Northern Territory Second Reading Speeches

[Index] [Search] [Bill] [Help]

TANAMI EXPLORATION AGREEMENT RATIFICATION BILL 2004


Bill presented and read a first time.

Mr VATSKALIS (Mines and Energy): Madam Speaker, I move that the bill now be read a second time.

I have much pleasure in introducing the Tanami Exploration Agreement Ratification Bill to the Legislative Assembly. The need for this bill has arisen due to the impending expiration, on the 12 September 2004, of the current agreement between the Northern Territory government and Newmont called the Granites Exploration Agreement.

Newmont approached the government in 2003 to extend the Granites Exploration Agreement. On advice from the Northern Territory Department of Justice, it was determined that there was no provision to allow an extension without passing specific legislation. There is a desire by government to facilitate Newmont’s aggressive exploration and development program of the Tanami region of Central Australia.

Members would be aware that exploration for minerals is a necessary precursor to development or continued existence of the mine. Mineral explorations are long drawn-out, technically difficult, expensive and time-consuming process. Risk of failure is high, but the chance of success is enhanced by the prospectivity of the exploration area, quality of exploration personnel and their ability to apply appropriate exploration techniques and interpret the results, the corporate commitment to sustained exploration funding and effort, and access to prospective land.

Balancing the period for which a company is licensed to explore an area against their performance, as judged by expenditure, the quality of the exploration work as seen on the ground and in their regular reports, and the success of that exploration, is one of the difficult tasks carried out by the government. Exploration in the remote, arid areas of Australia is particularly difficult due to the deep weathering of the ancient geological terrain, the remoteness from infrastructure and supplies, difficult communications and, sometimes, inclement weather conditions.

The Tanami Exploration Agreement Ratification Bill sets in place an agreement which establishes Newmont’s right of access to existing and future exploration licences in the Tanami region for a period of 10 years. It should be indicated at this point that the Tanami Exploration Agreement Ratification Act ratifies a new agreement which successfully updates and replaces the pre-existing Granites Exploration Agreement.

My comments today are guided largely by the rationale presented by the government of the day when introducing the 1994 Granites Exploration Agreement Ratification Act.

The Tanami exploration agreement between Newmont Australia Ltd and the Northern Territory government is not unique. It represents recognition by the government that this company succeeded in becoming one of Australia’s largest gold producers. Newmont has successfully developed major gold mines in the Northern Territory and operates the only two major gold processing plants in the region. It has also discovered high grade gold deposits at Dead Bullock and Granites, which are now being mined. Several additional significant gold prospects have also been identified in the Tanami region for potential development.

The previous agreement, the Granite Exploration Agreement between the Territory government and the North Flinders Mines Ltd, was commenced in 1994 and afforded North Flinders Mines with the opportunity to explore and develop a region in the vicinity of the Granites Gold Mine in a logical and progressive way. North Flinders Mines has now been acquired by Newmont Australia Ltd. The vision, technical expertise and persistence of this company continues and has resulted in recognition of the Tanami region as the Northern Territory’s major producing gold regions and one of the key prospective gold fields in Australia. Today, about $200m has been spent on exploration in the Tanami by North Flinders and Newmont. Current plans include an annual expenditure in the Northern Territory of about $8m in green field exploration in addition to about $2m of brown field exploration, and expenditure of some $200m per year in operational costs of the mining and milling operations.

Newmont has a capital investment of over $150m in the Tanami operations with processing facilities including a granite mill and a Tanami joint venture mill. It has an annual gold production in excess of 600 000 ounces from these mills and this figure is expected to be surpassed this year. It employs over 700 people, many of whom are based in the Territory and engage with some 250 Territory businesses with further flow-on effect to the Territory economy. Since inception, the Tanami operations have generated revenue for the Territory by way of royalties of approximately $62m with $11.5m paid in 2002-03. Newmont is also committed to indigenous employment. Indigenous employment reached 20% in 2002 and currently runs at about 15%. It is also actively engaged in contracts with local indigenous businesses, sponsors cultural activities and invests in a lot of community infrastructure injecting some $5m a year in to the local communities.

The Northern Territory government, through its agencies, will liaise with Newmont to facilitate maximised [inaudible] and employment opportunities in this region. The benefit to Newmont afforded by this agreement is constrained by conditions related to expenditure and [inaudible] rental that exceed those applicable to other Territory explorers. The benefit to the Territory is the continued high level of socio-economic benefits instilled in to the region.

