Energy, resources and environment update


10 October 2021


Peter Kupniewski, Chris Floreani and Nicole Mead summarise some key developments for businesses operating in the energy and resources sector.

 

  1. ARENA – new Investment Plan

On 9 September 2021, the Australian Renewable Energy Agency (ARENA) launched its new Investment Plan, which sets out how ARENA will support technological innovation that will underpin Australia's shift to net-zero emissions.

Amongst other points, the plan optimises electricity transition, including energy storage and integration of flexible demand, seeks to commercialise clean hydrogen, and supports the transition to low emissions aluminium and steel.

 

  1. Economic contribution of resources sector to South Australia

DMAW Lawyers recognises the importance of this sector to the State’s economy, which has been recently highlighted by South Australian Chamber of Mines & Energy (SACOME), the peak industry body, and the trade statistics outlined below.

On 9 September 2021, SACOME confirmed that the resources sector is the economic powerhouse of the South Australian economy, contributing $5.9 billion in direct and indirect spending and accounting for $5.7 billion of the State's exports.  This equates to approximately $1 in every $20 of the State's economy and 50% of the State's exports being driven by the resources sector.

SACOME welcomed BHP's significant economic contribution to the State.  BHP noted in its Economic Contribution Report 2021 to the ASX, that its national contribution in FY2021 included:

  • US$40.9 billion of total economic contribution;
  • US$16.5 billion payments made to suppliers for the purchase of utilities, goods, and services;
  • US$8.7 billion of dividends and payments;
  • US$175 million in community contributions;
  • US$4.4 billion in employee expenses for salary, wages and incentives;
  • US$11.1 billion in income taxes, royalty-related income taxes, royalties and other; and
  • 1% global adjusted effective tax rate, and 40.7% once royalties are included.

Further, on 3 September 2021, the Australian Bureau of Statistics confirmed South Australia's exports had hit a record $13 billion for the first time in the State's history. Our exports for the 12 months to July 2021 increased by 19 per cent compared to July 2020, including (increased from the corresponding 12 months):

  • iron ore and concentrates were up $512 million (approximately an 80% increase);
  • refined copper and copper products were up $283 million (approximately a 19% increase); and
  • lead was up $89 million (approximately a 35% increase).

 

  1. iTech Minerals

DMAW Lawyers congratulates and was pleased to assist iTech Minerals in its initial public offer.

iTech is a new diversified mineral resource company exploring industrial, battery and critical minerals.

iTech’s date for quotation with the ASX is expected on 25 October 2021.

 

  1. ARENA - renewable hydrogen export opportunities with Japan

On 15 September 2021, ARENA announced up to $2.17 million in funding to Stanwell Corporation Limited to complete a feasibility study for a proposed hydrogen export project located in Gladstone, Queensland on behalf of the Australian Government.

The study will be delivered in partnership with Japan's largest hydrogen supplier Iwatani Corporation and will investigate the feasibility of developing a hydrogen production facility capable of producing up to 36,500 tonnes per annum of renewable hydrogen and export to Japan from 2026.

 

  1. Cooper Energy - AGL

On 13 September 2021, Cooper Energy and AGL Energy Limited announced they agreed to enter into a new gas sales agreement for all developed and uncontracted volumes from the specific fields.

This deal highlights Cooper Energy’s flexible approach to optimise value and position the company for future growth.

 

  1. Santos Limited - merger with Oil Search Limited

On 10 September 2021, Santos and Oil Search announced that they entered into a merger implementation deed, under which the two companies will combine via an Oil Search scheme of arrangement.

The merger seeks to create a regional champion of size and scale, with an estimated proforma market capitalisation of A$21 billion.

The merger is subject to customary conditions, shareholder approval and regulatory approvals.

 

  1. Engineering firm enters Kazakhstan

On 6 September 2021, InDaily reported that Regency Park company GJC Engineers will ship one of its containerized uranium packing plants to Kazakhstan.

The fully automated plant was manufactured and constructed in Adelaide using many locally produced components.

The unit is used to remove the human element of packaging the radioactive yellowcake produced from uranium mining into drums before it is transported.

The firm is hoping this will be the first of a strong of exports to Central Asia.

 

  1. Woodside – proposed merger

On 17 August 2021, Woodside provided an overview of the proposed merger between Woodside and BHP's petroleum business.

The proposed merger is an all-stock merger and will merge BHP’s global petroleum business with Woodside.

The companies are working through due diligence with approval requests to shareholders expected in the second quarter of 2022.

 

  1. Resources sector urges Parliament to pass EPBC Act reforms

On 21 June 2021, Australia’s national and state resources sector bodies made a joint statement calling on the Federal Parliament to support pragmatic, targeted and reasonable amendments to the Environmental Protection and Biodiversity Conservation Act (EPBC Act).

Within the statement the bodies highlight how EPBC Act approvals can take over 1,000 days to process.

The second independent 10-year statutory review of the EPBC Act by Professor Graeme Samuel AC found the Act was outdated and required urgent reform.

The resources bodies highlight (amongst other points) that the Commonwealth should provide adequate funding to State and Territory governments for the establishment of bilateral agreements and deliver single touch environmental approvals and developments of national environmental standards.

 

 

This article provides general commentary only.  It is not legal advice.  Before acting on the basis of any material contained in this article, seek professional advice.

 

Authors:

Peter Kupniewski, Principal in our Corporate Team

Contact
Email:  pkupniewski@dmawlawyers.com.au
Direct Telephone:  +61 8 8210 2223

 

Chris Floreani, Principal in our Transactions Team

Contact
Email:  cfloreani@dmawlawyers.com.au
Direct Telephone:  +61 8 8210 2251

 

Nicole Mead, Senior Associate in our Disputes Team

Contact
Email: nmead@dmawlawyers.com.au
Direct Telephone:  +61 8 8210 2270

 

The authors would like to thank Georgia Kramm and Mario Pegoli for their assistance in preparing this article