditional and cultural associations to certain land in Victoria. National Parks Act 1975 To make provision, in respect of national parks, State parks, marine national parks and marine sanctuaries for preservation, protection, study and effective management, and to make further provision in respect of designated water supply catchment areas and wilderness parks. Crown Land (Reserves) Act 1978 To provide for the Reservation of Crown Lands for certain purposes and for the management of such Reserved Lands and for other purposes. Conservation Forest & Land Act 1987 To make provisions with respect to creation of a body corporate called the Director‐General of Conservation, Forests and Lands; to define its powers; to provide a framework for a land management system and to make necessary administrative, financial and enforcement provisions; and to establish a system of land management co‐operative agreements. Climate Change Act 2010 To establish a framework for the treatment of climate change issues and actions in Victoria. Flora and Fauna Guarantee Act 1988 To establish a legal and administrative structure to enable and promote the conservation of Victoria's native flora and fauna and to provide for a choice of procedures which can be used for the conservation, management or control of flora and fauna and the management of potentially threatening processes. Water Act 1989 To establish the regulatory arrangements relating to water in Victoria.
Plus, Commonwealth legislation, e.g. Native Title Act, Environmental Protection & Biodiversity Conservation ActPlus, regulatory instruments such as the Victorian Planning Provisions (VPP) and the State Planning Policy Framework (native vegetation, administered by DSE)
Victoria’s Regulatory Framework
Victoria’schallenges
DPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities Summary
DPI
DPCD
DPCD
DSE, EPA
DTF, VWA
DPCD, AAV
DOJ
DSE, PV
DSE
DSE
DSE
DSE
DSE, DPI
Regulatory reform
Victoria’schallenges
DPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities Summary
Principal Act - MRSDA
“To encourage economically viable mining and extractive industries which make the best use of resources in a way that is compatible with the economic, social and environmental objectives of the State”.
Main approaches:
Licensing, work authorities & compliance
Encourage active development within limited condition forming powers of the Act
Victoria’schallenges
DPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities Summary
MRSDA Review
• The Review of the Mineral Resources (Sustainable Development) Act 1990 (MRSDA) is a major reform activity
• Phase 1 of the review has resulted in the MRSDA Amendment Act 2010 – focused primarily on modernisation of licensing to align with industry practices.
• Phase 2, targeting a further set of amendments in 2012 to streamline approvals processes, improve planning and address inefficiencies is in progress, with policy position in late stage development (target end 2012).
MRSDA Review Phase 1
The new arrangements have been designed to:
• clarify purpose of licences (exploration, evaluation, mining)• align to today’s industry (development sequence, commitment rises with
certainty, time provided for evaluation)• add virtually no regulatory burden• improve security of tenure when a resource is identified• encourage development of Victoria’s resources (development obligation,
relinquishment), • ensure that land not being explored or mined becomes available to others
http://www.dpi.vic.gov.au/earth-resources/about-earth-resources/news-and-events/minerals-and-extractive-industries- stakeholder-information-days-presentations/mrsda-review-phase-1-presentation
MRSDA Review Phase 2
We are currently testing policy positions after consultation across industry and government. Some important areas of discussion (legislative & administrative) are:
• A lead agency approach – whole of govt advocacy and navigation
• Work plan requirements
• Work approvals processes across Government
• Planning matters and resource stewardship
• Rehabilitation bonds
• DPI’s enforcement tools
• Low impact exploration (native vegetation, cultural heritage)
http://www.dpi.vic.gov.au/earth-resources/about-earth-resources/legislation-and-regulation/discussion-papers/review-of-the- mineral-resources-sustainable-development-act-1990
Community engagement & land access
- Unique legislated requirement for licensees to engage (Victoria only)
- Community engagement plans required for work plan approval
- Training & advice to licensees, made accountable (audits)
- Clarification of rights & response to complaints- Communication: resources belong to Crown
- Clarification: exploration rarely leads to mining
- Negotiated consent, or in accord with compensation (VCAT decision if necessary)
- Two stage approvals process (licence, then work)
DPI consultation/ communication example (council & community group focus):http://www.dpi.vic.gov.au/earth-resources/community-information/landholders-info/coal-seam
Consultation guidelines for licensees:http://www.dpi.vic.gov.au/earth-resources/community-information/guidelines-exploration
Victoria’schallenges
DPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities Summary
Victoria’schallenges
DPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities Summary
OilConventional gasGoldGeothermal
Unconventional gasMineral sandsCoalBase metals
Commodities of relevance to Victoria
Highest market/resource potential
Mineral Sands – a $1 billion pa opportunity (16% of GSP M&P)
“Where will supply come from….”?Matched to current global needs – no need to exploreMurray Basin - Large, high grade (excellent assemblage), unconventional resources -opportunityRegulatory environment provides security, requires development – farm-in opportunitiesActivity responding: flotation developments, piloting, ilmenite upgrading, zircon specification ….
