“You don’t own the minerals”

Julia Gillard – Prime Minister of Australia

Governments only sell you the right to mine the resource.

A resource we hold in trust for a sovereign people.

They own it and they deserve their share.

I wonder who the PMs legal advisor is?

The Queensland Minerals Resources Act states:

All minerals lawfully mined under the authority of a mining lease cease to be the property of the Crown or person who had property therein and become the property of the holder of the mining lease subject however to the rights to royalty payments under this Act of the Crown or any other person.

The New South Wales Mining Act states:

For the purposes of this or any other Act or law, it is declared that any mineral that is lawfully mined becomes the property of the person by or on behalf of whom it is mined at the time the material from which it is recovered is severed from the land from which it is mined.

The Western Australian Mining Act states:

Subject to this Act and to any conditions to which the mining lease is subject, the lessee of a mining lease … owns all minerals lawfully mined from the land under the mining lease.

This is a huge mistake – Gillard and/or her advisors didn’t bother to check the actual legal regime operating in Australia.

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76 Responses to “You don’t own the minerals”

  1. Les Majesty

    The miners own the minerals once mined.

    But they don’t own the minerals in the land.

    They only have a license to mine those minerals. Once the license expires, the miners only have an interest in the minerals already owned, which they then own outright.

  2. boy on a bike

    For a lawyer, she sure doesn’t know much law.

  3. Les Majesty

    MINERAL RESOURCES ACT 1989 – SECT 8

    8 Crown’s property in minerals

    (1) Gold on or below the surface of land is the property of the Crown.

    (2) Coal:

    (a) on or below the surface of land that was acquired by the Crown as provided in the Agricultural Lands Special Purchase Act 1901 and subsequently alienated in fee simple by the Crown is the property of the Crown;
    (b) on or below the surface of land (other than land referred to in paragraph (a)) is the property of the Crown except where that land was alienated in fee simple by the Crown before 1 March 1910 and the grant of that land did not contain a reservation to the Crown of the property in that coal.

    (3) All minerals (other than coal and gold but including minerals dissolved or suspended in water within or upon the earth’s crust) on or below the surface of land in Queensland other than land alienated in fee simple by the Crown pursuant to

    (a) the Alienation of Crown Lands Act 1860, section 22; or
    (b) the Crown Lands Alienation Act 1868, section 32; or
    (c) the Mineral Lands Act 1872, section 21;

    are the property of the Crown.

    (4) Each deed of grant or lease of unallocated State land must contain a reservation of:

    (a) minerals on and below the surface of the land; and
    (b) the right of access for prospecting, exploring or mining.

    (5) Mineral on or below the surface of land that is or becomes road is (to the extent that the mineral, but for this paragraph would not be the property of the Crown) on and from the date the land becomes or became road, the property of the Crown.

    (6) Where land to a specified depth only is or becomes road, subsection (5) applies in respect only of mineral in or below the surface of that land to the specified depth.

    (7) Nothing in subsections (5) and (6) shall be construed as abrogating any right that the owner of land whose land is compulsorily acquired after the commencement of this Act for the purpose of being used as a road may have under any other Act or law to compensation in respect of that acquisition.

  4. Philip Crowley

    She was far too busy with student politics apparently boy on a bike, to ever actually study much law. Look at the work she did for the ex boyfriend with the dodgy shelf company and you’ll see the extent of her expertise. She even screwed that up.

  5. Les Majesty

    Sorry but what Julia said is completely correct as a matter of law.

    The minerals are the property of the state.

    Only after they are extracted from the ground pursuant to a temporary mining license does title to the minerals pass to the miner.

  6. Sinclair Davidson

    Les – yes. Minerals in the ground belong to the Crown. That ownership ceases when the lease is granted and the minerals mined. Read what Gillard said. “Governments only sell you the right to mine the resource.” That is not correct – when mined ownership changes.

  7. badm0f0

    Stop ruining the semantic vibe with your law-talking jive Les.

  8. Pickles

    She might be foreshadowing a move to a board type selling system where the government sets a pool price, acquires all production and sells it from a single desk. Like the old wheat board. Then we could have a floor price.

  9. perturbed

    – Gillard and/or her advisors didn’t bother to check the actual legal regime operating in Australia.

    This is because in their dictatorial mindset, THEY ARE THE LAW.

    Election now. Resist the Grunreich.

  10. JC

    It’s another reform, pickles. No doubt Kenny the Wombat whisperer would have thought that one up.

    All that crap in her speech about who owns da minerals was no doubt written by Kenny the wombat whisperer from her office. Self important blubbering idiot he is.

