Department Of Minerals And Energy

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Annual Re port 2000Fossil Stromatolites 3.5 Billion Years AgoAnnual Report 2000Department of Minerals and Energy Western AustraliaDepartment of Minerals and Energy"Our Resources Our People Our Future"

The Honourable Norman Moore MLCMinister for MinesParliament HousePERTH WA 6000Dear MinisterIn accordance with the Financial Administration and Audit Act1985 and Section 10 of the Explosives and Dangerous GoodsAct 1961, I submit for your information and presentation toParliament, the Annual Report of the Department of Mineralsand Energy of the State of Western Australia, for the year ended30 June 2000.The Annual Report is structured according to the OutcomeOutput model used in the 1999-2000 Budget Papers, with theDepartment’s activities described by Output. These are setagainst a background of the mining and petroleum industry in1999-2000.Yours sincerelyL C RanfordDIRECTOR GENERALDEPARTMENT OF MINERALS AND ENERGYAccountable Officer31 August 2000WORLD’S OLDEST ECOSYSTEM3.46 billion years-old fossilised stromatolites - Evidence of the world’searliest ecosystems, found in the State’s outback by the Department ofMinerals and Energy and now on display in the Western Australian Museum.INSERTDepartment of Minerals and Energy palaeontologist Dr Kath Grey with theUniversity of Montreal’s Professor Hans Hofmann, two authors of thescientific paper which fascinated the world with the best evidence so fardiscovered of early ecosystems on Earth

CONTENTSREPORT OF THE DIRECTOR GENERAL2THE YEAR IN BRIEFDepartmental highlights4Overview of industry8REPORT ON OPERATIONSRole and structure of the Department 11Departmental function andresponsibilities13Performance Measures15OUTCOME 1: Optimum use of landand resources18Output 1: A system for the grant andmaintenance of titles to explore forand mine minerals22Output 2: A system for the grant andmaintenance of titles to explore forand produce petroleum28Output 3: A geological framework ofthe State and its resources34Output 4: An archive of geoscientificand resource exploration data38Output 5: DiscontinuedOUTCOME 2: Safe and healthymineral and petroleum industryworkforcesOutput 6: A system for regulatingand promoting health and safety inthe mineral industry40Output 8: A system for regulating andpromoting environmental managementin the mineral industry68Output 9: A system for regulating andpromoting environmental managementin the petroleum industry70Audited key performance indicators73OUTCOME 4: Appropriate returnsto the community for the exploitationof its mineral and petroleum resources76Output 10: A system to establishroyalty rates and ensure appropriateroyalties are paid when due77Audited key performance indicators81OUTCOME 5: A community confidentthat it is safe from hazards associatedwith the storage, handling andtransport of dangerous goods8384884950Output 7: A system for regulatingand promoting health and safety inthe petroleum industry56Output 11: A system for regulatingthe storage, handling and transportof dangerous goodsAudited key performance indicators60Audited key performance indicatorsCORPORATE GOVERNANCE ANDCOMPLIANCE STATEMENTS92OUTPUT PERFORMANCE MEASURES102FINANCIAL REPORT108APPENDIX 1:Legislation and changes to legislation135APPENDIX 2:Glossary of selected terms used in themining and petroleum industries138APPENDIX 3:Reader’s feedback survey141CONTENTSAudited key performance indicatorsOUTCOME 3: Acceptable environmentalstandards for mineral and petroleumexploration, development, productionand project completion651

