Mining projects in Australia are still big business, even on the far side of the resources boom. With billions of dollars invested, and the potential to deliver jobs and other economic benefits, there can be a lot at stake in the approvals process. As we’ve seen recently with the Adani mine in Queensland, this is especially true if there is also controversy over the environmental impact of a project.
Unfortunately, like any industry where the stakes are so high, the approval process for mining projects is complex and can be vulnerable to abuse and corruption.
We take a look at the some of the potential risks outlined by Transparency International Australia in its 2017 report Corruption Risks: Mining Approvals in Australia.
What are the key risk areas for corruption in the mining sector?
The report identifies several key areas of potential risk in the mining sectors in Western Australian and Queensland, mainly split between the process of obtaining mining approvals, and negotiating Native Title mining agreements.
Those risks comprise:
- External influences in the form of ministerial approvals clouding the process for granting exploration licenses and mining leases in Western Australia. It was acknowledged that the approvals system in both Western Australia and Queensland generally has a high level of accountability and openness, meaning that weaknesses could involve approvals by corrupt ministers for personal or professional gain or bargaining. However, given the general Australian political system, which is largely transparent, this was identified as a low-level risk.
- A much greater risk was identified in the application process for mining leases, as it was noted that there was insufficient due diligence and background research into the applicants seeking mining approvals. A particular concern addressed in the report was a failure for sufficient investigation to take place as to who or what entity ultimately benefited from ownership of the licence, and what impact that could have on environmental, political or corporate spheres.
- The potential for inappropriate lobbying and industry influence was noted, particularly in a context where there is inadequate regulation of political donations and frequent movement of employment between industry sector and government workers, as well as observed cronyism.
- Insufficient protection for whistleblowers was a further risk identified in the report, which could perpetuate systemic corruption. It will be interesting to observe whether the proposed Treasury Laws Amendment (Whistleblowers) Bill 2017, which is aimed at corporate, financial and credit industries, may in turn be extended to include the mining sector.
- Lower transparency for mining infrastructure project approvals than for mining lease approvals – particularly arising from considerable powers held by state governments and ministers to use individual discretion or judgment perhaps based on less than objective reasoning when granting such approvals.
- Potential for a flawed approval system in relation to Environmental Impact Statements, especially having regard to poor independent verification of the content of statements, and a high degree of discretion afforded to the coordinator-general in the coordinated projects approach in Queensland.
- A similar potential concern in relation to mining infrastructure projects in Western Australia, arising due to an opaque approvals process, combined with excessive ministerial discretion.
- Risk of insufficient community consideration in negotiations between Native Title parties and mining companies, especially given the likely power imbalance between groups representing indigenous rights and powerful corporations involved in the sector.
Broadly speaking, the mining approvals process in Western Australia and Queensland can lay claim to elements of transparency and accountability.
However, the report concludes that relying too much on individual discretion, particularly by government ministers, could potentially increase the risks of corruption and adverse impacts on indigenous communities, economic principles and environmental outcomes.