  11. Sinclair Davidson

    JC – you’re being a bit harsh. But she probably has been taken in by the propaganda used to sell the RSPT and MRRT.

  12. badm0f0

    Read what Gillard said. “Governments only sell you the right to mine the resource.” That is not correct – when mined ownership changes.

    What she said is perfectly technically correct, if unnecessarily gratuitous. Government does only sell the right to mine, not the mineral itself. That ownership of the mineral is acquired via the exercise of that right does not alter the actual subject of the transaction – the right itself.

  13. Sinclair Davidson

    badm0f0 – so how do you explain “They own it and they deserve their share”?

  14. Pickles

    Well Kelvin Thompson didn’t seem to care if a few mines were a bit late. After all, if the board imposes a quota and restricts supply then the price goes up. If it doesn’t you can put in a floor price and the market will pay. If they don’t you can store the product and shoot the sheep.

  15. JC

    Here. This the relevant that trumps all.

    COMMONWEALTH OF AUSTRALIA CONSTITUTION ACT – SECT 91
    Exceptions as to bounties

    Nothing in this Constitution prohibits a State from granting any aid to or bounty on mining for gold, silver, or other metals, nor from granting, with the consent of both Houses of the Parliament of the Commonwealth expressed by resolution, any aid to or bounty on the production or export of goods.

    This clearly suggests the states are the ones with the right to decide what happens to minerals, not the commonwealth. So Canberra can do or say whatever they like but this isn’t going away.

    As a Victorian I have no right to claim any fair share of taxes etc generated from WA mining.

    I hope Bado isn’t suggesting we do, because if he does he’s an idiot.

  16. JC

    JC – you’re being a bit harsh.

    Sinc, Kenny the wombat whisperer was the one who thought up the bright idea of a rent tax and then directly and indirectly decided to defend it. It was shot down in flames 200 years ago.

    There’s no such thing as economic rent. It’s a preposterous claim and anyone attempting to defend is preposterous.

  17. Sinclair Davidson

    JC – while we know that, the optimal tax theory people don’t.

  18. JC

    Well Kelvin Thompson didn’t seem to care if a few mines were a bit late.

    Brad Pitt’s double has no concept of the time value of money and cost of capital. Seriously it’s like trying to talk to another species with these imbeciles.

  19. Samuel J

    How about section 2i of the AWU Ownership Act 2012?

    The holder of a mining lease must pay the Australian Workers Union an annual sum not less than ten per cent of the value of the minerals it has extracted

  20. Infidel Tiger

    My favourite new economic theory that has been bombarding the airwaves is that we should be saving these minerals for the future and not wasting them now.

  21. JC

    JC – while we know that, the optimal tax theory people don’t.

    So the 30% corporate income tax rate is not optimal? I haven’t seen any of these turkeys suggest it ought to go higher and in fact they promised they would lower it a whole 1% and then broke their pledge.

  22. badm0f0

    badm0f0 – so how do you explain “They own it and they deserve their share”?

    In the context of selling the right to extract “it”, I’d say it’s a fairly transparent and banal justification for profit based taxation of resources. As I said previously it’s a fairly (or unnecessarily) gratuitous statement of the obvious as to proprietary rights tin regard to mineral resources. One wonders who advised Gillard it would be a good idea to front up & piss in people’s faces on an issue that had been dropping off the radar.

  23. JC

    As I said previously it’s a fairly (or unnecessarily) gratuitous statement of the obvious as to proprietary rights tin regard to mineral resources.

    and it’s also incorrect and misleading as sect 91 of the constitution says. The states own the right to taxing it, so therefore as a Victorian I have absolutely no legitimate claim over WA mining taxes. None. not one bit.

  24. badm0f0

    This clearly suggests the states are the ones with the right to decide what happens to minerals, not the commonwealth.

    The argument isn’t jurisdictional, the states clearly retain the power to transfer most mineral rights on their terms. But the commonwealth does have the power to tax the profits derived from mining. As I’ve said previously on this issue if the commonwealth had been serious about implementing profit based taxation as an actual reform, whether on efficiency and/or equity grounds, they needed to go through the states and not try to roll over the top of them. National Competition Policy reforms could never have happened without the states being responsible for implementing change and directly benefiting from i.

  25. badm0f0

    Needless to say, fucking iPad.

  26. JC

    Bado

    The argument isn’t jurisdictional, the states clearly retain the power to transfer most mineral rights on their terms.

    True.

