WA mining sector post-COVID-19: from collaboration to cooperation

In brief 5 min read

The ACCC is allowing the mining sector to collaborate in response to COVID-19. It is hoped that the positive relationships fostered will continue long after COVID-19.

The Australian Competition and Consumer Commission (ACCC) has granted interim authorisations in the mining sector that have been targeted at loosening communication and coordination restrictions and to allow companies to work together to ensure the security of supplies and services critical to the mining sector during COVID-19. An incidental 'happy consequence' of this increased cooperation between the mining houses is an increase in collegiality within the industry, a sense of working together and 'quasi-pastoral care' between mining companies big and small.

Key takeaways

• Since March 2020, the ACCC has granted a number of urgent interim authorisations across a range of industries allowing businesses to collaborate in response to COVID-19.
• On 24 April 2020, the ACCC granted a conditional interim authorisation decision (Interim Authorisation) to the Minerals Council of Australia (MCA) for its members to work together to ensure the mining industry can continue to operate during COVID-19.
• The increased collaboration in the mining industry has fostered better relationships among the industry members and these positive effects may continue long after COVID-19.

The Interim Authorisation

On 23 April 2020, the MCA applied to the ACCC for an Interim Authorisation for its members and members of other associations to reach agreements to collaborate, share inventories, rationalise demand for critical supplies and services, and coordinate scheduling and services to ensure the mining industry can continue to operate during COVID-19. Australia, unlike many overseas jurisdictions, has successfully managed to keep the mining industry open and operational during COVID-19, and this has been a key economic area both bolstering the economy and giving it a competitive advantage over other jurisdictions.

The MCA has stated that 'without these critical inputs of services and supplies, mining operations will be hampered and not be able to support jobs, exports, families, communities and small business which depend on the industry'.¹

The next day, on 24 April 2020, the ACCC granted the Interim Authorisation 'solely for the purpose of dealing with risks to supplies critical to mining arising from the pandemic'.²

The group of entities that can rely on the Interim Authorisation are wide. In fact, it captures the MCA, seven other mining and exploration industry associations, full members of those associations and any other entity participating in the Australian mining industry that wishes to engage in the authorised conduct, provided the ACCC is notified in advance.

What conduct is authorised?

The authorised conduct (referred to as the 'Proposed Conduct') is to discuss, enter into or give effect to, any contract, arrangement or understanding between the participants that has the purpose of:

• collaborating to share inventories and critical services and supplies required to maintain operations safely and efficiently in the face of current and anticipated shortages of supplies that are critical to continued operations during COVID-19;
• rationalising demand through cooperation and sharing to reduce the burden on supply chains, thereby improving the supply of critical services and supplies for the Australian mining sector;
• identifying and sharing details of potential suppliers of COVID-19-related personal protective equipment (PPE), health and medical equipment – including with other governments, communities and industry – to ensure the health and safety of their workforces, families and communities; and
• minimising the risk of shortages of critical services and supplies by coordinating scheduling and supply chain activities including import, storage, trucking and delivery.

Anecdotally, we have seen this type of conduct occurring predominantly in the sharing of services and in coordinating supply chains.

What is included under 'critical services and supplies'?

Critical services and supplies are those required to maintain the operational integrity of mining operations while protecting the health and safety of the workforce, including:

• PPE required to continue safely operating sites (which is also mandated in regulatory approvals) and to allow the Australian minerals industry to manage the risk of COVID-19 on remote sites with a combination of preventative and reactive measures;
• maintenance inputs including parts and key maintenance personnel required to maintain the machinery in a condition that ensures safe operation;
• critical consumables such as fuel, explosives and parts; and
• other services or supplies critical to mining operations that may be in short supply in the future as global supply chains are further affected.

What conditions are attached?

The conduct authorised in the Interim Authorisation is non-compulsory, temporary and subject to the following conditions:

• as soon as practicable, MCA must report to the ACCC the material arrangements entered into pursuant to the Interim Authorisation;
• information must be provided to the ACCC upon request; and
• regular updates must be provided to the ACCC.

Of particular note is that it is the MCA (and not the participant cooperating companies) that reports to the ACCC, thus a participant company ought to report its Proposed Conduct to MCA to permit it to satisfy its reporting obligations under the Interim Authorisation.

What is the duration of the authorisation?

The Interim Authorisation commenced on 24 April 2020 and remains in place until it is revoked or the ACCC's final determination comes into effect.  The ACCC has very recently (on 5 August 2020) released its draft determination in this matter (found here), proposing to grant the authorisation largely in the same terms as the Interim Authorisation, effective until 30 June 2021.  The ACCC is now inviting submissions in response to the draft determination. In addition, the Applicants or an interested party may request that the ACCC hold a conference to discuss the draft determination.

What does this mean for the future?

As mentioned above, a consequence of this increased cooperation between mining houses is an increase in collegiality within the industry, fostering a sense of 'quasi-pastoral care' between mining companies big and small. Providing that competition is not lessened, this consequence can only be a good thing and may lead to efficiencies which can further benefit the industry and the economy in turn.

This has been observed in the positive manner with which industries such as the Chamber of Minerals and Energy of Western Australia (CME) and its members have 'come together' to share COVID-19 measures and anecdotes. CME's Chief Executive Paul Everingham has said that 'the resources sector has come together in solidarity' during these times.³

While the Interim Authorisation and the COVID-19 impacts are expected to be finite, it does appear to have fostered better relationships among the industry members, and it is hoped this continues long after the effects of COVID-19 have passed.