Proposed Western Australian Mining Rehabilitation Fund (MRF) - Effect On Performance Bonds

    November 2012

    Background to the Proposed MRF

    • The Mining Rehabilitation Fund Bill 2012 was introduced into State Parliament on 15 August 2012.
    • If enacted into law, the new legislation will, amongst other things, establish the MRF, which will be a pooled, government-administered industry fund.
    • The purpose of the bill and the MRF is to secure adequate funds for the state to rehabilitate land affected by mining operations, where the original operator does not fulfil its mine closure and rehabilitation obligations.
    • The MRF will replace the current unconditional performance bonds system for mine rehabilitation in Western Australia. However, the state will retain the discretion to require tenement holders to lodge unconditional performance bonds for high-risk projects.
    • Most tenement holders will be obliged to pay an annual, non-refundable levy into the MRF calculated as a percentage (currently expected to be 1 percent) of their estimated total mine closure liability. Mining tenements with a closure liability estimate below a certain threshold (initially AU$20,000) will not be levied.
    • Penalties will apply for failure to provide information, for the provision of false information and for failure to pay the appropriate levy.
    • Importantly, the MRF does not absolve tenement holders of their rehabilitation and closure obligations; it will be utilised by the state only when deemed necessary to rehabilitate abandoned mine sites.
    • There is a procedure for tenement holders to object to an assessment of their annual levy.

    How Will the Proposed MRF Affect Western Australian Tenement Holders?

    • The MRF is intended to commence on 1 July 2013.
    • Tenement holders will be required to regularly submit data to the state regarding the number of hectares of land disturbed for each of its Western Australian tenements. This data will form the basis of a calculation of the tenement holder’s total closure liability, which will determine the tenement holder’s annual levy.
    • Current modelling suggests that the annual levy will represent a lower annual cost than the costs associated with bank guaranteed unconditional performance bonds.
    • Given that tenement holders will, generally, no longer be required to procure unconditional bank guaranteed performance bonds, the MRF model should free up significant capital in early project stages, which would otherwise be locked away as cash collateral

    More Information

    • General information regarding the proposed MRF can be found on the Department of Mines and Petroleum website:
    • For more information regarding the proposed legislative framework, and tenement holders’ obligations under it, please contact John Poulsen or Duncan Maclean.