Minerals Development Bill 2015 [Seanad]: Report Stage

Amendments Nos. 1 and 25 are related and will be discussed together by agreement.

I move amendment No. 1:

In page 13, line 9, after "2013," to insert "to amend the Continental Shelf Act 1968,".

These amendments focus on a legal anomaly that the Office of the Attorney General has requested be addressed in respect of the Continental Shelf Act 1968. The issue arises as a consequence of past transfer of function orders and Department title orders. The issue was identified in the context of the drafting of provisions for the Maritime Area and Foreshore (Amendment) Bill in regard to the introduction of a licensing regime for offshore renewable energy and offshore natural gas storage activities. The Minerals Development Bill 2015, which amends section 4 of the Continental Shelf Act, represents the first opportunity to address this issue. It will also allow my Department to continue to progress proposals for offshore renewable energy and offshore gas storage.

The Continental Shelf Act asserts the State's right to the sea bed and sub-soil outside of our territorial waters, that is, our exclusive economic zone, EEZ, and designated extended continental shelf for the purpose of exploring such sea bed and sub-soil and exploiting its natural resources. Section 5 of the Act is the key element in the consent process for the placing of structures in the sea bed in the EEZ and the continental shelf. Sections 5, 7 and 12 of the Act currently reference two Ministers. Subsection (5) of the Act currently requires that the two Ministers each grant their consent for the construction of structures or the removal of objects from the sea bed. Section 7 of the Act authorises one Minister, with the consent of the other Minister, to make regulations prohibiting or regulating the discharge of oil, sewage and other harmful substances. Section 12 relates to the inquiry powers under Act which can be exercised by either Minister.

Over the years the functions of the two Ministers in respect of these three sections have come to vest with one Minister, the Minister for Communications, Climate Action and Environment. However, the sections continue to reference two Ministers. To address this issue, the proposed amendments combine the references to the two Ministers into one Minister, the Minister for Communications, Climate Action and Environment. The amendments also propose to introduce a new subsection (2)(a) into section 5 of the Act requiring that the Minister for Communications, Climate Action and Environment consult with the Minister for Transport, Tourism and Sport with respect to the safety of an allocation before granting a consent under the section. These amendments will allow my officials, in liaison with the Attorney General's office, to proceed with setting legislative provisions to regulate offshore renewable energy projects and gas storage projects beyond the foreshore by way of the issue of consents under the 1968 Act.

Amendment agreed to.

Amendments Nos. 2 to 5, inclusive, are related and will be discussed together by agreement.

I move amendment No. 2:

In page 30, line 3, to delete "may" and substitute "shall".

The purpose of these amendments is to ensure greater accountability to the Oireachtas in respect of prospecting licences, environmental issues and environmental protection. Mistakes have been made in the past in regard to our natural resources, for which, unfortunately, parts of the country such as Silvermines in Tipperary, continue to pay. There are some good examples of mining and some bad examples of it also. Overall, this Bill is welcome in that it consolidates the legislation in this area.

Amendment No. 2 relates to the granting of prospecting licences. We need to ensure that the Minister shall make regulations in this area and report back. This will ensure that the manner of making the application for the company or the person, as well as the timeframe in that regard, is specific and regularly reviewed.

Amendment No. 3 seeks to ensure that regulations around the granting of licences is reviewed every five years, that these regulations will be on the public record and that they provide for a reporting mechanism. The five-year timeframe is important. We are being practical about this. We are not seeking to shorten the timeframe too much or to make things awkward or difficult for people in this sector. We believe a five-year review is practical.

Amendment No. 4 seeks to ensure that the Minister publishes a directive in regard to adherence to compliance to protect the environment. We need to be as firm, legally, as possible in terms of any potential environmental implications arising from the mining practice. This amendment seeks to place an obligation on the Minister to specifically ensure there is compliance in terms of environmental issues.

Amendment No. 5 proposes that the Minister shall report and review these environmental practices and directives every five years. Again, we are seeking a regular reporting mechanism under this Act to ensure accountability and transparency.

The aim of these amendments is to ensure accountability in terms of the industry and to ensure we have good environmental practice to protect our natural resources. At the end of the day, minerals belong to the State and the people and it is important that we have a good regulatory system in place in this area but not regulation that prevents or inhibits legitimate mining. This is an important industry. In 2012, the turnover was €426 million and in 2011 it was €454 million, such that this is a substantial industry. We need to ensure it is not inhibited in any way and that we continue to enjoy the benefits of it in terms of jobs and revenue to the State in terms of taxation, PRSI, royalties and so on. I will comment further on royalties later. It is important we allow mining to happen while at the same time protect our environment, wildlife, wildlife habitats and so on. The aim of these amendments is to ensure we get that balance right.

