Rehabilitation liability and bonds

While the South Australian mining industry is an important economic contributor, mining activities impact the land and create a rehabilitation liability. Under the Mining Act, the holder of a mining tenement is responsible for rehabilitating the land disturbed by mining operations. The Department for Energy and Mining is responsible for ensuring financial liabilities from non-rehabilitated mining activities do not become the state’s responsibility.

The amount to be provided by the tenement holder is determined by the department as the value of 100% of the estimated rehabilitation liability. The rehabilitation liability estimate is the maximum third-party cost of undertaking the rehabilitation strategies covered by the approved PEPR and include costs for project management, inflation, normal project variation, and contingency provision for risk associated with the strategies and uncertainty in the cost estimates.

Table 5.1: Summary of bond type and amount held by the Department for Energy and Mining for mineral tenements 30 June 2023

Extractive areas rehabilitation fund (EARF)

The EARF was established in 1971 to fund the rehabilitation of extractive mining operations and has supported more than 1,000 projects since its inception. The EARF is funded by the government’s reallocation of royalty monies.

In the event an operator faces financial disruption through insolvency, administration, liquidation or bankruptcy, the EARF provides a royalty-financed scheme that protects the state. The EARF protects against operators who cannot meet their rehabilitation obligations due to voluntary administration or liquidation.

The EARF’s benefit to industry is that extractive operations generally do not require a rehabilitation bond.

The EARF also provides funding to support regulatory officers who work on extractive minerals leases and extractive operations. The EARF is regularly reviewed by government to ensure adequate reserves are held to assure potential rehabilitation liabilities may be funded if required by government.

The closing balance of the EARF at 30 June 2023 was $35,284,305.

Table 5.2: Projects approved for funding from EARF 2022–23 financial year

Table 5.3: Status of EARF-funded projects as at 30 June 2023