Unconditional Performance Bonds (UPBs)

This section summarises policy guidelines used by the Department of Mines, Industry Regulation and Safety (DMIRS) for the requirement, receival, enforcement and retirement of UPBs.

What is an UPB?

A UPB is a contract between the Minister for Mines, Industry Regulation and Safety (Minister) and a third party of financial standing. This contract needs to be acceptable to the Minister providing for the third party to unconditionally pay an agreed sum to the Minister upon his request, following the failure of the tenement holder to meet with environmental conditions imposed on a mining tenement.

The UPB must be in a form pre-approved by the department and guaranteed by a financial institution approved by the Minister and must show the name(s) of the current holder(s) of the mining tenement.

Cash Bonds are not acceptable in lieu of UPBs.

Why UPBs are guaranteed by financial institutions

UPBs may be required from a tenement holder and are intended to provide the State with an extra guaranteed access to funds so that necessary rehabilitation can be undertaken on mining tenements. This occurs in cases where tenement holders have failed to comply with any environmental conditions that have been imposed.

The approved financial institution providing the UPB remains liable to the Minister even when a tenement holder is in bankruptcy or liquidation.

An UPB remains valid and enforceable until it is retired by the Minister, such as when he is satisfied that the relevant obligations have been met by the tenement holder.

Once retired the original UPB document is returned to the relevant financial institution, at the address provided on the UPB document, and written notification of the retirement is sent to the tenement holder stated on the UPB document.

Operation of a UPB

Bonds are set at a level which is intended to encourage the rehabilitation of mining disturbance on the tenement in question to a satisfactory standard.

They are generally based on a set of predetermined criteria/rates that relate to the estimated cost of remediation and rehabilitation, and do not necessarily reflect the actual cost of rehabilitation.

This process is designed to encourage progressive rehabilitation.

Requirements for a UPB

All UPBs must:

  • be completed in the department’s pre-approved pro forma
  • be accompanied by the department’s standard UPB cover letter
  • include the names of all the registered holders of the mining tenement affected
  • include the tenement type and number of the mining tenement affected
  • be fully completed and correctly executed
  • include a separate UPB for each tenement
  • ensure bonds are not transferable from one party to another.

A UPB is a continuing unconditional liability and as such has no termination date. A UPB lodged stating a termination date will not be accepted.

There is no time limit on a UPB and it is not terminated upon the death of a tenement.

Share ratio of tenement holders is not required where the tenement is held by more than holder.

Bond pro forma

The department’s pre-approved pro forma UPB documents (each relevant to a particular tenement type) are available below.

These documents have been drafted in consultation with the State Solicitor’s Office. UPBs must be in the format and text of these pro forma documents. All UPBs must be submitted with the UPB cover letter proforma.

Pro Forma Bond Document (Mining Act 1978 Tenements)
For use in respect to all granted Mining Act mining tenements.

Pro Forma Bond Document E (DOC 67 kb)
For use in respect to Licence to Treat Tailings where further conditions are imposed in which a bond is required for protection of the land.

Transfer of tenement or conversion

Prior to the registration of any transfer of interest or conversion of a ‘bonded’ mining tenement, a substitute UPB in the name(s) of the new holder(s) or for the converted tenement must be provided. The replacement UPB must comply with the conditions of the tenement. The previous UPB will only be retired following the collection of the new UPB and the transfer of interest or the conversion.

Change of financial institution

When the holder changes financial institutions and wishes the change credit facilities, replacement UPBs by the new financial institution must be lodged for the amount stated in the tenement conditions. It should be noted that this may be different than the UPB currently held on the tenement. The previous UPB will be retired following the receival of the replacement UPBs. It is in your interest to check for any potential changes in required UPB amount.

Changes to UPB amount

When there is an increase in the UPB amount required for a tenement, a new UPB for the total amount can be lodged (once this is done the old UPB will be retired and the document returned to the relevant financial institution) or alternatively a UPB for the additional amount only can be lodged on the proviso that the combined sum of all UPBs held for the tenement equals the total amount required.

When there is a reduction in the UPB amount required for a tenement, a new UPB in the lower amount must be lodged before the existing UPB can be retired.

Bond Enforcement

Action will be initiated for the recovery of a UPB should an inspection of the tenement by an Environmental Officer from the Resource and Environmental Compliance Division of DMIRS confirm that the tenement obligations have not been met by the tenement holder(s).

Retirement of UPBs following rehabilitation

When the department is satisfied that the agreed mine closure standards have been met, it will make a recommendation to the Minister that the UPB be retired.

A request for retirement of a UPB will be considered only when the tenement holder has submitted a compliance report to the department for assessment. It will also need to determine whether closure of mine site standards are shown to have met the commitment made in approval documents and agreed to by the department. The report should confirm that all conditions have been complied with and that all commitments in the Notice of Intent document have been carried out.

The department may require an independent audit of the reported compliance.

Bond reductions will also be considered if progressive rehabilitation has been carried out satisfactorily.

Stamp duty exemption

As an UPB is a requirement of the Mining Act 1978 it is exempt from stamp duty pursuant to item 7(6) of the Third Schedule to the Stamp Act 1921.