I thank the Deputy for these amendments. Section 31 provides the Minister with discretionary powers to make regulations regarding the granting and renewal of prospecting licences and retention licences, including the manner of making the application and the period a licensee has to hold a licence before being eligible for a retention licence.

Section 40 provides that the Minister may issue directives in regard to adherence to good environmental practice. Compliance with the directives with a be condition of prospecting and retention. I am aware that there is a general concern regarding the frequency of the review period for prospecting licences and that the view is that companies are somehow permitted to rest on their laurels. However, this is not the case. Currently, prospecting licences are granted initially for a period of six years and during the six-year terms of the licences every licence is subject to a formal review at two-year intervals and thereafter on renewal.

In regard to environmental practice directives, it is envisaged that these would be prepared and reviewed as required. Due to the changing nature of legislation a review every five years might not be appropriate. These issues are only expected to arise on an ad hoc basis and may require the issuing of a directive to ensure compliance with specific obligations. In accordance with custom and practice, directives issued under this section will be reviewed at regular intervals to ensure that they remain relevant. The Department issues guidelines on good environmental practice in respect of mineral exploration activities.

In regard to amendments Nos. 2 and 4, I am advised by the Office of the Attorney General that it is more appropriate to use the term "may" rather than "shall" in relation to the making and reviewing of regulations and as such I do not propose to accept these amendments.

On deleting the word "may" and substituting it with the word "shall", I have never before heard of a legal impediment to doing this. I have spoken to the Minister of State's officials about it.

I wish to press those amendments because it is important we strengthen the legislation regarding the granting of licences and environmental practices.

Amendment put and declared lost.

I move amendment No. 3:

In page 30, between lines 9 and 10, to insert the following:

"(3) The Minister shall review regulations under this section every 5 years.".

Amendment put and declared lost.

I move amendment No. 4:

In page 34, line 5, to delete "may" and substitute "shall".

Amendment put and declared lost.

I move amendment No. 5:

In page 34, between lines 14 and 15, to insert the following:

"(4) The Minister shall review the environmental practice directives under this section at a minimum every 5 years.".

Amendment put and declared carried.

Amendments Nos. 6, 7, 14, 15, 21 and 23 are related and will be discussed together.

I move amendment No. 6:

In page 44, line 28, to delete "Planning and Development Acts 2000 to 2014" and substitute “Planning and Development Acts 2000 to 2016".

The Bill, as published, contained a number of references to the collective citation, Planning and Development Acts 2000 to 2014. The amendments propose to correct the collective citation to Planning and Development Acts 2000 to 2016, reflecting the enactment of the Planning and Development Act 2015 and the Planning and Development (Housing and Residential Tenancies) Act 2016.

Amendment agreed to.

I move amendment No. 7:

In page 47, line 12, to delete "Planning and Development Acts 2000 to 2014" and substitute "Planning and Development Acts 2000 to 2016".

Amendment agreed to.

Amendment No. 8 is in the name of Deputy Stanley. Amendments Nos. 8 to 13, inclusive, are related and may be discussed together.

I move amendment No. 8:

In page 49, between lines 33 and 34, to insert the following:

"(2) These regulations shall be reviewed every 5 years.".

Amendment No. 8 deals with mining licence fees and proposes that the Minister would review them every five years. There is no mechanism under the legislation whereby fees can take account of market changes. For them not to be bound by that would be a bad deal.

We have to address the important issue of royalties and the ability of the State to gain the best value possible from our resources. We must ensure that the State receives a fair and reasonable return from our mineral resources because our people lost out in the past in terms of commercial developments. That has been a particular problem with our offshore resources but we do not seem to be doing very well with our onshore resources. I have some figures on that. We need to achieve the best price possible. It is worth noting that the State receipts from mining licences and leaseholders was €6.16 million in 2009, €6.9 million in 2010, €9.68 million in 2011 and €8.6 million in 2012. They appear to be modest figures if we take account of the turnover figure for 2012. We know that turnover does equal profit. In some industries there can be a narrow margin of profit, which is understandable. Mining, in general, tends to have a good turnover depending on what cycle one is at in it. A benefit of €8.6 million to the State out of a turnover of €426 million appears to be on the slim side.

In amendment No. 9 we ask that the Minister shall seek a fair and reasonable return. Amendment No. 10 is connected to that. It proposes that the Minister may have regard to issue concerning commercial interests. Amendment No. 11 proposes that the Minister must review the royalty regulations every five years instead of every eight years. That is to allow for greater accountability and also changes in markets and so on.

