Iron Filings

Cedric Davies is a geologist, exploration tenement applicant and Environmental Compliance Officer for the Yamatji Marlpa Land and Sea Council, the Native Title Representative Body for the Murchison, Gascoyne and Pilbara regions of WA.¹

Iron Filings

Western Australia (WA) is a mining state. It is enormously rich in natural resources and is, as we are often told, the 'powerhouse of the nation's economy'. The mining industry as a whole employs more people and contributes more to the WA economy than any other. Mining infuses the identity and history of WA's people and is by far the dominant force affecting the State's political and socio-economic climate. Left or right, it doesn't matter in WA - one is pro-mining, the other is very-pro mining.

While prosperity is one thing, the scale of the riches on offer undoubtedly creates a temptation for rule-bending in the Government assessment of mining proposals. Indeed it appears there is a culture within government where due process can be disregarded if it cannot keep up with the demands of the mining industry.

Boom boom

The mining industry in WA is doing exceptionally well and the State can boast, in the words of Treasurer Eric Ripper, a 'V8 economy with a rocket engine strapped on the back.' The papers in WA report almost daily on the boom times with export and production records continually being broken. New car sales are up, house prices are soaring and consumer confidence is high. Champagne sales have increased by up to 400% in the past year.²

The super-cycle of boom times currently being experienced by the mining industry is driven primarily by an unprecedented demand for raw materials from China. This has resulted in WA's economy recording a spectacular growth of more than 10 per cent in the past year, almost four times the national figure and five times that of NSW³. Statistics from the WA Department of Industry and Resources (DoIR) reveal that in 2005 the State's mineral and petroleum production was worth some $38.9 billion, a 37% increase from 2004⁴. The State's solid export performance has resulted in WA's trade surplus standing at $28.7 billion for the 12 months to February 2006, compared with Australia's trade deficit of $16.5billion.⁵

Leading the charge in the resources boom is iron ore with demand so strong that lead producers negotiated a staggering 70% increase in the price of iron ore last year with a further rise up to 20% anticipated this year.⁶ To put this in context, the value of iron sales in WA rose by 83% in 2005 to $11.3 billion from a record 244 million tonnes of ore sold.⁷

The unprecedented scale of the boom has no doubt put significant pressure on bureaucrats and politicians alike to facilitate development and keep up with demand.⁸

The Government approvals process

The Government must both surf the wave and keep a steady hand on the tiller while the mining economy surges. It has the challenging role of promoting and facilitating resource development while at the same time regulating the industry in accordance with legislation and policy and to the expectations of the broader community. The Government benefits from the revenue raised directly and indirectly from mining, but also stands as the ultimate guardian of social goods that would be at risk from an open slather on mineral resources.⁹

The two main Government Departments that regulate the mining industry are the Department of Industry and Resources (DoIR) and Department of Environment (DoE), which includes the Environmental Protection Authority (EPA).¹⁰

The DoIR's mission is '[T]o advance the responsible development of industry and resources for the benefit of Western Australians' with a vision of [S]ustainable prosperity and a better quality of life for Western Australians'.¹¹ The DoIR Minerals and Petroleum Division manages the approvals of mineral exploration and mining tenure and associated activities under the Mining Act 1978. The DoIR employs close to 1000 full time staff¹² and is the lead agency regulating the mining industry.

The DoE 'works to ensure a healthy environment and the sustainable use of natural resources for the benefit of present and future generations in Western Australia'.¹³ It includes EPA which 'was established by Parliament as an independent Authority with the broad objective of protecting the State's environment'.¹⁴ The EPA operates under the Environmental Protection Act 1986 (EP Act) and manages the environmental impact assessment process for mining and resource development.

The Mining and EP Acts are the main legislative tools that regulate the mining industry. Other legislation which the industry is required to comply with includes the Commonwealth Native Title Act 1993 which sets out a process for the valid grant of tenure where it may impact on indigenous rights and interests. This is particularly relevant in WA as most of the States mineral wealth is located in remote and sparsely populated regions.¹⁵

Industry: 'faster, faster'

From the industry perspective the approvals process means time, which, as the old adage goes, 'means money.' There is a commercial economic advantage in a swift approvals process, but speed comes at the risk of social, environmental and ethical considerations if mining is to proceed in, for want of a better word, a 'sustainable' manner.¹⁶ The Government has the role of balancing these interests.

Industry perpetually pleads for more expedition in government-decision making. Boom or bust, it would seem that Government is always too slow for the mining industry. Some involved in the current iron ore boom have gone so far as to describe the gaining of Government approvals as constraints, even in the documentation forming part of their approvals applications.¹⁷

On its election the First Gallop Labor Government commissioned a raft of reviews and reports with a view to speeding up the approvals process for mining and exploration, including the Technical Taskforce on Mineral Title Applications¹⁸, the Keating Review¹⁹ and the Bowler Report.²⁰ The findings of these reviews have been adopted by Government in the main and continue to be rolled out. The Mining Amendment Act 2004, incorporating many of the recommendations, was passed by Parliament in October 2004 and should result in a substantial reduction in the existing backlog of mining lease applications.²¹ The DoE reports that '[I]mplementation of the Keating Review (government approval processes) recommendations that relate to industry licensing... , so as to improve timeliness and outcomes in those areas, has been a priority for us'.²²

Certainly the Gallop Government made significant efforts, at least at the political level, to address industry's desire for more expedition in government-decision making.

