DEPARTMENT OF RESOURCES www.nt.gov.

au

ADVISORY NOTE
SECURITY CALCULATION PROCEDURE

This advisory note outlines the procedure to establish a security for

operational activities under the Northern Territory Mining Management Act and
Northern Territory Petroleum Act.

INTRODUCTION
This procedure is designed to assist in the establishment of the level of security
required to ensure performance in relation to liabilities due incurred by mining
activities. Securities are to be regularly reviewed such that the amount required
reflects the current site liability. A Security calculation can be triggered by;
The Application for an Authorisation process
A request from Operator based on changes in potential lease liability
Findings of periodic audits and inspections, which highlight deviations from an
approved Mining Management Plan (MMP)
Amendments to an approved MMP
At the time of sale, transfer or mine closure.

LEGISLATION
Pursuant to section 40 of the Mining Management Act, a costing of closure activities
must be included in a Mining Management Plan submitted to the Department in
support of an application for Authorisation of a site, or submitted in response to
changes to operational activities.
A security is required under section 43 of the Northern Territory (NT) Mining
Management Act and section 78 of the NT Petroleum Act to enable the Minister to
prevent, minimise or rectify environmental harm resulting from mining activities.

PUPRPOSE AND BACKGROUND

Security will be applied to all Authorisations granted under the Mining
Management Act and environmental disturbances under the NT Petroleum
Act.
The Minister shall determine the level of security commensurate with
protecting the community from closure liabilities and optimising the benefits to
the community from the proposed project.
The default expectation for operators of mining interests under the NT Mining
Management Act, or onshore petroleum interest under the NT Petroleum Act,
is to submit 100% of the security calculated for rehabilitation.
Calculation of securities will be based on the actual cost of rehabilitation
commensurate with the size, environmental risk and expected project life in
accordance with advisories approved by the Minister.
Minerals and Energy
Advisory #: AA7-013
November 2007
 Minerals and Energy
Advisory #: AA7-013
November 2007

Securities will be regularly reviewed and adjusted taking into consideration

progress in rehabilitation as well as new or expanded activities.
The Operator of mining or onshore petroleum interests is responsible for
rectifying any environmental harm arising from mining activities and for final
rehabilitation of the affected area.
If there is a transfer of Operators, liability for outstanding rehabilitation will
become the responsibility of the new Operator and as part of the transfer the
new Operator will be required to replace the existing security held for the
project.
A security will be released once criteria specified in the approved closure plan
have been met. These criteria include commitments and responsibilities
pertaining to post closure monitoring and management of potential liabilities at
the site.
Security will be sought in the form of Cash or Bank Guarantee.

SECURITY SELF ASSESMENT

The operator should assess all mining interests (tenements, titles) pertaining to
an Authorisation for current risks and disturbances in addition to potential
liabilities planned during the period covered by the mining management plan.
Unless there is a formal end land use agreement approved by the Minister, the
close out options chosen for site activities should as far as reasonably practicable
return the disturbances to their pre-mining state.
A security self-assessment form is used for self assessment. This broadly
classifies disturbances into standard categories and provides suggestions on
potential close out techniques:
o Extractive Workings (Sand, Clay or Gravel)
o Hard Rock Pits and Quarries
o Underground Workings
o Site infrastructure
o Dams and Reservoirs
o Tailings Dams
o Stockpiles
o Exploration
o Roads and Tracks
Only those sections of the form applicable to site activities need to be completed
and techniques used may be adjusted to suit individual sites.
All disturbances that will require rehabilitation need to be identified, including
those activities documented in the current approved Mining Management Plan.
This should be documented on the front page of the Security Calculation Form
along with Authorisation information.
For relevant sections of the Security Calculation Form, identify the activities (i.e.
ripping, revegetation) that will need to be included in estimating the cost of

