Adherence To EPBCA By Waratah Coal Pty Ltd And Legal Risks

Waratah Coal Pty Ltd

Waratah Coal Pty Ltd is a company having its exploration activities predominantly located in Northern Territory, Queensland and New South Wales. It is a company which is engaged in acquisition, exploration and development of the coal projects in the nation and operates as a subsidiary Mineralogy Pty Ltd. Waratah Coal Pty Ltd was incorporated back in 2005 and is majorly based in Brisbane, having additional office in Canada’s Toronto.

Environment Protection and Biodiversity Conservation Act, 1999, herein referred to as EPBCA, is a significant legislation applicable in the nation, which is focused upon protecting and safeguarding the biodiversity and the environment of the nation. This act applies on the mining industry, of which Waratah Coal Pty Ltd is a part; and even for such industries which are engaged in mineral exploration. The discussion contained in this report is focused on the operations of Waratah Coal Pty Ltd and its adherence to EPBCA and the other legislations, as are applicable on it. This has been done to gain an understanding into the legal risks which are raised for the company for being a mining industry. This report would, in short, help in presenting a conclusive summary of the legal environment surrounding Waratah Coal Pty Ltd.

Waratah Coal Pty Ltd (Waratah) is a coal development and exploration company having its operations in the nation. The company has different exploration permits for minerals and coals located in Northern Territory regions, Surat, Nymbodia, Maryborough, Moreton, Styx’s, Bowen, Laura and Galilee as these areas are rich in mineral basins. The company takes pride in it being dedicated towards the development of Queensland region as it expands the mineral wealth and also works as an outstanding territory for this jurisdiction. Waratah is focused on developing and probing of the coal projects in the nation. Waratah has made a proposal of $8.4 billion for the coal mine and infrastructure project in Central Queensland’s Galilee Basin in collaboration with Mineralogy Pty Ltd’s subsidiary, i.e., Galilee Pty Ltd. 

The Galilee Basin Project covers a big thermal coal mine which is located near Alpha, which is in west of Emerald. This particular project is expected to cover four underground mines, processing facilities, associated coal handling, and two surface mines. As per the schedule, the mine is to be in connection with the new coal terminal which had to be located at Abbot Point which is a place near Bowen by putting up a new standard gauge and heavy haul railways line which is supposed to be 453 km long. Back in 2008, Queensland’s Coordinator-General had given Galilee Basin Project a significant project status and this status was also given to Galilee Power Project of the company, but in September 2009.

Issues faced by Waratah

The company is not only listed on the Australian Stock Exchange but is also listed on the Toronto Stock Exchange. Waratah accepted the offer of Mineralogy Pty Ltd to obtain the controlling stakes of Waratah back in December 2008 and as a result of this, Waratah became the subsidiary of Mineralogy Group. This group, along with its allies have an experience of twenty five years in development, management and funding of major projects. At present, the company is fully owned by Mineralogy Pty Ltd.

The companies, depending upon the nation or industry in which they are in, are required to follow different acts, rules, laws, legislations, regulations and statutes, as are applicable upon them. From the very basic of purchasing land for conducting business, to hiring of the employees, different legislations, bylaws and regulations are required to be adhered with. These regulations, laws and other statutory instruments create the legal environment for the company, which held in managing the relationship of the company and also in its governance. The companies are thus required to follow a range of different legislations.

Waratah has its operations in different parts of the nation, and on this basis, it is required to adhere to not only the laws of the Commonwealth, but also of the state or territory in which it operates. Apart from these laws, the company also has to follow the common law, where the tort law and the contract law are deemed as most significant. Due to the high number of laws which have to be followed, the legal environment of the company needs to be monitored strictly.