If the rules don't work, ignore them

What happens though if the approvals process does not meet with industry's particular requirements or expectations? On the one hand the relevant Minister usually has authority to override bureaucratic procedure.²³ However, it seems there is an eagerness within government to accommodate industry by ignoring its own procedures to the point that the industry has significant influence not only over the process as a whole, but individual bureaucratic decisions.

This is not a recent phenomenon. There is a major iron ore mine in the Pilbara region of WA that has been operating for over ten years. In this time it has produced some 80 million tonnes of iron ore that has been transported to the coast by rail and then shipped overseas for sale. According to the public record a not insignificant portion of the rail line was constructed on land where there was no validating tenure. When the issue was raised in 2004 the State Government advised that negotiations to establish a lease over the relevant part of the railway in question had been ongoing for some eleven years and had not been finalised at that date. In other words the railway had been operating without the necessary legal authorities for over 10 years and with the Government's full knowledge and presumably, also its full consent.

Another more recent example concerns the trial of mining equipment late last year on a new iron ore project area, also in the Pilbara. The proponent had applied for a native vegetation clearing permit under the EP Act for the trial. At the time the proponent's broader mining project was being assessed under the EP Act which meant that the DoIR was barred under legislation from making a decision on the application until either it was subject to proper environmental assessment under the EP Act, or the EPA waived the assessment process. The latter occurred and in a letter dated 19th October 2005 from the Chairman of the EPA approval was given for the DoIR to make a decision on the clearing permit application, which was subsequently granted.²⁴

The EPA justified the waiver on the grounds that the proposed work, in its opinion, could be classed as "minor or preliminary" as per Section 41A(3)²⁵ of the EP Act. Parliament clarified the meaning of "minor or preliminary" in the First Reading speech of the Environmental Protection Amendment Bill 2002, where examples of "minor or preliminary work" were said to be "the erection of fencing and signage, which may be part of the proposal and may also help protect the environment while the assessment proceeds." ²⁶ Similarly, the Explanatory Memorandum of the Environmental Protection Amendment Bill 2002 clarifies how the EPA would determine what constitutes "minor or preliminary" work, stating that s41A of the EP Act 'allows the EPA to approve minor or preliminary works which may assist in the assessment of the proposal (e.g. a monitoring bore) or the protection of the environment during the assessment (e.g. fencing)'.²⁷ However, the proponent did not erect a fence or a sign, but rather excavated some 310,000 tonnes of material²⁸ during the course of the trial.²⁹ To give an indication of scale, the total weight of the Rialto Towers in Melbourne is estimated to be 250,000 tonnes.³⁰ The biggest battleships ever built, the Yamato and Musashi weighed approximately 65,000 tons each.³¹

In 2005 a native vegetation clearing permit was granted to a mining company in breach of the EP Act because the applicant had provided incorrect information about its land holdings, as previously approved by the government, in support of its application. It appears no one at the DoE checked the veracity of this information until the decision to grant was appealed externally to the Appeals Convenor.³² In other instances tenements have been granted in flagrant breach of the Commonwealth Native Title Act 1993 (NTA) due to "administrative error"³³ and bureaucratic complicity.

Interestingly this is exactly the kind of conduct that the ALP was highly critical of, albeit on a far grander scale, when the Court Liberal Government was in power.³⁴ In 2000 and 2001 some 350 mineral tenements were granted under the Court Governments controversial Ward policy. Under this policy mineral tenements were granted without reference to the NTA over areas where the Federal Court had suggested native title might be extinguished. However, the argument was subsequently overturned by the High Court raising questions as to whether the grant of the tenements was valid.³⁵ The ALP was highly critical of the Liberal's exercise of political will with Geoff Gallop commenting "[W]e warned the Court government there was a risk³⁶ in issuing title before the High Court made a determination on the matter. I think it's another example of how they approached these issues aggressively without taking into account the proper judicial process".³⁷

Another example is found in WA ALP's Native Title policy which states that "[I]n 1995 the Court Government went so far as to issue potentially invalid mining titles. If these titles, which underlie seven major resource projects, are ever successfully challenged in a law court, the State Parliament would not have the power to validate them."³⁸ Of the 211 tenements in question the majority (195) relate to the now mothballed BHP Billiton hot briquetted iron site in Port Hedland. The tenements were knowingly granted without reference to the NTA with the Liberals arguing, ironically in hindsight, that the project was too important (to be granted in accordance with the law presumably). At the time there was vigorous debate in Parliament with Eric Ripper, now Minister for Native Title stating "[O]n this occasion the Government has apparently behaved unlawfully"³⁹. Geoff Gallop went on to add "I want to go back a step and ask what has happened about the 211 titles" Opposition members say that that is unlawful; the Government says that it is not. We will continue to argue the point and the Government will find that the issue becomes more important as the days go by".⁴⁰
What indeed has happened to those 211 titles then since the ALP, who argued so passionately against their grant, came to power? What has happened to those 350 Ward tenements? Did the Government seek to compensate those prejudiced by the grant or move to correct the wrongs it was aware of? The answer would seem to be no, and all the uncertainty about the validity of those tenements remains. Is this the 'responsible development of industry' under a vision of 'sustainable prosperity'?⁴²

She'll be right, mate!