Page 2 of 5
 Minerals and Energy
Advisory #: AA7-013
November 2007

rehabilitating identified disturbances. You may elect to combine common

disturbances in your assessment.
Identify the appropriate costs per unit (i.e. $/Ha, $/m3) and the total number of
units requiring rehabilitation.
Material quantities and other activity requirements should be best estimates
based on operator experience and current market price.
This cost assessment should include man-hours and equipment costs to
accurately reflect the scenario of a third party having to undertake the work.
The total costs for each section should be recorded on the front page of the
Security Assessment Form, and an initial total security value calculated from
these.
An additional security amount to fund contingencies arising from failure of
rehabilitation and to cover post closure costs including monitoring, maintenance,
site visits and any necessary remediation works must be added to the closure
calculation to give the total security amount required.
These values should be recorded on the front page of the Security Calculation
Form.
This completed form should be submitted to the Department in conjunction with
the Mining Management Plan

THE DEPARTMENT SECURITY CALCULATION VERIFICATION

Completed security self-assessments are reviewed against the current approved
Mining Management Plan to ensure appropriate close out techniques have been
included for all site disturbances. Additional information may be obtained through
audits, site inspections and close out reviews.
Additional information or cost breakdown/justification may be required should any
of the following issues be present
a. Significant deviation in close out of estimated costs compared with
similar operations in the Northern Territory and throughout Australia.
b. The self assessment does not address all current and proposed
activities in the most recently approved mining management plan
c. Close out options chosen do not adequately control all safety and
environmental risks associated with the Authorisation or are not viable.
The Minerals and Energy Security Assessment Board (SAB) oversees the
security establishment process and endorses the level of security to be
requested.
Once the established value of security has been endorsed based on the self-
assessment and review by departmental officers a request for payment is
dispatched to the Operator.
Payment of the security is required prior to the grant of an Authorisation or
acceptance of the Mining Management Plan.

Page 3 of 5
 Minerals and Energy
Advisory #: AA7-013
November 2007

SECURITY PAYMENT
Security payments can be in the form of Cash, Credit Card, Cheque, Money
Order or Bank guarantee.
Bank guarantees, money orders and cheques may be lodged by mail to the
address as shown below:
Department of Resources
GPO Box 3000 Darwin
Northern Territory 0801

Bank guarantees must be:

1. in favour of the Minister for Primary Industry, Fisheries and Resources
2. unconditional (ie no expiry date)
3. be for the Authorisation as advised in the security request letter from
the Department. No titles or project names need be included so as to
minimise errors.

Direct Debit may be made by contacting the Titles front counter on 08 8999 5322
for the Department account details.
Other types of securities may be lodged at the Titles Front Counter from 8.00am
to 4.00pm Monday to Friday.
5th Floor Centrepoint Building,
48 Smith Street
Darwin
The Authorisation reference number should be quoted when submitting payment to
ensure correct receipting.

Whilst the Mining Management Act details the requirement to provide security
deposits, it does not provide for interest payable on such deposits. The money held
by the department is in trust and remains in stasis.

SECURITY VARIATION
At any time the operator may request a reassessment of security value based on
either successful close out of disturbances or a change in project activities. This
request must be accompanied by a new or amended Mining Management Plan
detailing closure status.

RELEASE OF SECURITY
A partial security (excluding the amount calculated as the contingency fund) may be
refunded to the Operator upon proof that adequate rehabilitation has been
undertaken. This may require a site visit by Mining Officers to confirm that planned
rehabilitation has been completed.

Page 4 of 5
 Minerals and Energy
Advisory #: AA7-013
November 2007

The contingency fund portion of the security will be maintained by the department for
an agreed period, or until Mining Officers from the Compliance Division have
confirmed that rehabilitated areas on the site are safe and stable and that no further
remediation works, site visits, or monitoring will be required.

For further information or advice on this subject please contact

Mining Environmental Compliance
Department of Resources
GPO Box 3000, Darwin, Northern Territory 0801
Phone : +61 8 8999 6528 Fax : +61 8 8999 6527
E-mail : [email protected] Website: www.minerals.nt.gov.au

Page 5 of 5