The key issues faced by Waratah, which impacts its operations, are related predominantly to the laws related to environment. Apart from this, the company also has to face major logistical issued particularly in the matter of the transportation to international markets from its mines. Mining licenses and permits, which are a major requirement for being in mining industry, also pose a problem for the company as these licenses and permits are necessary for undertaking the projects of the company and these are subjected to certain predefined requirements. In case the company fails in satisfying the condition of the licenses or the permits, these can be revoked by the pertinent authority and this in turn, translates into the investment value of such projects being declined, which overall proves costly for the company.

The Government Gazette clearly provides that the company has been given the required authority for constructing a rail line. However, the company faces constant problems in the obtainment of the approvals for building the rail line. In case these approvals had been obtained easily by the company, it would have been able to make land acquisition and would have removed a crucial hurdle in the rail line’s construction.

Applicable Legislations for Waratah

The company has faced similar issues with the authorities in other matters also. An example of this is the refusal of $5.3 billion coal mine, port and railways by the Federal Court of Australia and the Federal Environment Minister. The reason for rejection of this proposal was cited to be section 74B of the EPBCA by the Federal Environment Minister. He also made it very clear that he had rejected the proposal for its negated impact over the route of the rail line and owing to the threat the coal port posed over the environment of that region. In reply to this, Waratah applied for a legal review of this judgment by filing an application and cited the time limit as the reason, which was beyond the time limits as has been specified under the EPBCA. However, this application was quashed.

The company has its operations in the nation and due to these reasons it is required to follow certain commonwealth laws, particularly the Corporations Act, 2001 and the Competition and Consumer Act, 2010. Another key piece of legislation is the Australian Consumer Law, which is covered under Schedule 2 of the Competition and Consumer Act, 2010. The Corporations Act is a statutory law which provides the provisions for each and every aspect of the company, whereby it provides for the incorporation, the winding up, the director duties, the oppression and mismanagement, the constitution of the company and many other provisions as are applicable and as are required to be followed by the companies. It is significant that the provisions of this act are followed, as a breach of these can give rise to both civil and criminal liabilities for the company and for the people responsible for running its business.   

Apart from these statutory laws, the companies are also required to follow the common law, particularly the contract law and the tort law. So, whenever a company forms any contract with employees, or for any purpose, the basics of contract formation are to be adhered, whereby the contract needs to have offer, acceptance, intention, clarity, consent, capacity and consideration as elements of the contract. The business contracts could also cover the terms like dispute resolution, force majeure, jurisdiction where the dispute is to be filed, and other standard terms of the contract.

As Waratah is a listed company, it had to adhere to the guidelines and the listing requirements as are issued by both Australian Stock Exchange and the Toronto Stock Exchange. However, after the company became a subsidiary of Mineralogy Pty Ltd, it has been delisted, so this requirement is not to be fulfilled.

The EPBCA was enacted on 17^th July, 2000 and had replaced the erstwhile National Parks and Wildlife Conservation Act, 1975. The EPBCA is a legislation of Parliament of Australia and revolves around the protection of environment in the nation and for the biodiversity of the nation, in addition to the natural and culturally significant locations. Through this act, different processes have been created for defending and promoting the endangered species recovery, and also of the environmental societies, along with working towards the preservation of the significant locations from being degraded. This act has to be complied with the Environment Protection and Biodiversity Conservation Regulations, herein referred to as EPBCR, whereby the procedure for issuance of permits and approvals for different activities for commonwealth land is provided, along with such land which is affected through the commonwealth. In such a case where this act or the regulations are flouted, both criminal and civil penalties become applicable, and also allow for the claims of remedies in nature of injunctions and damages to be made. For instance, this act is applicable on the agreements which take place with the habitual owners in order to protect their domain for safety and preservation of the endangered species.

The EPBCA clearly provides that the purpose of this act is to safeguard the environment, specifically in such areas which are deemed as holding significance for Australia. It also provides that the ecological sustainable improvement has to be promoted by sustaining, as well as conserving the use of natural resources in an ecological manner; promoting effectively regarding safeguarding of the biodiversity; promoting the move towards administration and safeguarding of environment which involves indigenous people, holder of land, society and government, in a supportive manner; providing assistance for the international environmental duties to be mutually in existence with the ones of Australia; recognizing the role played  by the indigenous people in sustainable use of biodiversity of the nation in an ecological manner and for the protection of the same; and promoting the usage of understanding of such indigenous groups in terms of biodiversity for their participation and collaboration with the holders of this understanding.