Similarly those seeking to question or clarify mining proposals are often dealt with in a less than expeditious manner by government decision makers. There is frequently a lack of rigor when issues are tabled which may slow down the approvals process. The following responses from the DoE are related to mining proposals, and I quote:

• The assessment officer failed to understand.
• The delay in you receiving the document is regretted.
• The assessment was undertaken by a temporary relief officer. Unfortunately, the temporary staff member failed to check.
• We are under a lot of pressure from the proponent.

At a State level then there appears to be a culture whereby the rules can be bent if the normal approvals process cannot keep up with the demands of the mining industry.

So what, who cares?

WA needs mining. It is to be expected that Government in WA will be strongly pro-mining, irrespective of political persuasion. However, it is not unreasonable to expect that due process will be afforded in the assessment of mining proposals. If indeed Government is ever "under a lot of pressure from the proponent" it can respond in a variety of ways. It could, for example, increase resourcing to decision-making agencies or seek to make reasonable changes to process or legislation. What it should not do however, is to ignore legislation or due process. Being pro-mining does not necessitate taking a dismissive approach to government approvals. To do this and embrace the short term gains is to put at risk the longer term goal.

In the same way that WA needs mining, so 'the industry needs an approvals process that delivers certainty, accountability, transparency and timeliness'.⁴³ The Keating Review recognised the need for a system 'that can deliver the necessary approvals within a reasonable timeframe at reasonable cost, and offering greater certainty to the proponent, while properly taking into account the public interest'.⁴⁴ Cutting corners in the approvals process does not deliver on these needs. It does deliver uncertainty, in that the approvals may be subject to subsequent legal challenge, and a lack of transparency, in that varying assessment standards may be applied.

The approvals process provides a mechanism for balancing resource development with community concerns. It does not necessarily mean vetoing a project, but rather ensuring that environmental, social and Indigenous concerns are properly addressed as the project develops. It also provides certainty and a level playing field for industry by decreasing the potential for varying assessment standards. A process by which government can manipulate its own procedures lacks transparency and puts at risk the reputation and health of the mining industry in WA.

Sweeping changes, but more of the same?

Given the pro-mining stance of (all) government in Western Australia it comes as no surprise that in October 2005 the Government announced sweeping changes to WA's system of approving major resource projects. Announcing a funding boost of some $25 million to accelerate the approvals process, then Premier Geoff Gallop acknowledged "that the approvals process is one of the biggest areas of concern for the resources industry".⁴⁵

The Premier was keen to point out that the proposed quicker approval times did not mean WA was lowering its approvals standards. However, in the same media statement the Premier outlined changes including that "agencies will be required to meet firm deadlines for commenting on resource projects, or will be deemed to have no comment to make."⁴⁶ Clearly this concept is problematic from the outset. Lack of comment cannot necessarily be deemed to mean no comment. A lack of adequate resourcing, or control of the purse strings, can be used to affect outcomes by preventing agencies from complying with deadlines. Indeed, it is likely that significant or complicated proposals which require comment from agencies will normally take more time to consider and investigate. Yet comments might not be considered in these instances due to a procedural guillotining of the assessment process.

An increased emphasis on expedition in Government decision making combined with a culture where existing procedures can be bent and swayed in favor of proponents means that approvals standards will be compromised.

Is it simply that too much Champagne is being drunk on St George's Terrace?

The government approvals process is important in demonstrating the viability and acceptability of mining projects. Adequate time and resources are required for the necessary studies to be undertaken, for meaningful public input and for proper and responsible government agency review.⁴⁷ A culture where the approvals process can come second to the demands of industry is not healthy, or responsible or for the benefit of present and future generations in WA.⁴⁸

Yes, Minister

Perhaps the most talked about new resource development in WA at this time is the Fortescue Metals Group's (FMG) ambitious bid to become the 'new force in iron' and the third major iron ore miner in the Pilbara.⁴⁹ FMG is also currently being pursued by the Australian Securities and Investments Commission for alleged misleading and deceptive conduct⁵⁰, claims that it vigorously denies.⁵¹ At a ceremony marking the commencement of construction of FMG's port infrastructure in Port Hedland in February this year the Minister for Planning and Infrastructure⁵² commented "[T]here are still quite a number of hurdles for this project to cross before it starts in full. We are very confident it will take off and all those hurdles will be more than ably jumped over".⁵³

But then of course, WA is a mining state.