Western Australia land law can benefit renewables and mining companies

However, any rights granted to use that land would be non-exclusive and rents may be payable to farmers with existing leases to use the land.

Diversification leases

On 24 March 2023, the Land and Public Works Amendment Act 2023 passed the Western Australia Legislative Assembly, making way for amendments to the Land and Administration Act 1997 (WA) (LAA) and the Public Works Act 1902 (WA).

An important change as part of the Bill is the grant of a new non-exclusive land tenure over Crown land, a diversification lease. The introduction of diversification leases aims to maximise the economic potential of Crown land assets and provide opportunities for further renewable projects – in particular, hydrogen – in the state, as land subject to a diversification lease can be used for clean energy-related uses, co-existing with mining or pastoral uses. The Bill, trialled last year, has now progressed to the Legislative Council for debate.

As diversification leases are non-exclusive, they will not prevent access by third parties such as mining companies and will not extinguish native title rights or interests. To this regard, a diversification lease can also have multiple subleases to different subtenants for different purposes. A diversification lease can also be granted over Crown land that is already the subject of a lease under the Land and Administration Act, such as a pastoral lease, though the effected land must first be surrendered from the existing lease. If the effected land concerns a pastoral lease to be surrendered, the minister for lands in Western Australia must first obtain advice from the Pastoral Lands Board.

There is no requirement for the minister of lands to publicly offer diversification leases, and the minister would have discretion to grant a diversification lease by private treaty or through a competitive process such as a public tender. Under the Bill, in order to apply for a diversification lease, proponents must contact the Department of Planning, Lands and Heritage to discuss the proposal and complete a Crown land enquiry form. The applications will then be considered by the minister for lands on a case-by-case. Amongst other requirements, the minister needs to consider:

• the amount of Crown land required;
• the proposed uses under the lease and the corresponding social, economic or environmental benefits to the state, the relevant region or locality;
• the appropriateness of the use of land;
• the social and economic opportunities to indigenous peoples/communities, and;
• the capability, capacity and experience of the proponent.

Interaction with existing rights

Diversification leases will co-exist with the native title holders, pastoral lessees and resource companies. Approvals from parties such as the minister for lands, minister for mines, and native title parties will, however, be required for the grant of a diversification lease, dependent on the specifics of each parcel of land.

Mining

If mining activities are proposed, before a diversification lease is granted, the minister for mines and petroleum must approve of the location, proposed use, and any substantial structures to be built, and referrals for comment will be made to the Department of Mines, Industry Regulation and Safety, Department of Water and Environmental Regulation, local government, and other relevant agencies.

Native title

The grant of a diversification lease will not result in the extinguishment of native title. The rights of indigenous individuals, including traditional owners and native title owners, to engage in activities and access unenclosed and undeveloped areas of the land will be preserved, aligning with their entitlements as outlined in the Native Title Act 1993 (Cth). Further, that Act has a specific reservation in favour of indigenous persons, who “may at all times enter upon any unenclosed and unimproved parts of the land under a diversification lease to seek their sustenance in their accustomed manner”. If native title is affected, the proposed tenant must comply with the appropriate future act process under the Native Title Act 1993. In most scenarios, this will involve the negotiation of an indigenous land use agreement, with project proponents meeting the cost.

Other restrictions

Despite the flexibility of diversification leases, there will be some restrictions. Diversification leases will not be granted where the sole proposed use is for a highly intensive land use, grazing authorised stock – cattle, goats and sheep – or for mining purposes. These exceptions to the granting of a lease exist as they are not consistent with the preservation and ongoing management of the rangeland as a natural resource – a condition for diversification leases.

Benefits of diversification leases

The introduction of diversification leases has the potential to create a number of opportunities for Western Australia.

Renewable energy projects

Land acquisition and competing uses of land has been prohibitive to renewable project viability in Western Australia. As diversification leases will allow concurrent permitted uses, they will play a leading role in freeing up more flexible use of land in the state, presenting an opportunity for further renewable energy projects – hydrogen projects in particular. The development of renewable energy projects will be critical for leading the energy transition and will have the capacity to assist Western Australia in achieving ‘net zero’ emissions by 2050 and meeting the objective of its climate policy.

Opportunities for mining companies

Diversification leases offer mining companies a solution to fulfil their land rehabilitation responsibilities and to contribute to conservation efforts as compensatory measures in the mine project approval process.

As diversification leases will not provide exclusive possession, by primarily focusing on less intensive broader use and maintaining ongoing mining access, a diversification lease may receive greater consideration for approval by the minister for mines compared to a section 79 lease, which is currently widely used for mining projects. Further, a diversification lease will co-exist alongside mining rights, granting mining tenement holders more convenient access to the land compared to a section 79 lease.

Surrender of pastoral lease

If an entity is seeking a pastoral lease over land subject to a diversification lease, the Western Australian government has explicitly provided that the pastoral leaseholder will not be compelled to surrender their tenure, notwithstanding if the land is a prospective site for a hydrogen or renewable energy project. Accordingly, as the legislation provides no specifics on the mechanism, and in other jurisdictions pastoral leaseholders agree to the grant of a sublease for a project in return for an ongoing rental payment, any project proponent will need to negotiate with existing pastoral leaseholders to achieve the surrender of the relevant site so that it is available for a diversification lease. This could lead to potential issues concerning compensation.

Therefore, whilst in theory diversification leases are an innovative mechanism to maximise renewable and hydrogen projects in Western Australia, it is yet to be seen how this intention will reflect the reality, particularly due to concerns on the specifics of pastoral lease surrender.

Co-written by Harry Grewal of Pinsent Masons.