    But the commonwealth does have the power to tax the profits derived from mining.

    true also. the Feds have the right to base a tax on time an ant reaching the nest if they want. There’s no question on that. However all the states have to do is raise royalties and it basically negates anything the Feds choose to do. They would easily win a court case over this in a second. Of course the government can threaten them to lower the GST, but good luck holding seats in that state.

    In other words its unworkable,

    As I’ve said previously on this issue if the commonwealth had been serious about implementing profit based taxation as an actual reform, whether on efficiency and/or equity grounds, they needed to go through the states and not try to roll over the top of them.

    A profits based tax at the state level would be more efficient by the sounds of things, but sometimes it’s also more effective to simply retain what there is like the royalty system as it’s well understood and worked well in the past.

  27. Amfortas

    Listen to Julia. She is a feminist. Of course she is right. Feminists are always right and all men are rapists. Especially miners who rape the earth, You know this. Child ‘learners’ in school discover this from within their own experience as part of their ‘learnings’ and with ‘facilitation’ and ‘enablement’ from the teachers who are all bloody feminists too. As for all that legislative gobbledegook, it is all ‘Patriarchal Oppression’ cooked up by Dead White Males.

  28. The Old and Unimproved Dave

    Xena, She-Wolf of Pollies, cares not for legalities !

  29. D’oh, they don’t own the minerals until we sell them or rather the mining rights.

    How hard is that to understand?

  30. another captain

    Wasn’t it someone famous who quipped, “Socialism work well until you run out of other peoples’ money?”

    We are close to the next step, anarchy. I am greatly fearful for our directions and stability when / if the mining is forced out of this country.

  31. val majkus

    It’s a bit embarrassing to have a PM display so little knowledge of Constitutional law
    But it’s just following on from Rudd – he had the same line
    Just been at the gym and Conroy was on tv (channel 10) sprouting the same line ‘minerals resources belongs to all the people’
    (sigh)

  32. Alan Moran

    The basic understanding under which mineral extraction law operates is “finders, keepers”. An explorer obtains a licence to discover minerals and in return has to make regular reports on the findings which become publicly available. He has to progressively surrender parts of the lease to forestall “real estating” – waiting for someone else to discover something and thereby reveal uniscovered wealth on his own land.

    If something is discovered it becomes the property of the finder subject to, theoretically, known and fixed royalties to the state (and of course, income tax)

    This encourages the correct amount of effort and the absence of mineral rights by the surface owner encourages search activity.

    If we now say you do not automatically own the wealth you discover but it becomes ownership conditional on what the sovereign people’s representative decide, there becomes a massive disincentive to search. This would pretty well destroy mining over time.

    The context for this approach to mining law is where little is known publically about the area being searched. Once its mineral wealth is well known, efficiencty suggests there becomes a case for auctioning the right to search and benefit from any findings.

    Such subtleties would, of course be lost on Julia and others who have no notion of incentives or of the importance of property rights.

  33. Dandy Warhol

    One wonders who advised Gillard it would be a good idea to front up & piss in people’s faces on an issue that had been dropping off the radar.

    It’s their business model. Think ‘carbon tax’.

  34. Mike of Marion

    She is hell bent on circumventing the Australian Constitution and also dealing the States out of Royalties.

    You wonder if she is daring the Miners and the Sates to mount a High Court challenge.

  35. Such subtleties would, of course be lost on Julia and others who have no notion of incentives or of the importance of property rights.

    Nothing subtle about it; their solution to the ‘two speed economy’ is to apply the handbrake to the fast bit. And if their precious union mates can’t ‘share’ the wealth then they’ll shut it down.

    Wait till after the election and the TUP rolls out the ‘shock and awe’ of strikes and industrial sabotage and the Greens’ ‘environmental armageddon’.

    But can anyone even dream of the Liberals (sic) defunding these parasites…

  36. val majkus

    Check out the comments in the smh on this issue
    http://www.smh.com.au/national/boom-is-not-yours-pm-tells-miners-20120530-1zjfb.html

    Here’s one which is reasonably typical of the majority which accept what Gillard says

    Basically, Tony Abbott has cost this nation $20B in lost revenue because of his refusal to back the first MRRT.
    Some may say that is a treasonable act way beyond anything Thomson may have done.

  37. pedro

    I don’t know why some people struggle with this. The ground is like a State owned supermarket and you get a licence that allows you to select various goods from it and then you pay the State for the amount of goods you select. Unlike woolies, you have to build your own trolley to collect the goods, but otherwise its the same.

    The real issue is not who owns the minerals at any point in time, its that the minerals are owned by the States and not the Commonwealth. So Jules is trying to say she gets to charge for the goods the States are selling, except that’s not what she’s doing, she’s taxing profits in specific businesses who currently happen to be extra profitable.