The environmental impact assessment and approval of different measures which are untaken by the agencies and departments of the Australian Government, which have a possible major outcome over the environment is regulated through this act, along with the actions taken in commonwealth area. Such activities which attract the different requirements of the EPBCA are not to be undertaken till the time the requisite authorization had been undertaken from the Government of Australia’s Minister for the Environment. The burden of referring the application under this act is placed upon such individual who wants to obtain the requisite action, instead of the same being placed on Australian Government. Through this act, the proposers are able to institute at the very initial stages of planning regarding a specific action or venture would require the Australian Government involvement through the different sections of this act. In case an action or a particular venture indeed requires the involvement of the government, the degree of such involvement can be chalked out with ease. Where the proposer of such action has certain doubts about the provisions of this act being applicable on them, they can refer the venture to the Australian Government’s Environment Minister. The decision would then be made by the Environment Minister and this decision is binding in nature, upon both the venture and the proposer. And as per the provisions of this act, the time limit of this decision is 20 business days.

The approval has to go through three stages and has to be fulfilled by the project proposer. The very first stage is the referral stage in which the proposal is submitted by the proposer for development and this sis submitted to the Environment Minister. The Environment Minister has 20 business days within which he is required give the decision made by him pertaining to the particular proposed venture and also has to specify if this venture is requires the approval based on the provisions of EPBCA. Where the proposed venture is not in a need of such authorization, the proposer is allowed to continue with the proposal through an undertaking for the referred actions, and does not have to be liable for any legal accountability. In addition to this, the proposer could be required to take the requisite authorization from the state or territory government or from the local government, for action. And where this authorization is not required, the request moves on to the next stage, which is of evaluation.

In evaluation stage, the Australian Government’s Environment Minister makes use of a range of different evaluation criteria, which covers from the evaluation during groundwork credential for preparation of the particular Environmental Impact Statement and can also ask about the public behaviour regarding the same. Based on the situation of a particular case, the evaluation procedures of the state or territory are endorsed. The final stage in this process is that of approval, which is granted, not granted/ denied, or is granted based on particular conditions.

As has been stated earlier also, one of the key projects of Waratah is located in Galilee Basin in Central Queensland and is given the name of Galilee Coal Project. For this particular project, Waratah had been thee proposer. The action which was proposed by Waratah was regarding the establishment of a new brand coal mine, coal stockyards and railways, in addition to the sustaining infrastructure as was needed, so that it could be used to send the highly unstable low sulphur and streaming goal to different nations across the globe from the Abbot Point situated Galilee Basin, which is near Alpha.

For the Galilee Coal Project the EPBCA was applicable due to the company being the proposer and it was required to obtain the approval as a result of the applicability of different sections of this act. Waratah applied for approval pursuant to sections 12 and 15A of the EPBCA, which covers the provisions related to the World Heritage properties. Based on this act, the company applied for approval as per sections 15B and 15C owing to the land being National Heritage place. It also sought different other approvals under sections 18 and 18A which were related to the Listed Threatened Species and Communications, based on sections 20 and 20A, for the Listed Migratory Species, pursuant to sections 23 and 24A which is related to the commonwealth marine areas; and lastly pursuant to sections 24D and 24E which is related to the water reserve, coal seam gas expansion and regarding the large coal mining expansion undertaken by Waratah. Even though the approval was granted to Waratah, the same was done by the Environment Minister of that time, i.e., Greg Hunt, subject to certain specified conditions.