“There’s been little new capacity investment over the past decade. Major ore bodies are nearing depletion, and bringing new ore bodies on line will not happen overnight”. Jean-Francois Turgeon
CEO, Rio Tinto Iron & Titanium
TZMI MDL
Stars are lining up
“Much of the new capacity will only cover the growth in demand from China alone, not other growing markets such asIndonesia and India”. David Robb
CEO, Iluka
Zircon
TiO2 feedstocks
Mineral Sands – a $1 billion pa opportunity (16% of GSP M&P)
“Where will supply come from….”?Matched to current global needs – no need to exploreMurray Basin - Large, high grade (excellent assemblage), unconventional resources -opportunityRegulatory environment provides security, requires development – farm-in opportunitiesActivity responding: flotation developments, piloting, ilmenite upgrading, zircon specification ….
“There’s been little new capacity investment over the past decade. Major ore bodies are nearing depletion, and bringing new ore bodies on line will not happen overnight”. Jean-Francois Turgeon
CEO, Rio Tinto Iron & Titanium
TZMI MDL
Stars are lining up
“Much of the new capacity will only cover the growth in demand from China alone, not other growing markets such asIndonesia and India”. David Robb
CEO, Iluka
ZirconZircon
TiO2 feedstocksTiO2 feedstocks
Victoria’schallenges
DPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities Summary
Gas – Victoria’s resource positionVictoria’s gas demand is expected to double by 2030
Current gas sources will be depleted somewhere between 2025 and 2030
There are three possible new sources of local supply which need to be investigated:
Some publicly reported intersections, but no reported reserves
Sources: AEMO Gas Statement of Opportunities
DPI Annual Statistical Review
‘http://www.lakesoil.com.au/assets/Uploads/Announcements11/Clean-Onshore-Gippsland-Gas.18072011.pdf’
Michael Yeager, CEO BHP Petroleum, “Price pressure rising as Bass gas exported”, The Australian, 16 November 2011
• conventional gas offshore (limited)
• shale gas and tight gas onshore
• biological coal seam gas onshore
Victoria’schallenges
DPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities Summary
Mineral carbonation?
Direct exports
Derivatives
Ports, rail, water, roads, public safety
Victorian EnergySecurity/Cost
Other base load energy options
Large liquid CO2geo storage
Power
“Bio” sequestration
17 – 30 Bt ligniteCost?
EnergyEfficiency?
Selection?
AtmosphericDischarge?
Base Metals Porphyry in the MIGA ARC? – new ideas about evolution
Victoria’schallenges
DPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities Summary
Earth resources is a small but valuable part of Victoria’s economy
High use of products within Victoria itself – competitive influence
Sector has overall declined – depleted resources not replaced
Greenfields exploration remains subdued – area is at a premium, cycle time reflects low ranking for spending (some recent improvement)
Prospectivity is perceived as low
Leveraging already best in class geological data availability to exploration success is a key challenge
There is active regulatory reform
Promotion requires active engagement focused on competitive potential
Victoria has significant endowments and potential for development
Active working of licences is a critical need
Community engagement is acknowledged as critical for success
Summary
The Crown owns all minerals (some term based exemptions)
Stone on or below the surface of any private land is the property of the owner of the land.
Consistency with the Native Title Act 1993 of the Commonwealth and the Land Titles Validation Act 1994.