Amendment No. 12 proposes that the Minister shall report to the Houses of the Oireachtas and to the Oireachtas joint committee on each review of royalty regulations and the rates that royalties are set, which is an important provision. That will provide for transparency. While new politics is something of a cliche, we have talked a good deal about strengthening the committees, giving them teeth and a strong role. We have seen that this is important. However, people outside this House might view that negatively as it slows down the passage of legislation. During this Dáil term not as much bad legislation has got through. There has been greater scrutiny. While some legislation has gone through with which we would not agree from our political perspective, best practice has been adhered to. The committees have a role to play.

Amendment No. 13 proposes that the Minister must report to the Oireachtas on the waiving or deferring of a licence fee or royalties from minerals or one-off royalty payments on projected benefits from royalties. That would ensure greater accountability to the Oireachtas. We do not consider that to be over-onerous. It would give the Dáil and the Oireachtas committee their place, ensure people's interests are protected and that we achieve the maximum benefit from our natural resources. I hope the Minister will consider these amendments in the spirit that Sinn Fein put them forward, thereby ensuring that the State and the people's interest are always protected.

I welcome the amendments in the spirit in which they have been made, although I am not sure about the detail of them. I agree with Deputy Stanley that it is desirable to involve the committee in deliberations of any kind and in a review of regulations. I am not sure if there is difficulty with the amendments in that, as they are worded, they do not refer to the Oireachtas Joint Committee on Communications, Climate Action and the Environment. The Minister might elaborate on that. While it is laudable and worthy to always put the interests of the State first in terms of commercial matters when we are trying to incentivise and attract investment, I wonder if it could be misinterpreted or give rise to some confusion when investors are weighing up the competing jurisdictions in which to invest and enter into commercial activities. We need to ensure that direct investment is attracted and that there is not an ambiguity about the potential return. Those are my observations on the amendments.

I thank the Deputy Stanley for his amendments. In respect of amendment No. 8, Deputy Stanley has proposed that the mining licence would be reviewed every five years. I have considered his arguments and I propose to accept that amendment.

In respect of amendments Nos. 9 and 10, the royalty regulations will take into account what is a fair and reasonable rate of return to the State and to private mineral holders. Mineral exploration and development is a high risk activity. In the event of a successful discovery, a company would hope to develop the ore body and to cover all costs and make a reasonable profit. Royalty rates should be set such that they are not punitive - punitive rates result in natural resources not being exploited or developed - but at a rate such that the company can make a reasonable profit and the country can benefit from the development of its natural resources. As such, I am not proposing to accept these amendments.

I note the debate on royalty regulations and, in that context, I propose to accept the Deputy Stanley's amendment No. 11, which proposes to reduce the frequency of receiving the royalty regulations from eight years to five years.

The Bill also provides for the laying of an annual report before each House of the Oireachtas under section 223, providing details of licences granted, money collected, acquisition and rehabilitation orders made. It is currently the practice that details of mining licences and leases granted, including royalty rates and fees are included in six-month reports to the Oireachtas. Therefore I do not propose to accept this amendment.

I do not propose to accept amendment No. 13 as I believe flexibility is required in this section. There may be a case where, for instance, prices of minerals decrease considerably and the Minister may at short notice have to make a decision to reduce, waive or defer payments or royalties. Such a case might arise in order to keep a mine in operation and thus maintain employment. This would only be expected to arise in very limited circumstances and will require the agreement of the Minister for Public Expenditure and Reform. Deputy Stanley quoted a number of figures. He should know that there is also a corporation tax rate of 25% as well as royalties on mining licence fees and I believe the figures quoted were only royalty figures so there is additional tax as well as the tax generated from employment.

I welcome that the Minister is accepting amendments Nos. 8 and 11. That is positive and a welcome thing to see happen. Regarding royalties, I acknowledge that there are other benefits and that there are benefits arising from every job created, regardless of what the job is, in terms of revenue and employment and reducing the social welfare expenditure. It is always a benefit when a job is created and we want to do that. We are in favour of that and that is why we are being careful on this. In some offshore mineral extraction industries, royalties have been written off against corporation tax. I do not know if the Minister of State can clarify this, I know he is not the Minister for Finance, but I would be obliged if he or his officials could clarify this point before we proceed. Is that also the case with minerals? Are there occasions when corporation tax is written off against costs for developing mines, exploration and so on?

That is more a question for the Minister for Finance but we can provide clarity on that at a future point. There have been cases where royalties have been deferred but have been paid back to the State subsequently, as base metal prices recovered. That flexibility is important to ensure the viability of mines which may go through a period of months or years when there was a collapse in prices, for instance.