On 04^th December, 2015, the Environmental Management Plan off this project was reviewed, on request for Level 1 Non-Code Compliant Environmental Authority for Mining Lease 70454, by Department of Environment and Heritage Protection. It was held by the Department that the administration plan of the company for the environment fulfilled the requirements of the EPBCA; and as a result of this, the company was issued a draft environmental authority for undertaking this project. Waratah had also undertaken the project which included a thermal coal mine and which was located north of the Galilee project, and was known as the Alpha North Project. The project was able to obtain all the requisite approvals from Department of Natural Resources and Mines.

In the past, the company has faced a number of risks, which remain out of the control of the company. In this segment of the report, some of the risks faced by Waratah have been highlighted.

One of the key issues faced by the companies trying to access the land is the exploration and evaluation. A number of coal dwellings of Waratah require searching licenses and the retrieval of land, particularly in the dwelling area is dependent on the lease being granted. In case of coal production, the renting or the possession of free land, or the obtainment of a suitable entrance agreement with the land holders is a crucial requirement for accessing the land. Reaching a proper arrangement with the land owners is quite unlikely when the permission relates to entering their property, with an intention of conducting exploration activities in terms of seismic surveys and drilling programs. Where there is a failure in observing the requirements of maximum expenditure, as well as, responsibilities pertaining to the safety of the environment, the right to maintain the granted usage of land area is threatened.

Even though there is nothing to show that the aboriginal cultural heritage or occupation is present on such land regarding which the company needs the access, in case such a presence is established, there would be a need for the company to obtain the different permissions as have been stated as a requirement under the EPBCA. These processes require a significant amount of time and also require quite a lot of skilled negotiations for the major agreements. There is also a need for the negotiation to be carried for the access rights, as well as, for the compensation payment to such who claim the native title of the particular land or hold such title. The determination and the administration of the native title issues carry with them substantial negated outcomes, particularly on the cash flow of the company, along with upon its business development and fiscal performance.

Waratah is amongst the different companies which operate in mining industry and so, it faces tough competition from the other companies involved in the mining for exploration and for obtaining possession of such lands which have the potential of commercial activities. The company also faces threats from such mining companies which are better equipped in terms of monetary capital as they can easily acquire and lease the coal interests, hire and retain skilled workers, and also use this capital for research and development purposes. The leading competitor of the company is the top company in this field, i.e., BHP Billion.

One of the key risks faced by the company relates to the Galilee Basin Project. The main risk is due to the fact that there is no surety to the notion that this project would actually be an economically feasible one for Waratah. The assurance can also not be given by the company if this project would be completed on time, along with a proper and timely start of the operations of this project. The success of this project is dependent on different factors, included in which is the success of the future discovery, the obtainment of the required rights for accessing the key area, the value of infrastructure, the prices of coal, the availability of funds, the favourable result of the feasibility study of Waratah, and the grant of the requisite approvals by the appropriate govern bodies and that too in a timely based manner and in favourable terms.

As has been highlighted previously, the Environment Minister made the decision pertaining to the Galilee Basin Project of Waratah. This was subject to the referral of the Minister which was without any doubt, objectionable as a result of section 74B of the EPBCA. Waratah made an application for the lawful revaluation of this verdict, which was also quashed. Had this project remained a subject of the Minister’s decision, it would have been objectionable without any doubt due to the EPBCA, as Waratah was not able to obtain the requisite approvals which could allow the company to operate and develop the project in the manner in which it was stated in the proposal, which was made to the Australian Government’s Environment Minister. And if this was to continue, the company would have to access alternative choices regarding whole of the project, or a portion of it, particularly for the rail parts and for the port of this project; and would also be required to determine the suitability of the resubmission of a customized offer, or applying under a new application based on provisions of EPBCA.