  38. .

    JC

    Just implement the WA system everywhere and to the offshore minerals.

  39. Louis Hissink

    The principal mistake made is the “so called” obscene profits we are alleged to make from mining. The profits that attract everyone’s attention are the book ones published in the corporate accounts before ultimate disbursement to the shareholders. I don’t see anyone flogging this crucial fact in the media. Go buy a mining company share and see what the dividend rate is. Reducing our profits is simply reducing the amount we have to give the shareholders, yet this argument is not heard being put in the media.

  40. whalehunt fun

    This from someone who practised law! Shame on her and shame on those who voted for this disgrace. Nasty mean minded hate for hardworking families is al we see

  41. .

    Clearly she took the minimum required constitutional law cases before becoming an incompetent commercial solicitor.

  42. Uber

    Well done Sinclair, this legal view should have been all over the media at the first anouncement of the RSPT. Combine this with the miners’ ‘intellectual’ and ‘capital’ rights over the resource and you get a thorough understanding of the enormous theft being perpetrated and idealised by Labor.

  43. Uber

    Sinclair you said, “That ownership ceases when the lease is granted and the minerals mined.”
    Which is it? They are separate entities. If it’s the latter, when is the mineral said to be mined?
    Either way it doesn’t really matter. The stuff isn’t worth a dime until it comes out the back end of a concentrator.

  44. Sinclair Davidson

    Uber – not following your question. Minerals in the ground belong to the State Crown, minerals (legally) mined belong to the miner.

  45. Judith Sloan

    The focus groups made me tell this lie.

  46. maurie

    Nothing new from our socialist government whose dream of re-allocation of resources is their considered ultimate. Reward for effort was always such a stupid idea anyway because if voters become too contented it becomes too hard to get their attention. There is only so much social division that labor can maintain so the next best is to offer lollies. They really do function just like the unions who have the philosophy of when an employer goes broke, another will just step in to replace them!! No brains what soever!!!

  47. Sinclair Davidson

    The stuff isn’t worth a dime until it comes out the back end of a concentrator.

    Yes – indeed.

  48. Judith Sloan

    Also from the focus groups:

    ‘There’s nowhere in the world you’d be better off investing. And there’s nowhere in the world where mining has a stronger future. And this is Australia, and it has a Labor government.”

    Tell that to Canada and quite a few other places. Delusional.

  49. Winston SMITH

    This is just more of the managerial incompetence of this current lots of Labor Parliamentarians.
    They’re living in a world defined by their wants, not by reality.

  50. Louis Hissink

    Judith,

    I think you misinterpreted Gillard’s statement – “it has a Labor government” is an implied threat that Australia is governed by a socialist one, and under this system you, the mining industry, have to pay your fair share of tax which is determined by us, the Labor government.

    Gillard and her cronies actually believe we in the mining industry will ooohh so happy to pay our “fair share” of tax (assume Boris and Natasha voices). Not a whisper from anyone about the reduction of income to the institutional investers or the small share holders who end up receiving less income from their share of the stocks.

  51. dan

    Anybody got the link to the Gillard MCA speech transcript?

  52. Gab

    Stop reading my mind, Dan.

    Her Screechiness’ speech here.

  53. Uber

    Sinclair, my question regards the fact that there is a world of process between the granting of a lease and the actual extraction of minerals (eg, infrastructre development). Do miners own the rights once the lease is granted, or only after the minerals are extracted? And at what point are the minerals considered ‘extracted’? When they are piled on the surface and separated from waste (Run of Mine condition), after processing, after mine development…?

  54. dan

    Oh shit. Its starts with “friends”

    Not sure if I can be plooked reading it.

  55. Gab

    “Friends” is just code for ‘comrades’.

  56. .

    An old friend of mine “the poison dwarf” works for the MCA. I reckon he’d be going through “Keating convulsions” when he heard Gillard’s speech, being really amused and almost wanting to spew.

  57. Skuter

    She is hell bent on circumventing the Australian Constitution and also dealing the States out of Royalties.

    Never before in my lifetime have I seen a Commonwealth government attempt to trash the Federation like this. All the time, this government tries to undermine the States rather than work with them. One of the stated rationales of the RSPT was to get rid of royalties and replace them with a more efficient tax.
    Jonathan Pincus wrote an excellent article in the Oz during the week basically stating that the deadweight losses associated with royalties were overblown by the Wombat whisperer, but nevertheless, if it was decided to replace them, that all revenues raised by the new regime should have been turned over to the states and other commonwealth payments scaled back. Sounds like a great idea, but these small minded fuckwits just couldn’t resist an adversarial revenue grab. Bunch of creeps…

  58. Louis Hissink

    Uber,

    We (the miners) own the minerals (as specified in the lease document) once that lease is granted. However, if the lease is surrendered or expires, the minerals (below a certain depth) revert back to the state. Owner ship starts from grant, not from production further down the flow chart.