Exemptions to a licence or other authority under this Act- (National Parks, Aboriginal Heritage protection, Ministerial exemption)Royalties (ad valorem or in case of coal energy based, can set to any level by regulations except coal)
Licences – exploration, retention, mining
Advertising requirements – licence grant (14 days)
Mining economic benefit compared with agriculture, and excision.Publication of reasons for granting or refusal to grant
Main Provisions of (Amended) MRSDA
Victoria’schallenges
DPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities Summary
Scope of licence conditions
Licence transfer, cancellation of licence
Objections processes (21 days from notification)
Mine stability levy (technical review board)
Authority to enter land (in absence of consent – Dept Head), with notice
Work plan and work plan approval, work authority
Obligation (on licensee) to consult with affected communities
EES exempts need for planning permit
Statutory endorsement of approvals
Compensation – all loss or damage, solatium, negotiated prior to access, appealsMining warden & powersInspection & enforcement powersAdministrative processes
Main Provisions of (Amended) MRSDA (Continued)
Victoria’schallenges
DPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities Summary
MRSDA Review Phase 1
The new arrangements have been designed to:
• clarify purpose of licences (exploration, evaluation, mining)• align to today’s industry (development sequence, commitment rises with certainty, time provided for
evaluation)• add virtually no regulatory burden• improve security of tenure when a resource is identified• encourage development of Victoria’s resources (development obligation, relinquishment), • ensure that land not being explored or mined becomes available to others
http://www.dpi.vic.gov.au/earth-resources/about-earth-resources/news-and-events/minerals-and-extractive-industries- stakeholder-information-days-presentations/mrsda-review-phase-1-presentation
An integrated new licensing system is being introduced that includes a new Retention Licence
• Retention licence is an optional licence between exploration and mining stages, for the purposes of development and evaluation of economic viability
• Provides secure tenure, around an identified resource, in the absence of mining, with no compulsory area relinquishments
• Requires compliance with an agreed work program - work towards defining economic reserves and establishing economic viability
• Encourages farm-ins where commercially appropriate
• Can still choose exploration licence (with relinquishments) or mining licence (with commitment to mine)
Package of reforms includes changes to exploration and mining licences complementary to introduction of the retention licence.
MRSDA Review Phase 1 –Retention licences
MRSDA AmendmentsRetention licences: Strong alignment with industry evaluation processes
Strong security of tenure, with high incentive to partner where needed for active development
Resource identified?
Reasonableprospect?
Economic viabilityTest I
Yes
Retention LicenceGranted (if sought)
Work program Positive prefeasibility
study?
Economic viabilityTest II
Yes
No
Mining Licence
Iterate topositive?
Still reasonableprospect forthis project?
Economic viabilityTest II
Yes
Yes
No
Economic viabilityTest III
No
No
Formed Intention to mine?
Licence relinquishment
Changes to Exploration Licences
• Exploration Licences are for ‘greenfields’ exploration, not resource evaluation – need to make space for retention licences
• Transparent tenure limits (5 years, 1 renewal – not as right, 1 further renewal under exceptional circumstances, with relinquishments)
• Additional relinquishments (relinquishment to 75%, 40%, 20% and 10% at 2, 4, 7 and 10 years, assuming licence still valid)
• New work program expectations (e.g. when on a known resource endowment)
• Fair transitional arrangements for existing exploration licences (2 year renewal possible at term for those already renewed once to enable bridge to retention licence - but with relinquishments as above)
MRSDA Review Phase 1 –
Exploration Licences
Changes to Mining Licences
• Mining licences are for mining only (compliance expected)
• Prior to grant - Identification of a mineral resource, mineralisation report (unless already mining) and demonstration that a resource and project will be economically viable
• Expectation of mining within 2 years of grant
• While mining has not commenced an appropriate program of work is required
• Transitional arrangements: for 12 months following commencement, existing licensees can apply for a retention licence – once only
MRSDA Review Phase 1 –Mining Licences
Introduction of a Prospecting licence
• The new licensing system may not complement prospectors and small scale miners who request tenure to small areas for their activities
• The New Prospecting Licence allows exploration and/or mining activities with lower entry and work requirements (no resource identification, no need for prefeasibility study on licence).
• Is limited in size (5 Ha)
• Is limited to 5 years and is not renewable
• Provides an exclusive right to apply for a mining licence during the life of the licence.
