Waratah Coal Pty Ltd: Legal Environment, Risks, and Strategic Options

This report provides a comprehensive analysis of the legal environment surrounding Waratah Coal Pty Ltd, a company operating within the Australian mining industry. It examines the key legislations impacting the company, including the Environment Protection and Biodiversity Conservation Act, 1999 (EPBCA), and assesses their implications for the company's operations, particularly the Galilee Basin Project. The report delves into the legal risks faced by Waratah Coal, such as obtaining mining licenses and permits, and the challenges related to environmental regulations and transportation. It highlights the strategic options available to the company for managing these legal risks and offers recommendations to improve compliance and mitigate potential liabilities. The analysis covers the interplay of various legal aspects, including the Corporations Act, 2001 and the Competition and Consumer Act, 2010, and provides a detailed overview of the legal landscape relevant to Waratah Coal's activities.

Managing the Legal
Environment
Waratah Coal Pty Ltd

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Executive Summary
The companies in Australia have a substantial legal environment, whereby a number of
legislations and regulations are to be followed by the companies. Included in these are the
common legislations like the Corporations Act, 2001 and the Competition and Consumer Act,
2010, and the specific legislations like the Environment Protection and Biodiversity
Conservation Act, 1999. The applicability of these legislations is one the basis of the type of
industry in which the company is and on the operations which are conducted by the company. It
is significant that these statutes are properly adhered, or else, the company has to face legal
implications, which not only harm them in short term, but in long run as well.
In the report, the legal environment of Waratah Coal Pty Ltd has been analysed. Waratah
Coal Pty Ltd is a company working under the mining industry, and is a subsidiary of Mineralogy
Pty Ltd, which was listed earlier, but since it becoming a subsidiary, has been delisted. Due to its
activities, the key piece of legislation which the company often comes across is the Environment
Protection and Biodiversity Conservation Act, 1999. The key project which is the focus of the
company is the Galilee Basin Project. And so, this report revolves around these three elements,
to study the manner in which the Environment Protection and Biodiversity Conservation Act,
1999 affects the Galilee Basin Project of Waratah Coal Pty Ltd, along with the other compliances
which are required to be carried on by the company. This has been done to highlight the strategic
options available to the company for managing its legal risks, which arise as a result of the
interplay of the three aspects. In addition to this, this would allow recommendations to be drawn
for the company, which can help the company in taking care of the interplay of the three aspects.

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Table of Contents
Introduction......................................................................................................................................4
Waratah Coal Pty Ltd......................................................................................................................4
Issues faced by Waratah..................................................................................................................6
Applicable legislations for Waratah................................................................................................8
EPBCA........................................................................................................................................9
Significant provisions of EPBCA in context of Waratah..........................................................10
EPBCA and Waratah.................................................................................................................12
High Risks for Waratah.................................................................................................................14
Galilee Basin Project.................................................................................................................15
Legal Risk Implications for Waratah.............................................................................................17
Strategic Options for Managing Legal Risk..................................................................................18
Recommendations..........................................................................................................................19
Conclusion.....................................................................................................................................19
References......................................................................................................................................21

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Introduction
Waratah Coal Pty Ltd is a company having its exploration activities predominantly
located in Northern Territory, Queensland and New South Wales. It is a company which is
engaged in acquisition, exploration and development of the coal projects in the nation and
operates as a subsidiary Mineralogy Pty Ltd. Waratah Coal Pty Ltd was incorporated back in
2005 and is majorly based in Brisbane, having additional office in Canada’s Toronto1.
Environment Protection and Biodiversity Conservation Act, 19992, herein referred to as
EPBCA, is a significant legislation applicable in the nation, which is focused upon protecting
and safeguarding the biodiversity and the environment of the nation. This act applies on the
mining industry, of which Waratah Coal Pty Ltd is a part; and even for such industries which are
engaged in mineral exploration. The discussion contained in this report is focused on the
operations of Waratah Coal Pty Ltd and its adherence to EPBCA and the other legislations, as
are applicable on it. This has been done to gain an understanding into the legal risks which are
raised for the company for being a mining industry. This report would, in short, help in
presenting a conclusive summary of the legal environment surrounding Waratah Coal Pty Ltd.
Waratah Coal Pty Ltd
Waratah Coal Pty Ltd (Waratah) is a coal development and exploration company having
its operations in the nation. The company has different exploration permits for minerals and
coals located in Northern Territory regions, Surat, Nymbodia, Maryborough, Moreton, Styx’s,
1 Bloomberg, Company Overview of Waratah Coal Pty Ltd. (2017)
<https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=98779213>
2 Environment Protection and Biodiversity Conservation Act, 1999 (Cth)