The basis of the Tanami Exploration Agreement is that Newmont will, within an agreed area of 20 000 particular blocks, approximately 64 400 km2, be able to hold granite exploration licences or exploration licence applications up to 10 000 blocks throughout the 10 year tenancy agreement. In return, Newmont will guarantee to expend a significant amount on exploration. This guaranteed expenditure level is defined in the agreement as $600 per granite exploration licence block multiplied by the number of granite blocks. This amount will be adjusted annually taking into account the Consumer Price Index. Regionally, there has been an average annual exploration expenditure of approximately $475 per block by all explorers. This means that Newmont could spend an extra $1.2m per year above the average expenditure in this region.

The agreement also requires higher tenure rental than is required under the current Northern Territory Mining Act. For example, under the Mining Act the first year rental is set at $10 per block increasing to $14 per block in year four, whereas under the agreement the rental is set at $50 for the first year, increasing to $98 in year four. Because this land is Aboriginal freehold, in accordance with the Aboriginal Land Rights Act the Territory foregoes this rent which is paid to traditional owners through the Central Land Council. The relatively high expenditure level and the rental requirements will encourage Newmont to carefully manage the tenure within the activity area. This may lead on to early relinquishment of land which could then be picked up by other explorers.

The Tanami Exploration Agreement is subject to the Aboriginal Land Rights (Northern Territory) Act. All the exploration licenses covered by the agreement are on land held as Aboriginal freehold by the Tanami Land Trust, some of which were originally granted following agreement between North Flinders Mines and the Central Land Council.

The Central Land Council has been fully apprised of the negotiations of the Tanami Exploration Agreement and supports the agreement. Newmont and the Central Land Council will adjust existing agreements to account for the terms of the Tanami Exploration Agreement.

Madam Speaker, let me briefly review some of the Tanami gold fields history, which was described at the time of passage of the original Granites Exploration Agreement Ratification Act.

For new members of this Assembly, including myself, this will be of interest and a salutary reminder that an area is never fully explored. Repeated exploration efforts seeking different models of mineral occurrence and using new and more sophisticated exploration technology continue to surprise us with new discoveries, further enhancing prospectivity and longevity of the original development.

The Tanami region and The Granites in particular are some of the more remote mining localities in Australia. Gold was first discovered at The Granites in 1900 by Mr Alan Davidson who, while prospecting by camel, discovered gold outcrops at what was later called Chapmans Hill.

The deposit was worked for a short time by Mr Stewart who extracted approximately 200 ounces of gold from alluvial deposits and quartz veins. The hardships endured in those years must have been daunting for the rewards they won and the early rush to the area was severely curtailed by the extreme shortage of water.

Further discoveries of gold were made by Mr Jim Escreet at Bullakitchie in 1932. The mine was purchased by CH Chapman who successfully worked there and later made a new discovery at the site called Shoe. Production of over 10 000 ounces of gold occurred over the next 20 years.

Exploration in the area by major companies was not lacking in those years, with a number of companies being floated to take part in the gold rush. Most fizzled out without success.

Subsequent exploration by a number of major of companies during the 1950s through to the 1970s did not find a sufficient grade of gold to develop a vision of a major gold field in the region. In 1975, North Flinders Mines applied for its first exploration licence covering the area of The Granites. It had to wait until 1983 to commence work in the area, delayed by the need to sign agreements with the traditional owners.

Drilling at the East Bullakitchie and Shoe prospects delineated high grade ore shoots, which led to the construction of the modern Granites Gold Mine. The mine produced its first bar of gold on 1 July 1986. North Flinders Mines pursued an aggressive exploration program on this original exploration licence and, following the signing of further agreements with traditional land owners, additional exploration licences were granted in 1998.

Gold was discovered at what is descriptively named Dead Bullock Soak later that year. Over the next few years, additional ore bodies were found and given such colourful names as Triumph Hill, The Villa, Furmarole, Avon, Callie, Colliwobble Ridge and Sleepy Hollow.

It is this exploration success and the desire to capitalise upon the full potential of the Tanami region that the government has agreed to enter into this new agreement allowing Newmont to explore for an extended period on a stable tenure basis.

There is a lead time between three to five years from a mineral discovery to mine development and continuous access to ore is required to ensure operations continue. It is essential that we must do everything reasonable to ensure that ore is available for continued operation of existing infrastructure to sustain the flow on effects of employment and local industry in the region.

Madam Speaker, I commend the bill to the Assembly.

Debate adjourned.




 

[Index] [Search] [Bill] [Help]