Rehabilitation security deposits

Why has the tool been revised and updated?

The RCE tool has been revised and updated to ensure that rates associated with specific rehabilitation activities are consistent with third party contractors so that security deposit amounts reflect the actual cost of rehabilitation works. This is important to reduce the risk to the community by ensuring that sufficient security deposits are held by government in the unlikely event that a title holder defaults on their rehabilitation obligations.

In addition, the RCE tool was refined to include a broader range of rehabilitation activities so that it can be tailored to accurately cost the rehabilitation liabilities associated with the diversity of exploration and mining operations across the State.

What was the process for updating the RCE tool?

An independent specialist consultant was engaged by the Department to undertake a benchmarking process to ensure rehabilitation activities and associated rates were aligned with the actual costs to undertake rehabilitation across industry. The benchmarking process collated projects costs from a variety of sources including earthworks contractors, demolition contractors, mine companies and specialist consultants.

How did the Department consult with industry to develop the tool?

Further to specific mining companies being consulted in the benchmarking process, the Department engaged with industry associations such at the NSW Minerals Council and the Association of Mining and Exploration Companies. Valuable feedback was provided as part of the consultation process, which resulted in further enhancements to the RCE tool to provide greater clarity on assumptions that underpin specific rates and line items.

What are the main changes?

The main changes in the RCE tool relate to an increase in the number of rehabilitation line items from 172 in the current tool to 236. These additional rehabilitation line items were included to improve the accuracy of the tool, provide greater granularity in terms of the scope of each line item and rate as well as to account for a broader range of rehabilitation activities. In general, rate changes relate to increases to the cost for contamination treatment, earthworks, tailings remediation and revegetation activities, with decreases for demolition activities.

Is this going to make the RCE more expensive?

The scale of any changes to the security deposit amounts calculated under the revised RCE tool will vary depending on the scope of rehabilitation activities required at a specific exploration or mining project. In some instances, security deposits may remain at current levels or may even reduce. For those sites where a large proportion of activities relate to contamination treatment, earthworks, tailings remediation and revegetation works, rehabilitation security deposit amounts may increase.

Can alternative rates to those specified in the RCE tool be used by industry?

The current provisions of the rehabilitation security deposit framework that allows for alternative rates and rehabilitation line items to be used, subject to acceptance of the Department, will continue to apply with the revised RCE tool. Details in regards to the justification and supporting information to be provided for the use of alternative rates and methodologies are included in Section 2.4.7 of the Rehabilitation Cost Estimation Handbook (PDF, 5.05 MB). Importantly, it will need to be demonstrated that the alternative rates and or rehabilitation line items have been developed to ensure that the amount of the security deposit is sufficient for the government to undertake rehabilitation works in the unlikely event of default by a mining company.

When do I need to use the revised RCE tool?

Titleholders must use the updated rehabilitation cost estimate tool from 2 July 2022.

Where can I find additional information to assist in preparing a rehabilitation cost estimate?

Refer to the guidance material and tools available below.