The royalty rates are consistent with international rates. The international rates for base metals are between 0% and 5% and Ireland's rate is between 3.75% for State minerals and about 1.5% for private minerals of net smelter return. Other countries including Sweden, Norway and Finland, do not charge royalties. Australia, which is a mining country, imposes a royalty rate of between 2% and 2.5%. As I noted earlier, there is also corporation tax.

Exploration costs and capital expenditure can be written off corporation tax but not royalties.

Amendment agreed to.

I move amendment No. 9:

In page 51, line 3, to delete “may” and substitute “shall”.

Amendment put and declared lost.

I move amendment No. 10:

In page 51, line 6, before “the” to insert “may have regard to”.

Amendment put:
The Dáil divided: Tá, 22; Níl, 75; Staon, 0.

  • Brady, John.
  • Broughan, Thomas P.
  • Crowe, Seán.
  • Daly, Clare.
  • Doherty, Pearse.
  • Funchion, Kathleen.
  • Kenny, Gino.
  • Kenny, Martin.
  • Martin, Catherine.
  • Mitchell, Denise.
  • Murphy, Paul.
  • Nolan, Carol.
  • Ó Broin, Eoin.
  • Ó Caoláin, Caoimhghín.
  • Ó Snodaigh, Aengus.
  • O'Reilly, Louise.
  • O'Sullivan, Maureen.
  • Ryan, Brendan.
  • Ryan, Eamon.
  • Stanley, Brian.
  • Tóibín, Peadar.
  • Wallace, Mick.

Níl

  • Bailey, Maria.
  • Barrett, Seán.
  • Brassil, John.
  • Breathnach, Declan.
  • Breen, Pat.
  • Brophy, Colm.
  • Browne, James.
  • Bruton, Richard.
  • Burke, Peter.
  • Byrne, Catherine.
  • Byrne, Thomas.
  • Cahill, Jackie.
  • Calleary, Dara.
  • Canney, Seán.
  • Cannon, Ciarán.
  • Carey, Joe.
  • Casey, Pat.
  • Chambers, Jack.
  • Collins, Niall.
  • Corcoran Kennedy, Marcella.
  • Creed, Michael.
  • Curran, John.
  • D'Arcy, Michael.
  • Deering, Pat.
  • Doherty, Regina.
  • Donnelly, Stephen S.
  • Doyle, Andrew.
  • Durkan, Bernard J.
  • English, Damien.
  • Flanagan, Charles.
  • Halligan, John.
  • Harty, Michael.
  • Haughey, Seán.
  • Heydon, Martin.
  • Humphreys, Heather.
  • Kelleher, Billy.
  • Kyne, Seán.
  • Lahart, John.
  • Lawless, James.
  • Lowry, Michael.
  • McConalogue, Charlie.
  • McGrath, Finian.
  • McGrath, Michael.
  • McHugh, Joe.
  • McLoughlin, Tony.
  • Madigan, Josepha.
  • Martin, Micheál.
  • Mitchell O'Connor, Mary.
  • Moran, Kevin Boxer.
  • Moynihan, Aindrias.
  • Murphy O'Mahony, Margaret.
  • Murphy, Dara.
  • Murphy, Eoghan.
  • Murphy, Eugene.
  • Naughten, Denis.
  • Naughton, Hildegarde.
  • Neville, Tom.
  • Noonan, Michael.
  • Ó Cuív, Éamon.
  • O'Callaghan, Jim.
  • O'Connell, Kate.
  • O'Donovan, Patrick.
  • O'Dowd, Fergus.
  • O'Keeffe, Kevin.
  • O'Loughlin, Fiona.
  • O'Rourke, Frank.
  • Phelan, John Paul.
  • Rabbitte, Anne.
  • Ring, Michael.
  • Rock, Noel.
  • Ross, Shane.
  • Scanlon, Eamon.
  • Smith, Brendan.
  • Smyth, Niamh.
  • Troy, Robert.

Staon

Tellers: Tá, Deputies Brian Stanley and Carol Nolan; Níl, Deputies Joe McHugh and Tony McLoughlin.
Amendment declared lost.

I move amendment No. 11:

In page 51, line 7, to delete "at least every 8 years" and substitute "every 5 years".

Amendment agreed to.

I move amendment No. 12:

In page 51, between lines 8 and 9, to insert the following:

“(6) The Minister shall issue a report to the Joint Oireachtas Committee on each review of the regulations in this section.”.

Amendment put and declared lost.
Debate adjourned.