Sovereign Risk

The policy and practice of the Department of Mineral Resources (DMR) towards mining leases was that mining leases would be renewed "almost as a matter of course" to applicants who largely complied with their lease conditions and the application requirements.

The reason for this was that mining leaseholders generally made large investments in their mining operations, and those large investments may only be economic if they can count on getting renewals and if the terms and conditions of their leases do not change dramatically in a way that threatens the economic viability of their operations.

The DMR was concerned that if applications such as that from Emerald Peat for continued peat mining was to be refused or approved with conditions that adversely affect the economic viability of the mining operation, then the confidence of mining companies throughout NSW would be undermined and less mining investment would occur.

According to the NSW Minerals Council:

a mining operation with a valid consent, a good track record of site management and at a site which has been identified in planning instruments for that purpose should have a reasonable expectation of security of tenure. Failure to renew the lease would therefore have a negative impact upon investor confidence, throughout the mining industry.(Annexure A10 to Exhibit 14)

According to the Department of Mineral Resources (DMR):

The adverse perception of New South Wales sovereign risk will arise where a lease renewal is refused for a reason other than failure to hold a valid consent.

Source:

Department of Mineral Resources, Submission to Inquiry into Renewal of Mining leases 567 and 568 at Wingecarribee Swamp, 1997.

Statement by Mr Alexander William Ramsland, Manager, Titles Branch, Department of Mineral Resources, exhibit 25?