(2005) 22 ARELJ Western Australia 39 Warden Calder was satisfied that RBJ had a commercial goal which it sought to achieve by objecting to the grant of certificates of objection and in plainting the tenements for forfeiture. He acknowledged that this commercial goal may be realised by accepting benefits (including financial benefits) and discontinuing with the objections or plaints. Warden Calder found that none of the various commercial alternatives were unlawful and improper when viewed in the context of the Mining Regulations and in particular the ‘self policing provisions and objectives’ of the Mining Act and Regulations. Accordingly Warden Calder dismissed the argument that the objection, plaints and application to extend the time within which the objections may be lodged, constituted an abuse of process on the part of RBJ. Conclusion Warden Calder held that RBJ’s inadvertent failure to lodge its objection within the 21 day period prescribed by regulation 55 was brought about by insufficient knowledge and understanding of the mining industry. Accordingly, Warden Calder ordered that the period ending and including the days in which the objections were lodged was, in each case, a reasonable period in all of the circumstances for the lodgement of those objections and granted the applications for extensions in each case. CONSTRUCTION OF STATE AGREEMENTS – PROPOSAL TO MODIFY EXPAND OR OTHERWISE VARY AN APPROVED PROPOSAL* Mineralogy Pty Ltd & Ors v The State of Western Australia & Anor  WASC 275 (Supreme Court of Western Australia, CIV 2463 of 2004; 21 December 2004, Pullin J) Construction of State agreement – proposal to significantly modify expand or otherwise vary activities carried on in relation to an approved project – production of interim product for sale rather than further processing not a valid proposal. Facts and nature of the action Mineralogy Pty Ltd (Mineralogy) and the other companies are parties to a State agreement scheduled to and ratified by the Iron Ore Processing (Mineralogy Pty Ltd) Agreement Act 2002 (WA). The State agreement provides for the development of iron ore projects on tenements near Cape Preston, Western Australia by Mineralogy either alone or with other companies who are parties to the agreement as co-proponents. * Lucas Wilk, LLB (Hons) B Comm, Senior Associate, Blake Dawson Waldron; and Sally Marsh, LLB (Hons) BSc (Hons), Lawyer, Blake Dawson Waldron. 40 Recent Developments (2005) 24 ARELJ Mineralogy and a co-proponent obtained approval for a project to produce high grade iron ore pellets under the State agreement. They then applied under clause 8 of the State agreement for approval to modify, expand or vary the pellet project to produce additional iron ore concentrates for sale rather than further processing into pellets (Concentrates Proposal). Iron ore concentrate is an interim product in the process of producing pellets. Clause 8 of the State agreement provides: If Project Proponents at any time during the continuance of this Agreement desire to significantly modify expand or otherwise vary their activities carried on pursuant to this Agreement in relation to a Project beyond those activities specified in the approved proposals relating to that Project they shall… [give notice to the Minister and submit detailed proposals]. The Minister considered that he could not validly consider the Concentrates Proposal under clause 8 of the State agreement. The companies who are parties to the State agreement applied for a declaration that the Minister was obliged to consider the ‘Concentrates Proposal’ and exercise his powers under clause 8. Construction of State agreements generally Pullin J considered the principles of construction of State agreements. He made remarks consistent with Hancock Prospecting v BHP Minerals  WASC 259 to conclude that the usual principles of construction of written contracts apply and that a State agreement is not to be interpreted like a statute. He stated that a contract should be construed practically to give effect to its commercial purpose and that the Court should not adopt a narrow or pedantic approach to construction. The State agreement Pullin J stated that the purpose of the State agreement is to provide a framework for the development of iron ore projects which will see value added to iron ore; being projects to produce high grade iron ore pellets, direct reduced iron or steel, as those projects are defined in the State agreement. The defined projects also include production of a minor amount of iron ore concentrates for use as heavy media in the coal washing industry. Pullin J stated that the Minister has a duty to consider proposals and the authority to approve proposals relating to the defined projects and to approve modifications, expansions or variations of those defined projects. The proponents are obliged to implement approved proposals for those defined projects and, in return, the State provides concessions such as reductions in royalties and modification of tenement expenditure requirements. The State also undertakes to assist in the provision of infrastructure. Clause 8 of the State agreement In relation to clause 8, Pullin J held that a proposal to undertake activities for a purpose that is different from the purposes of an approved and defined project does not fall within clause 8. He (2005) 22 ARELJ Western Australia 41 held that for the activities proposed to be an expansion, modification or variation of activities in relation to the approved Project, the proposed activities must have the same purpose as the approved project. Pullin J’s view was that the words ‘in relation to’ in clause 8 require some connection between the expanded activities and the approved project, but that expansions for purposes different to the already approved project do not have any connection. Pullin J therefore held that the Concentrates Proposal was not a valid proposal under clause 8 because the purpose for producing additional concentrates (sale) was not the same as the purposes for which concentrates were to be produced in the approved project (further processing in to pellets). The Minister was, therefore, under no duty to consider the Concentrates Proposal and had no power to approve it. In reaching his conclusion, Pullin J did not accept the plaintiffs’ submissions. One of the plaintiffs’ submissions was that the State agreement must allow products which do not fall within the defined projects to be produced under clause 8 because the State agreement includes a royalty for iron ore concentrates, iron ore and other minerals. Pullin J held that the inclusion of a royalty for iron ore concentrates was specifically for iron ore concentrates produced for use as heavy media in the coal washing industry (which falls within the defined projects). Pullin J did not consider in detail the consequences of the State agreement including a royalty for iron ore and other minerals. This decision may have implications for other projects in Western Australia that operate under State agreements because clauses similar to clause 8 are found in several other State agreements in Western Australia. The decision is under appeal. NEW ZEALAND RECENT NEW ZEALAND GOVERNMENT INCENTIVES FOR PETROLEUM EXPLORATION * Oil and gas exploration in New Zealand has recently been the subject of significant attention, with the much publicised dwindling of gas reserves available from the Maui gas field in Taranaki, New Zealand’s largest gas field which currently provides over 80 per cent of the country’s gas. The Maui field has been New Zealand’s major source for energy supply for the last 25 years. The New Zealand Government has recognised the need for increased levels of gas exploration and commercial development to replace rapidly reducing gas supplies. The exploration industry has been given some breathing space with the impending development of two other offshore Taranaki fields, the Kupe and Pohokura gas fields, but the Government considered that more needed to be done. * John Steenhof, Solicitor, and Brigid McArthur, Partner, Chapman Tripp, Washington.