management approaches share many common features and are similar to those that already exist in Victoria. What will be important for the Latrobe Valley is to further develop and tailoring these strategic management approaches to ensure that they address the strategic management requirements that are specific to the region. These specific requirements, which include the physical connections between the mines, are explored further below. Strategic management approach in Victoria The fundamental principles and features of mature strategic management frameworks are evident in the Victorian planning and regulatory frameworks relating to the Latrobe Valley coal mines. Overarching principles of best-practice, strategic resource management are embedded in the Mineral Resources (Sustainable Development) Act 1990 (Vic) (MRSDA), including its purpose which is defined in Section 1 of the Act as follows: The purpose of this Act is to encourage mineral exploration and economically viable mining and extractive industries which make the best use of, and extract the value from, resources in a way that is compatible with the economic, social and environmental objectives of the State. The objectives and principles of the MRSDA support strategic management processes that are appropriate to the Latrobe Valley context. For example, they encourage coordination between relevant approval providers and consultation with affected communities. A selection of these relevant objectives, defined in sections 2 and 2A of the MRSDA, include the following: to foster exploration and mining operations by: coordinating approvals; making resource allocation decisions that benefit the community; to have a legal framework that: manages adverse to the public, land, property and infrastructure; provides access to information and supports effective consultation ; enforces conditions in licences and approvals; to administer the MRSDA in a way that supports sustainable development by: integrating long and term economic, environmental, social and equity considerations into decision-making; ensuring that lack of full scientific certainty is not used as a reason for postponing measures to prevent irreversible environmental degradation; ensuring that mining development a positive contribution to regional development and respects the aspirations of the community (including Indigenous communities); and providing the opportunity for community involvement in issues that affect them.
Information inputs and stakeholder engagement Under Schedule 14 of the MRSD Regulations the exploration workplan must provide a description of proposed arrangements for consultation with landowners, Crown land managers and local councils. This requirement should be expanded to include a requirement to consult with spatially impacted mines. Mine operation and progressive rehabilitation Current arrangements Mining activity is administered under the MRSDA and the MRSD Regulations by: allocating licences and authorities, subject to conditions, to eligible applicants; regulating the operational aspects of mining activities through the approval of work plans and authorities; and considering community views when approving work plans and regulating operations. Gap analysis Extent of spatial strategic management Many aspects of the spatial impacts of mines are currently assessed as part of the process of granting a mining licence and approving the associated work plan. This process addresses many aspects of spatial strategic management as follows: risks that the mining activity may pose to the environment, any member of the public, or to land or property in the vicinity of the work must be identified; planning approvals that consider the impacts of the proposed mining activity on the environment and local communities must be granted. For large coal mines, such as those in the Latrobe Valley, an Environmental Effects Statement (EES) process is often required that considers the economic and social impacts of the mining activity and involves community consultation; and mine stability issues and their management must be addressed. The existing processes are likely to address the issues associated with the physical connections between the Latrobe Valley mines and their surrounding environment, infrastructure and communities. However, it is possible that these processes could fail to fully consider the physical connections between mines and the cumulative impacts of the mines. For new mines these gaps could be addressed by adding new requirements to the mine licensing and workplan approval processes to identify all spatial impacts and how they will be managed. At a minimum, this would include requirements on the licence applicants to: establish whether there are physical connections to other mines or exploration sites (to the extent that this has not been done already within the resource allocation and/or exploration phase); consult with the connected mines or exploration sites; and
range up to 9% per annum of face value of the liability Minimal administration required Ties up capital in the statutory deposit (opportunity costs) Funds unavailable for rehabilitation Borrowing power of mine operator reduced (medium to small firms) and that it has sufficient funds to cover the costs If the guarantee is low relative to the rehabilitation cost then the mechanism will not provide sufficient incentive to avoid the rehabilitation obligation Company guarantee Low level of assurance as only backed by balance sheet of the operator. It can be difficult to access accurate information about the true financial health of the company. Many jurisdictions will no longer accept a Company Guarantee as an adequate form of financial surety Will depend on financial position of company Low cost to company. Administration costs incurred in verifying the firms’ financial position. Insufficient incentives on the mine operator to assume risks and to meet its rehabilitation obligation Surety (insurance) bond Depends on the financial strength of the insurer But could have similar assurance strength as bank guarantee liquidity and accessibility Relatively inexpensive but more expensive than bank guarantee Costs could be high for small companies without track record Minimal administration required As for bank guarantee Trust fund Highly transparent. However, risk that investments may depreciate in through poor or risky investments Less certainty value of funds held May take time to build up required financial assurance where significant funds are required Liquid and accessibility within reasonable timeframes Requires ongoing administration and sound third party management and hence incurs ongoing administration costs Requires review and audit Mining company will have the incentive to ensure sound management of the fund Sinking fund Less assurance as fund levels are built Sound liquidity and accessibility Depends on the mix of mechanisms used. Typically involves some form of trust fund and hence requires ongoing administration, sound third party management incurs ongoing administration costs In many a large proportion of the As for bank guarantee