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Bowen, Laura and Galilee as these areas are rich in mineral basins3. The company takes pride in
it being dedicated towards the development of Queensland region as it expands the mineral
wealth and also works as an outstanding territory for this jurisdiction. Waratah is focused on
developing and probing of the coal projects in the nation4. Waratah has made a proposal of $8.4
billion for the coal mine and infrastructure project in Central Queensland’s Galilee Basin in
collaboration with Mineralogy Pty Ltd’s subsidiary, i.e., Galilee Pty Ltd.5
The Galilee Basin Project covers a big thermal coal mine which is located near Alpha,
which is in west of Emerald. This particular project is expected to cover four underground mines,
processing facilities, associated coal handling, and two surface mines6. As per the schedule, the
mine is to be in connection with the new coal terminal which had to be located at Abbot Point
which is a place near Bowen by putting up a new standard gauge and heavy haul railways line
which is supposed to be 453 km long7. Back in 2008, Queensland’s Coordinator-General had
given Galilee Basin Project a significant project status and this status was also given to Galilee
Power Project of the company, but in September 20098.
The company is not only listed on the Australian Stock Exchange but is also listed on the
Toronto Stock Exchange. Waratah accepted the offer of Mineralogy Pty Ltd to obtain the
controlling stakes of Waratah back in December 2008 and as a result of this, Waratah became the
subsidiary of Mineralogy Group. This group, along with its allies have an experience of twenty
3 Waratah Coal, Corporate Profile (2017) <http://waratahcoal.com/corporate-profile/>
4 David Blair, Encyclopedia of Australasia (Cosmo Publications, 2006)
5 Seek, Waratah Coal (2017) <https://www.seek.com.au/companies/waratah-coal-802386>
6 Queensland Government, Galilee Coal Project (Northern Export Facility). (2017)
<http://www.statedevelopment.qld.gov.au/assessments-and-approvals/galilee-coal-project.html>
7 Department of Sustainability, Environment, Water, Population and Communities, Final Guidelines for an
Environmental Impact Statement for Waratah Coal Terminal Project, Port Of Abbot Point, Queensland (2012)
<http://www.environment.gov.au/epbc/notices/assessments/2012/6250/2012-6250-final-eis-guidelines.pdf>
8 Waratah Coal, Infastructure Facility Of Significance For Waratah Rail (2011)
<http://waratahcoal.com/infastructure-facility-of-significance-for-waratah-rail/>

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five years in development, management and funding of major projects. At present, the company
is fully owned by Mineralogy Pty Ltd9.
Issues faced by Waratah
The companies, depending upon the nation or industry in which they are in, are required
to follow different acts, rules, laws, legislations, regulations and statutes, as are applicable upon
them. From the very basic of purchasing land for conducting business, to hiring of the
employees, different legislations, bylaws and regulations are required to be adhered with. These
regulations, laws and other statutory instruments create the legal environment for the company,
which held in managing the relationship of the company and also in its governance. The
companies are thus required to follow a range of different legislations.
Waratah has its operations in different parts of the nation, and on this basis, it is required
to adhere to not only the laws of the Commonwealth, but also of the state or territory in which it
operates. Apart from these laws, the company also has to follow the common law, where the tort
law and the contract law are deemed as most significant. Due to the high number of laws which
have to be followed, the legal environment of the company needs to be monitored strictly.
The key issues faced by Waratah, which impacts its operations, are related predominantly
to the laws related to environment. Apart from this, the company also has to face major logistical
issued particularly in the matter of the transportation to international markets from its mines.
Mining licenses and permits, which are a major requirement for being in mining industry, also
pose a problem for the company as these licenses and permits are necessary for undertaking the
9 At 3

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projects of the company and these are subjected to certain predefined requirements10. In case the
company fails in satisfying the condition of the licenses or the permits, these can be revoked by
the pertinent authority and this in turn, translates into the investment value of such projects being
declined, which overall proves costly for the company.
The Government Gazette clearly provides that the company has been given the required
authority for constructing a rail line11. However, the company faces constant problems in the
obtainment of the approvals for building the rail line. In case these approvals had been obtained
easily by the company, it would have been able to make land acquisition and would have
removed a crucial hurdle in the rail line’s construction12.
The company has faced similar issues with the authorities in other matters also. An
example of this is the refusal of $5.3 billion coal mine, port and railways by the Federal Court of
Australia and the Federal Environment Minister. The reason for rejection of this proposal was
cited to be section 74B of the EPBCA13 by the Federal Environment Minister. He also made it
very clear that he had rejected the proposal for its negated impact over the route of the rail line
and owing to the threat the coal port posed over the environment of that region. In reply to this,
Waratah applied for a legal review of this judgment by filing an application and cited the time
limit as the reason, which was beyond the time limits as has been specified under the EPBCA.
However, this application was quashed14.
10 Office of Information Commissioner Queensland, Waratah Coal Pty Ltd and Department of State Development
Infrastructure and Planning. (2012) <https://www.oic.qld.gov.au/decisions/waratah-coal-pty-ltd-and-department-of-
state-development-infrastructure-and-planning,-queensland-information-commissioner,-10-december-2012>
11 UC Southern Regional Library Facility, Government Gazette, 2016, p 1510
12 Matthew Austin and Justin McDonnel, End of the Line for the Waratah Coal Railway? (21 September 2014)
<http://www.kwm.com/en/au/knowledge/insights/end-of-the-line-for-the-waratah-coal-railway-20140921>
13 Environment Protection and Biodiversity Conservation Act 1999, s 74B
14 Environmental Law Australia, Waratah Coal Case (2017) <http://envlaw.com.au/waratah-coal-case/>.