REPORT OF THE DIRECTOR GENERALAfter a period of mixed fortunes, improvingeconomic conditions and positive developmentsin areas such as native title are promising a goodstart to the new millennium for WesternAustralia’s minerals and energy sector.Improving occupational safety and health withinthe minerals and petroleum industries remaineda top priority and the Department conductedmine site audits and the ThinkSafe MineSafecampaign, to emphasise to management andemployees that focus must be maintained toachieve the aim of a fatality-free industry.From an economic point of view, the industryexperienced a dramatic turn-around in 19992000 with sales increasing in value by a massive28 per cent. The record high of 21.3 billionwas largely due to increased production andprices for petroleum products during the year.The State Government has attempted to improvethe outlook for the exploration industry throughamendments to legislation and other initiativesincluding a proposal, which is currently underconsideration, to grant access to explorationlicences to prospectors holding a Miner’s Right.The Department’s Geological Survey continuedto provide the State’s exploration and miningindustries with quality geoscientific products andtools. At the close of the reporting period, theJ H (Joe) Lord Drill Core Library in Kalgoorlie wasalso completed. This facility will provide industrywith an opportunity to examine drill coresamples, develop and refine explorationstrategies and test new ideas and technologieswithout having to re-drill areas.Throughout the industry, the pre-competitiveinformation products of the Geological SurveyThe industry experienced a dramatic turnaround in 1999-2000 with sales increasingin value by a massive 28 per centOne important development was the decisionof the Full Federal Court in the MiriuwungGajerrong appeal case where it was held that anumber of land categories, including enclosedand/or improved pastoral leases, extinguishednative title. With roughly 60 per cent of theState’s mineral provinces covered by pastoralleases, this decision offers an opportunity for theState to grant some of the 10,000 mining titlesapplications currently caught up in a native titleinduced backlog.Mineral exploration expenditure continued todecline during the year to levels not seen since1993. Although ailing expenditure can also beattributed to the fall-out from the Asianeconomic crisis and low gold prices, native titlehas also had a significant impact on theexploration sector.2DEPARTMENT OF MINERALS AND ENERGYANNUAL REPORT 2000are acknowledged as a crucial factor in attractingthe large private investment necessary tomaintain and enhance our resources sector. Inorder to determine an appropriate andsustainable level of funding, a review of theGeological Survey was commissioned by MinisterMoore, with findings to be reported before thenext round of Budget estimates.The introduction by the Commonwealth of theEnvironmental Protection and BiodiverityConservation Act 1999 is considered likely tohave serious implications for explorers anddevelopers when it comes into force in July 2000.The Act refers to areas of national environmentalsignificance that are loosely defined and theadditional administration processes necessary to

achieve project approval under this legislationare already causing concern and uncertainty.In its pursuit of its objective to harness thepotential of the Internet and computer-basedinformation systems, the Department is nowproviding information relating to areas fromland-use topography to mine safety audits viatheDepartment’swebsiteatwww.dme.wa.gov.au. With the advent this yearof our new electronic bookshop, it is now alsopossible to purchase Departmental maps andpublications from anywhere on earth, with theassistance of a computer and a modem.During the year, an elected Staff Consultativeand Improvement Committee was establishedto improve communications and facilitateimproved productivity within the Department.characterised by increased complexity. Auditedmeasurements of productivity indicate a morethan five per cent increase over the year andthis rate of increase has been maintained for thelast five years. The staff have shown bothdedication and ingenuity in dealing with theissues and I am confident they will continue toprovide the high level of effective servicenecessary to achieve the desired economicbenefits for the community from what is themajor sector in our economy.L C RanfordDIRECTOR GENERALDuring the year, an elected Staff Consultative andImprovement Committee was established toimprove communications and facilitate improvedproductivity within the DepartmentThe Committee is represented at meetings ofthe Department’s corporate executive.The Department does not rate well in terms ofequal opportunity measures and new efforts toimprove equal opportunity and diversity havebeen initiated, recognising it may take manyyears to achieve our objectives in this area.The Department has experienced the challengeof dealing with an expanding industryREPORT OF THE DIRECTOR GENERALOccupational safety and health within theDepartment was declared a priority issue duringthe year and a new position created to develop,implement and coordinate all aspects of theDepartment’s Safety and Health ManagementPlan, as well as provide technical advice onrelated matters.3

