Special Report - No approval for process

Western Australia’s miners have warned that the State may not be able to meet future demand for its resources unless approval processes, particularly environmental approvals, are streamlined.

The issue dominated discussions at the WA Business News Mining Lunch and while speakers acknowledged the WA Government had taken some positive steps, there was strong opinion that the approval process remained a drogue on the State’s resources development.

WA Chamber of Minerals and Energy CEO Tim Shanahan said the issue was important given the WA Government’s own forecast, through the Environmental Protection Agency, of a doubling of major projects that required assessment in the next 12 to 18 months.

Mr Shanahan said an important step was to implement the recommendations from the now three year old Keating Review, which looked at the WA mining approval process.

“The Keating Review made a lot of sensible recommendations but ironically it hasn’t survived its own approval process because they haven’t been able to implement it yet,” he said.

Mr Shanahan said the issue of environmental approvals was a major challenge for the State Government.

It could also become an electorally sensitive issue for the Gallop Government as it seeks a second term.

The green vote proved critical to the Gallop Government’s first election success almost four years ago. However, the Government has, more recently, started to turn its attention to resource and industry policies.

A few months ago it released a strategic plan to link and develop some $16.5 billion worth of WA’s resource and industrial developments, ironically at the same time it announced $3.9 million in funding to improve the State’s approvals processes.

Mr Shanahan said while those additional funds had been directed into beefing up approvals agencies, it had not fully solved the problem.

Peter Harold, managing director of one of WA’s newest nickel miners Sally Malay Mining, hit out strongly at the approvals process labelling it a “joke” and saying his company had faced immense difficulty trying to steer its namesake Kimberley nickel mine through.

“Even a small project like Sally Malay with a drilled out resource took three and a half years. From the time we bought it to the time we could produce the first concentrate we went as hard as you possibly could go,” Mr Harold said.

“At the same time, the possibilities for us to slip up were unbelievable.”

Chairman of gold miner Croesus Mining and Pilbara exploration company De Grey Mining Ron Manners said this type of delay was “disgusting” compared to historical standards.

“WMC got their Kambalda nickel mining operation [1967] up and running and to market in nine months compared to today where it could take three years he said.

However, Mr Manners also said he had been in recent discussions with the WA Government to trial a project through a new streamlined approvals process.

Mr Harold said the current approvals process was too complicated and while there was talk of streamlining it, it remained one of the biggest problems facing WA mining.

“If we are going to have a problem in terms of filling the demand hole with new developments then that’s where I see it,” Mr Harold said.

Currently many Australian miners, similar to miners around the world, are enjoying surging demand for minerals.

The demand stems largely from Asia, particularly China, which is undergoing huge economic and industrial transformation, buying up masses of the world’s mineral commodities to meets its construction and development needs.

Mr Harold said miners were very aware of their legal obligations to the environment.

He said governments needed to take measures to help the industry meet this demand rather than get in its way. 

“There is no one who will take your Notice of Intent [to mine] and steward it through for you,” Mr Harold said.

“It goes into a black hole and you don’t know how its going and you don’t know who you can speak to and it could just be sitting in someone’s shelf for six weeks.”

Mr Harold said other jurisdictions could be more attractive.

“In other countries there are often agencies that assist major projects through approvals processes,” he said.

Mr Shanahan said in the WA Government’s favour, it had recently recognised that by allowing the approvals process to be scoped up front it was the single most important thing it could do.

Mr Harold acknowledged this but said in his experience, the regulating agencies seemed not only understaffed but inexperienced.

Association of Mining and Exploration Companies president and chairman of mineral sands exploration company, Gunson Resources managing director David Harley, took Mr Harold’s sentiments further, saying the approvals process problems had been politically motivated.

“The biggest problem is the WA Government has been trying to save money to get its budget in surplus and one of the ways they have done this is to cut down on the people in these agencies,” Mr Harley said.

“They have given priority to health and police so agencies like the EPA have actually had people removed yet they’re actually being asked to do more work.

He said in some cases big mining companies had resorted to the amazing situation of actually seconding staff into particular agencies to move projects forward.

“Now this is pretty sad stuff,” he said.

Another problem the approval lag throws up is the potential for mining companies to miss the peak in the supply-demand commodities cycle, which may cloud a decision to proceed on a project.

“If you started it now for instance there is a chance in three years the nickel price could be half what it is,” Mr Harold said.

Not only is this obviously negative for a company’s calculated return on its investment, it is also bad for public investment in the resource sector, which has recently returned strongly after a dearth of almost five years.

“We have to get on with our business, get on and provide the investment community with the return that they want,” Mark Ashley, managing director of international nickel miner LionOre Australia said.

Western Areas, a WA-based nickel explorer has spent almost $10.5 million in the past year on exploration to prove up a series of high grade nickel sulphide deposits at its Forrestania project near Southern Cross.

At the same time it has raised a considerable sum from the market and currently the company going through its Notice of Intent [to mine] process.

However, while Western Areas managing director Julian Hanna is confident the company will be able to proceed, he does harbour some reservations.

Mr Hanna said this partly stemmed from the confusing number of agencies involved in the approvals process.

The four are: the Department of Industry and Resources, Conservation and Land Management, The Environmental Protection Agency and the Department of Environment.

“As it stands now, four agencies all with a slightly different slant on life does kind of confuse the picture,” Mr Hanna said.

However, Mr Hanna said that in a recent meeting with the Environment Minister Judy Edwards he noted that there seemed to be some “kind of restructuring going on behind the scenes” that could impact positively.

Mr Manners said that the current situation bought to bare the possibility the State could face if something wasn’t done soon.

He said there had not been a significant gold discovery in many years and there were fewer projects in the current system than the industry would expect.

The wait goes on

Mining-related proposals being assessed by the Environmental Protection Authority:

• Koolanooka Direct Shipping Iron Ore (DSO) project, Morawa
• Wagerup Refinery Unit 3 expansion, WagerupWorsley Alumina – Increase of
  Existing Operations to 4.4 MTPA alumina, Darling Plateau, Boddington and Collie
• Straits salt project, east Exmouth Gulf

• East Pilbara iron ore Port and Railway (Stage A), Pilbara
• East Pilbara iron ore and infrastructure project: east-west railway and mine sites (Stage B), Pilbara
• Speewah Fluorspar Project, Wyndham
• Waroona Mineral Sands Project, Waroona
• Change to Environmental Conditions – AGR’s sodium cyanide operations, Kwinana
• Expansions to Kemerton Silica Sands, Kemerton Industrial Estate, Harvey
• Coburn Mineral Sand Project – Amy Zone Mining Operation Coburn and Hamelin pastoral leases, Shark Bay
• Mount Gibson Hematite Project, between Wubin and Paynes Find
• Barge site and laydown area, Gumboot Bay, East Kimberley
• Mineral sands mine, near Gwindinup
• Titanium minerals mine, within "C" Class Nature Reserve, D’Entrecasteaux National Park, Nannup
• Gas Pipeline to connect Nifty Copper Operations with the Port Hedland to Telfer gas pipeline

• Mineral Sands Mine, Gingin