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Applicable legislations for Waratah
The company has its operations in the nation and due to these reasons it is required to
follow certain commonwealth laws, particularly the Corporations Act, 200115 and the
Competition and Consumer Act, 201016. Another key piece of legislation is the Australian
Consumer Law17, which is covered under Schedule 2 of the Competition and Consumer Act,
2010. The Corporations Act is a statutory law which provides the provisions for each and every
aspect of the company, whereby it provides for the incorporation, the winding up, the director
duties, the oppression and mismanagement, the constitution of the company and many other
provisions as are applicable and as are required to be followed by the companies. It is significant
that the provisions of this act are followed, as a breach of these can give rise to both civil and
criminal liabilities for the company and for the people responsible for running its business18.
Apart from these statutory laws, the companies are also required to follow the common
law, particularly the contract law and the tort law. So, whenever a company forms any contract
with employees, or for any purpose, the basics of contract formation are to be adhered, whereby
the contract needs to have offer, acceptance, intention, clarity, consent, capacity and
consideration as elements of the contract19. The business contracts could also cover the terms like
dispute resolution, force majeure, jurisdiction where the dispute is to be filed, and other standard
terms of the contract20.
15 Corporations Act, 2001 (Cth)
16 Competition and Consumer Act, 2010 (Cth)
17 Competition and Consumer Act 2010, sch 2
18 Julie Cassidy, Concise Corporations Law (The Federation Press, 5th ed, 2006)
19 Paul Latimer, Australian Business Law 2012 (CCH Australia Limited, 31st ed, 2012)
20 Andy Gibson and Douglas Fraser, Business Law (Pearson Higher Education AU, 2013)

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As Waratah is a listed company, it had to adhere to the guidelines and the listing
requirements as are issued by both Australian Stock Exchange and the Toronto Stock Exchange.
However, after the company became a subsidiary of Mineralogy Pty Ltd, it has been delisted, so
this requirement is not to be fulfilled21.
EPBCA
The EPBCA was enacted on 17th July, 2000 and had replaced the erstwhile National
Parks and Wildlife Conservation Act, 197522. The EPBCA is a legislation of Parliament of
Australia and revolves around the protection of environment in the nation and for the
biodiversity of the nation, in addition to the natural and culturally significant locations. Through
this act, different processes have been created for defending and promoting the endangered
species recovery, and also of the environmental societies, along with working towards the
preservation of the significant locations from being degraded23. This act has to be complied with
the Environment Protection and Biodiversity Conservation Regulations, herein referred to as
EPBCR, whereby the procedure for issuance of permits and approvals for different activities for
commonwealth land is provided, along with such land which is affected through the
commonwealth. In such a case where this act or the regulations are flouted, both criminal and
civil penalties become applicable, and also allow for the claims of remedies in nature of
injunctions and damages to be made. For instance, this act is applicable on the agreements which
21 Delisted Australia, Waratah Coal Inc (WCI) (2017) <http://www.delisted.com.au/company/waratah-coal-inc>
22 National Parks and Wildlife Conservation Act, 1975 (Cth)
23 Department of the Environment and Energy, Environment Protection and Biodiversity Conservation Act for
Indigenous Stakeholders (2017) <http://www.environment.gov.au/epbc/publications/epbc-act-indigenous-
stakeholders>.