THE YEAR IN BRIEFDEPARTMENTAL HIGHLIGHTSThe following is a summary of the year’s eventsas they relate to the five main outcomes whichprovide the focus for Departmental programsand activities.Outcome 1: Optimum use of land andresourcesWestern Australia’s minerals and energy sectorhit a new high in 1999-2000, with statistics fromthe Department revealing sales values up 27.7per cent to nearly 21.3 billion.Although mineral exploration investment inWestern Australia fell 24 per cent to 393.6million, the State still remains the country’sparamount destination for explorers. With 13billion worth of minerals produced in 19992000, the State also remained the nation’s majorproducer of minerals with a rise of about threeper cent in the value of sales.Western Australia continued as the focus of oiland gas activity in Australia this year. The State’s 7.6 billion worth of oil and gas productionrepresented a significant amount of the totalAustralian production and the State attractedapproximately 60 per cent of the investment inexploration for petroleum. Exploration activitywas at a high level with an impressive successrate: 13 discoveries from 40 new field wildcatwells.A key policy issue was resolved this year whenchanges to the petroleum Work Program BiddingSystem maintained the guaranteed nature ofNative title continues to represent a major hurdlefor the resources industry. At the time ofreporting, more than 10 000 mining titleapplications were still caught up in thecomplexities of the Commonwealth Native TitleAct 1993. This situation could be easedsomewhat following the Full Federal Courtdecision in the Miriuwung Gajerrong appealcase, which determined that native title had beenextinguished by a number of land categories(including previous mining leases and enclosedpastoral leases). With the State Governmentannouncement that it will grant titles incompliance with this decision, there is a realpossibility for inroads to be made into thebacklog in the near future.Amendments to the Mining Act have simplifiedthe process of transferring titles, enabled thegrant of general purpose leases for areas greaterthan 10 hectares and increased securityprovisions for environmental protection andrehabilitation.4Data capture for TENGRAPH (the Department’scomputerised tenement mapping system) wascompleted Statewide and this system is nowavailable via the Internet.DEPARTMENT OF MINERALS AND ENERGYANNUAL REPORT 2000Geological Survey’s Gary Williams (centre) showsPremier Richard Court (left) and Mines Minister NormanMoore the ease with which drill core samples can beaccessed at the new J H (Joe) Lord Drill Core Library inKalgoorlie. The Library will house up to 250 kilometresof drill core so that the mining industry can examinesamples from many areas before starting their ownexploration work.

Significant legislative amendments were made(separately) to State and Commonwealthpetroleum Acts. In the former, the amendmentsrelated to clearer processes for access to landand improving the effectiveness of short-termexploration titles. In the latter case, theamendments covered a range of issues includingrecognition of the impact of new technology bythe introduction of new licensing and titleprovisions for oil and gas developments.On 30 June 2000, the Department completedconstruction of WA’s first state-of-the-art drill corelibrary in Kalgoorlie. The core library will becomea vital resource for the exploration industry.In 1999, the Department recovered samples ofthe world’s oldest evidence of early life-formsfrom the Pilbara region. The 4.5 billion-year-oldstromatolites attracted wide international interestand samples are now safely housed in the WAMuseum.Officers of the Department also discoveredAustralia’s largest meteorite impact crater (andthe world’s fourth largest). It is thought to havebeen formed by a five-kilometre-wide asteroidthat struck Earth near Shark Bay between 200and 360 million years ago.Outcome 2: Safe and healthy mineraland petroleum workforceshas been conveyed to the workforce via radioand print advertisements, posters andpamphlets.The Mining Operations Audit ManagementSystem (MODAMS) was launched and willelectronically service many industry safety needs.MODAMS is designed to hold, analyse anddisseminate safety information collated frommining industry safety audits.New safety legislation for the State’s petroleumindustry was drafted during the year. The WAPetroleum Safety Act which received Royal assentin June 1999 will apply the Safety Case regime,currently applying to petroleum facilities andoperations in State and Commonwealth waters,to State onshore petroleum sites and activities.Regulations for the Commonwealth Petroleum(Submerged Lands) Act 1967 were also draftedto cover pipeline and diving operations.An external review of the administration of safetyin the Commonwealth offshore adjacent areasby all relevant State/Territory authorities(including the Department) was carried out inFebruary-March 2000. No deficiencies wereidentified in the administration of safety.However, recommendations were made toobtain consistency i