  59. Sinclair Davidson

    Uber – I’m not sure of the precise definition of what ‘mined’ is – but it seems to me that at the end of the lease minerals still in the ground belong to the crown and not the former lease holder. So with a mining lease if you don’t actually take possession of the mineral you don’t own them.

  60. dan

    Exactly Gab. I guess in Her contorted logic she sees the room as being full of rapacious Mining Stalinists and therefore the reference is apt

  61. Sinclair Davidson

    Louis – snap.

  62. Louis Hissink

    Skuter,

    For some of us this is unsurprising – do some research on the Fabians and their associates – only the terminally dense could conclude that there is nothing to their philosophical goals.

  63. retired

    Uber: re-read SD’s comment “That ownership ceases when the lease is granted and the minerals mined.”. At the quote’s heart is a conjunction. That conjunction is “and”. Not “or”. So, both conditions need be met; having a lease AND mining the minerals.

  64. Penndragon

    Speaking as a lawyer, this is just another piece of wrong advice. She forgot also to mention that back in the middle ages or thereabouts the land owner owned the minerals until they were confiscated (nationalised?)by the Crown because they were seen to have value and the landowning aristocracy did not resist hard enough.

    As for the advice, I should not have to point out on this blog that govenment appointees appear to be chosen these days on the basis of whether they will tell the current administration what they want to hear rather than whether they are likely to get things right.

  65. twostix

    Sounds like a great idea, but these small minded fuckwits just couldn’t resist an adversarial revenue grab. Bunch of creeps…

    No it doesn’t sound like a great idea.

    It’s just the next in the line of usurptions by the Feds from the State Govts: Income Tax -> Sales Tax -> Minerals Tax.

    Expect them to go after Stamp Duty next, then the states truly will be just administrative regions of Canberra – all just a coincidence of course.

  66. Skuter

    Indeed Louis. The more I see of these creeps, the more I think they are implementing a definite plan. This is all intentional.

  67. Capitalist Piggy

    “My favourite new economic theory that has been bombarding the airwaves is that we should be saving these minerals for the future and not wasting them now.” – IT

    Have these people never heard of the law of supply and demand? (In a free market, over/under production is regulated by prices).

    Anyway, their wish may come true: The world’s biggest miner, BHP Billiton, says it is freezing all board-level major project approvals for six months.

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  70. Louis Hissink

    Skuter,

    My radar was pinged 7 years back when I was travelling on the train from Perth to Fremantle and overheard some public servants discussing implementing the carbon trading and emissions system. That’s when I started getting interested in the IPCC etc and discovered I wasn’t paying attention.

  71. cohenite

    It is tempting to say that Gillard is a hypocrite, as are all politicians and she is just preaching to her feral constituency when she mouths this crap; and that different things will be said in private to the corps.

    But really, on the evidence, Gillard and this government are as their feral constituency and stupid enough to believe this.

    My understanding of exploration licences is that you own nothing until you successfully convert that licence to a mining lease.

  72. cohenite

    Correction; an exploration licence is a right in rem which can be onsold; but the right is with licence not the possible existence of the minerals.

  73. confused

    an exploration licence is not a ‘right in rem’

    Its probably property, but it does not ‘attach to the land’, maybe a statutory form of property… Even though you can on sell it, provided you get approval by the State .

    The Courts don’t even really know what a mining/exploration , licence, lease, claim is….

    Julia got the law nearly correct… The States have property in the minerals, Miners have ownership when it is severed from the land, Cth can charge taxes, the states cannot that is why they claim a royalty BUT;

    Wouldn’t it be great if the government was really a ‘trustee’, we could get the pollies to pay back all the money they will squander when they get those ‘super profit’ taxes.

  74. Pickles

    Louis
    My ears pricked in 1995 when a couple of earnest scientists turned in Darwin wanting to know how many cattle there were in the NT so they could work out how much methane they burped. When asked if they intended to tax cow burps n farts they went ashen. We gave them a BER rough number and the told them that the number of buffs was unknown.

    They were very unhappy that we didn’t seem to take them seriously.

  75. cohenite

    an exploration licence is not a ‘right in rem’

    Its probably property, but it does not ‘attach to the land’

    The licence is defined by the land it covers and the minerals it specifies; I don’t see how it could be other than a right in rem.

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