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take place with the habitual owners in order to protect their domain for safety and preservation of
the endangered species24.
The EPBCA clearly provides that the purpose of this act is to safeguard the environment,
specifically in such areas which are deemed as holding significance for Australia25. It also
provides that the ecological sustainable improvement has to be promoted by sustaining, as well
as conserving the use of natural resources in an ecological manner; promoting effectively
regarding safeguarding of the biodiversity; promoting the move towards administration and
safeguarding of environment which involves indigenous people, holder of land, society and
government, in a supportive manner; providing assistance for the international environmental
duties to be mutually in existence with the ones of Australia; recognizing the role played by the
indigenous people in sustainable use of biodiversity of the nation in an ecological manner and for
the protection of the same; and promoting the usage of understanding of such indigenous groups
in terms of biodiversity for their participation and collaboration with the holders of this
understanding26.
Significant provisions of EPBCA in context of Waratah
The environmental impact assessment and approval of different measures which are
untaken by the agencies and departments of the Australian Government, which have a possible
major outcome over the environment is regulated through this act, along with the actions taken in
commonwealth area. Such activities which attract the different requirements of the EPBCA are
24 Lee Godden and Jacqueline Peel, “The Environment Protection and Biodiversity Conservation Act 1999 (Cth):
Dark Sides of Virtue.’ (2007) 31(1) Melbourne University Law Review
25 Department of Environment, Matter of National Significance (2013)
<https://www.environment.gov.au/system/files/resources/42f84df4-720b-4dcf-b262-48679a3aba58/files/nes-
guidelines_1.pdf>
26 Federal Register of Legislation, Environment Protection and Biodiversity Conservation Act 1999 (2016)
<https://www.legislation.gov.au/Details/C2016C00777>

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not to be undertaken till the time the requisite authorization had been undertaken from the
Government of Australia’s Minister for the Environment. The burden of referring the application
under this act is placed upon such individual who wants to obtain the requisite action, instead of
the same being placed on Australian Government. Through this act, the proposers are able to
institute at the very initial stages of planning regarding a specific action or venture would require
the Australian Government involvement through the different sections of this act. In case an
action or a particular venture indeed requires the involvement of the government, the degree of
such involvement can be chalked out with ease. Where the proposer of such action has certain
doubts about the provisions of this act being applicable on them, they can refer the venture to the
Australian Government’s Environment Minister. The decision would then be made by the
Environment Minister and this decision is binding in nature, upon both the venture and the
proposer. And as per the provisions of this act, the time limit of this decision is 20 business
days27.
The approval has to go through three stages and has to be fulfilled by the project
proposer. The very first stage is the referral stage in which the proposal is submitted by the
proposer for development and this sis submitted to the Environment Minister28. The Environment
Minister has 20 business days within which he is required give the decision made by him
pertaining to the particular proposed venture and also has to specify if this venture is requires the
approval based on the provisions of EPBCA. Where the proposed venture is not in a need of such
authorization, the proposer is allowed to continue with the proposal through an undertaking for
the referred actions, and does not have to be liable for any legal accountability. In addition to
27 Pepe Clarke, Environmental Law Toolkit--NSW: A Community Guide to Environmental Law (Federation Press, 5th
ed, 2005)
28 Mineral and Petroleum Exploration & Development in Australia, Environmental Protection. (2017)
<http://www.industry.gov.au/resource/Documents/Minerals-and-petroleum-exploration/Guide_for_
%20Investors_13EnvironmentalProtection.pdf>

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this, the proposer could be required to take the requisite authorization from the state or territory
government or from the local government, for action. And where this authorization is not
required, the request moves on to the next stage, which is of evaluation29.
In evaluation stage, the Australian Government’s Environment Minister makes use of a
range of different evaluation criteria, which covers from the evaluation during groundwork
credential for preparation of the particular Environmental Impact Statement and can also ask
about the public behaviour regarding the same. Based on the situation of a particular case, the
evaluation procedures of the state or territory are endorsed. The final stage in this process is that
of approval, which is granted, not granted/ denied, or is granted based on particular conditions30.
EPBCA and Waratah
As has been stated earlier also, one of the key projects of Waratah is located in Galilee
Basin in Central Queensland and is given the name of Galilee Coal Project. For this particular
project, Waratah had been thee proposer. The action which was proposed by Waratah was
regarding the establishment of a new brand coal mine, coal stockyards and railways, in addition
to the sustaining infrastructure as was needed, so that it could be used to send the highly unstable
low sulphur and streaming goal to different nations across the globe from the Abbot Point
situated Galilee Basin, which is near Alpha31.
For the Galilee Coal Project the EPBCA was applicable due to the company being the
proposer and it was required to obtain the approval as a result of the applicability of different
29 Albert Breton, Environmental Governance and Decentralisation (Edward Elgar Publishing, 2008)
30 Department of Industry, Innovation and Science, Environmental Protection (2017)
<https://industry.gov.au/resource/Documents/Minerals-and-petroleum-exploration/Guide_for_
%20Investors_13EnvironmentalProtection.pdf >
31 Mark C. Thurber and Richard K. Morse, The Global Coal Market. (Cambridge University Press, 2015)