The company has not yet concluded on the assessment of the alternatives regarding the entire or a part of the port and rail parts for the Galilee Basin Project. Waratah is also not able to offer any guarantees pertaining to the substitute feasible ports and rail parts regarding this project. It also remains unsure for the company regarding the substitute offer being made to the Environment Minister based on the provisions of EPBCA would be deemed as controlled action, or whether they would be able to acquire the required approvals which are needed for operating and constructing the Galilee Basin Project. In case this project remains subjected to the decision of the Environment Minister, where he believes that the project is objectionable pursuant to the provisions of EPBCA, or if the company would be unable in acquiring the requisite approvals for operating or constructing this project, a major unfavourable result would be put on the operations of the company business, along with on the fiscal performance of Waratah.

The risks faced by Waratah, not only have short term implications, but also have the same in long term. It has earlier also been stated, that in case there is a failure in getting the regulatory and the government licenses and permits, an unfavourable effect is put on the company’s operations. And this is denoted on the financial performance of Waratah. An important aspect for development and acquisition is funds and the funds availability affects the financial performance. In such a situation where Waratah is unable to go forward with Galilee Basin Project, not only the cash flow of the company would be curtailed, but also the growth of the company would be hampered.

Hence, the Galilee Basin Project is the major risk for Waratah owing to the different environment law related risks. Generally, the exploration and the appraisal program of Waratah Coal Project, along with the proposed Environment Impact Statement for the Galilee Basin Project require certain sanctions through the legal associations. In addition to this, each phase of the business of mining, presents different sorts of environmental risks and hazards. Furthermore, there would be a need to adhere to the different regulations which relates to environment regarding different global conferences, as well as the laws and regulations which have been imposed through the state and the municipal bodies. Owing to these reasons, the Galilee Basin Project is subjected to stringent regulatory processes and environmental approvals.

The statutes which relate to the environment provide different restrictions and prohibitions on spills, release of restricted materials and emissions which result from the mining operations. These legislations require the mining premise to be properly abandoned, operated, maintained and reclaimed so as to fulfil the requirements of the pertinent legal body. An adherence of these regulations is required to avoid substantial expenditure in terms of penalties and fines, which can at times be very costly for the company. There is a need to anticipate the requirements of the strict environmental standards as they bring big liabilities and fines. This not only impacts the capital expenditure, which are raised, but also the working expenditures. These legislations impact Waratah, particularly in the long run.

The company is undertaking examination of different mediums through which the overseas sale of coal by using the new rail line and port at the Galilee Basin, and for the coal basins to be effectively used. And at the same time, the company is also looking for different ways of commercialising its Galilee Basin project, including the possibility for the geo-sequestration of the CO₂ emissions located in this basin. This covers the coal deposit utilization of Waratah for the purpose of generating power by using conservative highly crucial coal fired creations or gasification. This gave rise to a major policy relating to coal in developments. Along with the dwelling of the company in Galilee Basin, the company owns different dwellings in different locations. And the company is also is discovering different coal investigations in different locations. The company has also taken up advances towards expansion of the rail arrangement in the Galilee Basin in a new or committed coal port for exportation.

The analysis of the legal environment of Waratah, presents certain areas where recommendations can be drawn for it. In this regard, the company needs to examine different alternative for the rail and ports. And there is also need for the company to take into consideration the optimum costs, timing and the capacity provided by the Environment Minister for the Galilee Basin Project. There is a need for the company to carry on this project while keep a strict eye on its environmental impact. There is a need for the EPBCA to be strictly followed and submission of applications for the requisite permits and licenses. The adherence to the other statutes and statutory instruments is also a requirement and is a highly recommended thing for the company. There is a need to follow both the letter and spirit of the law. Hence, the company needs to work on improving its legal compliances.

Conclusion

The discussion carried on in the previous parts highlights the significance of the legal environment of the company and the need to strictly follow the law. Waratah is one of the companies of Australia working in mining industry, which was used as a reference for this study, to show the magnitude of compliances which have to be undertaken by the companies in the nation. The discussion was predominantly focused on EPBCA to show the significance of this act for the mining industry. And the legal requirements to be followed by Waratah were effectively summarized here.

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