MRSDA Review Phase 1 –Prospecting Licences
Statutory Endorsement of Work Plans
• Give legislative effect to current administrative practice of endorsing work plans prior to planning permit applications
• Process: work plan to referral authorities for 30 days comment; DPI Head must consider comments prior to endorsement
• Intended to streamline work approvals by reducing or eliminating duplication of referrals to other agencies (e.g. in approving planning permits)
• Only applies where a planning permit is required for a work plan or work plan variation
MRSDA Review Phase 1 –Statutory Endorsement
MRSDA Review Phase 2
Policy position yet to be finalised, discussion papers available
• A lead agency approach – whole of govt advocacy and navigation
• Work plan requirements
• Work approvals processes across Government
• Planning matters and resource stewardship
• Rehabilitation bonds
• DPI’s enforcement tools
• Low impact exploration (native vegetation, cultural heritage)
• A variety of other matters
http://www.dpi.vic.gov.au/earth-resources/about-earth-resources/legislation-and-regulation/discussion-papers/review-of-the- mineral-resources-sustainable-development-act-1990
DPI’s Proposed Lead Agency Role
Victoria is unique – not “one stop shop” preference in approvals
Clarity on facilitation services provided & navigation aids – standard decision trees and Gantt charts
Project management based approach
Scaled approach to facilitation
Clearly available information & measures
Single point of information
Efficient government decision making
Web based application procedures (RRAMS)
Monitoring of approval timeframes
Advocate for industry interests
MRSDA Review Phase 2
Minister for Public Transport Terry Mulder has welcomed today's commencement of Iluka Resources Limited's trial mineral sands trains from Hopetoun in northwest Victoria to Iluka's Hamilton Mineral Separation Plant.
"This $9 million Iluka Resources rail freight project involves Iluka providing $5 million and the Victorian Government $4 million, the latter largely through Regional Development Victoria.. The project consists of a rail loading facility at Hopetoun, together with rail sidings and an unloading facility at Iluka's Hamilton Mineral Separation Plant," Mr Mulder said.
Iluka's General Manager, Australian Operations, Mr Steve Wickham said that the rail freight project was another sign of Iluka's investment in Victoria.
Premier’s Office, Friday 18 November, 2011
Example – Infrastructure support
Victoria’schallenges
DPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities Summary
Engaging & attracting relevant explorers
Relevant Explorers #
Global Greenfield Exploration Budgets
(2010) Total 108 $950.8m Overseas only 71 $303.1m Active in Australia 37 $647.7m Active in Victoria 2 $6.0m
Victoria’schallenges
DPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities Summary
Perceptions of Prospectivity are Related to Land Area(With Upwards Scatter Related to Iconic Mines)
Mongolia
Kyrgyzstan
Ireland
India
Finland
Bulgaria
Venezuela
Peru
Panama
Mexico
Honduras
Guatemala
Colombia
Chile
Bolivia
Zambia Tanzania
South Africa
Niger
Namibia Madagascar
Guinea (Conakry)
Ghana
DRC (Congo)
Burkina Faso
Botswana
Philippines
New Zealand
Indonesia
Tasmania
Northern Territory
New South Wales
Wisconsin
Washington
New Mexico
Nevada
Montana
Minnesota
Michigan
Idaho
Colorado
California
Alaska Yukon
Quebec Ontario Nunavut
Nova Scotia
NWT
Nfld./Labrador
New Brunswick
Manitoba
British Columbia
Alberta
Wyoming
Western Australia
Utah
South Australia Mali
Saskatchewan
Queensland
Papua New Guinea
Greenland Ecuador Argentina
Zimbabwe
Arizona
Victoria
Kazakhstan
Norway
Romania
Spain
Sweden
Turkey
Vietnam
0.4
0.5
0.6
0.7
0.8
0.9
1
- 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000Land Area KM2 (Excluding Water Bodies)
Perc
eive
d M
iner
al P
rosp
ectiv
ity A
ssum
ing
No
Res
tric
tions
Source: Fraser Institute Survey of Mining Companies 2010/2011 Jurisdictions marked red are known to host iconic mines / deposits
Virtually no large jurisdictions have low perceived prospectivity
Victoria’schallenges
DPI’sapproaches Prospectivity
Regulation/reform Opportunities SummaryVictoria’s
challengesDPI’sapproaches Prospectivity
Regulation/reform Opportunities Summary
World’
s largest mine
“ ”
?
Victoria is not on the radar , even for its land area