In some circumstances, the department requires tenement holders to provide financial security to ensure compliance with environmental conditions imposed under the Mining Act 1978.
These are referred to as mining securities, or unconditional performance bonds. DEMIRS policies and procedures for the lodgement, variation, enforcement and retirement of mining securities or Unconditional Performance Bonds (UPBs) are outlined below.
Policies and procedures
Links to the Department of Energy, Mines, Industry Regulation and Safety’s Policy and procedure to request and manage unconditional performance bonds are below.
Mining Securities Policy – Administration for compliance with environmental conditions - December 2020 - 266 Kb
Policy for decisions on the requirement, lodgement, variation, enforcement and retirement of Unconditional Performance Bonds.
Mining Securities Procedure – Administration for compliance with environmental conditions - December 2020 - 265 Kb
Procedure for the administration of the requirement, lodgement, variation, enforcement and retirement of Unconditional Performance Bonds.
Requirement for an unconditional performance bond
The form of mining security required by the Minister (or the Minister’s delegate) must be specific to individual tenements. An unconditional performance bond is a guarantee issued by a financial institution in favour of the Minister that may be called in by the Minister at will. The Minister is not obliged to discharge an unconditional performance bond.
An unconditional performance bond must:
- be completed in the department’s pre-approved pro forma bond document and accompanied by the pro forma cover letter.
- include the names of all the registered holders of the mining tenement affected.
- include the tenement type and mining tenement number.
- be fully completed and correctly executed.
- include a separate pro forma bond document for each tenement.
- UPBs are a continuing and unconditional liability that has no termination or expiration date.
- UPBs are not transferable from one party to another.
- UPBs are not terminated upon the death, surrender, or forfeiture of a tenement.
- Share ratios of multiple tenement holders is not required.
The following applies to all unconditional performance bonds.
Unconditional performance bond pro forma
The department’s pre-approved pro forma unconditional performance bond documents (each relevant to a particular tenement type) are available below. The department requires UPBs to be prepared using the same format and text as these pro forma documents. These are to be submitted with the UPB cover letter pro forma.
Pro Forma Bond Document (Mining Act 1978 Tenements) for use in respect to all granted Mining Act mining tenements.
Transfer of tenement or conversion
Prior to the registration of transfer of interest or conversion of a ‘bonded’ mining tenement, a substitute UPB in the name(s) of the new holder(s) or for the converted tenement must be provided. The replacement UPB must comply with the conditions of the tenement. The previous UPB will only be retired following the collection of the new UPB and the transfer of interest or the conversion.
Changes to unconditional performance bond security
When there is an increase in the UPB security that is required for a tenement, a new UPB for the total amount can be lodged. Once the new UPB is completed, the old UPB will be retired and the document will be returned to the relevant financial institution.
Alternatively, an unconditional performance bond for the additional amount can be lodged, however it is on the condition that the combined sum of all UPBs held for the tenement equals the total amount required.
When there is a reduction in the UPB amount required for a tenement, a new UPB in the lesser amount must be lodged before the existing UPB can be retired.
Stamp duty exemption for unconditional performance bond
As an unconditional performance bond is a requirement of the Mining Act 1978, it is exempt from stamp duty pursuant to item 7(6) of the Third Schedule to the Stamp Act 1921.
