Nickel (Agnew) Agreement Act 1974

The Act is built around a single, ratified “Agreement” that is a hybrid of a statutory contract and a regulatory scheme. Key concepts include “the Joint Venturers” , originally two companies, but defined in section 2 as having the same meaning as in the Agreement, and in the 2022 variation agreement the party is BHP Nickel West Pty Ltd alone. The “mineral lease” is a central concept: a twenty‑one year lease granted under clause 15, with successive renewal rights, over land in the “mining areas” (red and yellow areas on plan A). The lease covers specific minerals: nickel, copper, silver, lead, zinc, cobalt, platinum, palladium, asbestos, silica and limestone (see Second Schedule to the Agreement, the form of the mineral lease). The term “ore” means nickeliferous ore from the mineral lease, but the 2022 variation introduced “non‑mineral lease ore” and “non‑Agreement nickel concentrates”, allowing the Joint Venturers to treat ore and concentrates sourced outside the original mineral lease area (clause 6B). “Approved proposals” are a critical mechanism: the Joint Venturers must submit detailed proposals for mining and treatment projects (clause 6), the Minister approves them (clause 7), and the Joint Venturers then construct and operate in accordance with them (clause 9). The Agreement contains a “no derogating legislation” clause (clause 26) which allows the Joint Venturers to terminate the Agreement if the State enacts legislation that modifies their rights or increases their obligations, subject to a cure period. In the 2022 variation agreement that clause was deleted except for the heading. Another vital concept is “force majeure” (clause 32): obligations are suspended for delays caused by circumstances beyond the party’s control, including strikes, lockouts, shortages, and inability to profitably sell nickel‑containing products. The concept of “town” and “townsite” is also central: the Joint Venturers must provide housing, services and facilities for the workforce at their cost (clause 18), and the State ensures non‑discriminatory rating (clause 24). The 2022 variation substituted a new clause 24 with specified improvements for rating purposes. The concept of “mine closure plan” was added by the 2022 variation: the Joint Venturers must lodge a plan for approval, and obligations survive cessation or determination of the Agreement (new clause 15(9)-(14)).

The Act directly affects the State of Western Australia (including its agencies and instrumentalities such as the Railways Commission, the State Electricity Commission, and local authorities) and the Joint Venturers , originally Western Selcast (Pty) Limited and Mount Isa Mines Limited, but as at 2022, the sole Joint Venturer is BHP Nickel West Pty Ltd (see recitals and execution of the Third Schedule). The Joint Venturers’ successors, permitted assigns and appointees are also bound (definition in clause 1 and clause 29). The Act also affects persons living and working in the Leinster region: the town development obligations (clause 18) provide housing, education, health and police services, and the community development plan (clause 10A) aims to deliver community and social benefits including skills development, training, employment for indigenous and non‑indigenous persons, and regional development activities. The local participation plan (clause 10B) requires the Joint Venturers to use Western Australian labour, professional services, and suppliers. The Act also affects third parties with whom the Joint Venturers contract: those third parties must be bound by the local participation plan obligations (clause 10B(7)). Native title holders are indirectly affected: the 2022 variation inserted clause 2A, which provides that nothing in the Agreement exempts the State or the Joint Venturers from compliance with native title laws. Persons holding mining tenements over aquifers or other land in the region may be affected by the State’s obligation not to grant rights that would unduly prejudice the Joint Venturers’ operations (clause 14(15) as inserted by the 1976 variation). Mortgagees and chargees of the mineral lease benefit from clause 30, which removes requirements for approval of floating charges and transfers in exercise of powers of sale, subject only to clause 29. The Act also has potential impact on the Commonwealth, as clause 39 requires the Joint Venturers to apply for Commonwealth licences and the State to make representations on their behalf. Ultimately, the Act creates a self‑contained regulatory environment for the Agnew nickel operations, overriding inconsistent State laws (clause 4(3) and section 3B(3)).

The Act imposes extensive duties on the Joint Venturers and the State. The Joint Venturers’ primary duties include: (a) continue studies and submit detailed proposals for a mining and treatment project with a capacity of at least 300,000 tonnes of ore per year (clause 6 as amended by the 1976 variation), and for the original project up to 1 million tonnes; (b) commence construction within six months of proposal approval and complete within three years (clause 9); (c) use local professional services, labour and supplies as far as reasonable and economically practicable (clause 10); (d) pay for half the cost of constructing and sealing certain public roads (clause 11(2)); (e) pay advance freight payments (initially $1 million, increased to $1.5 million by the 1976 variation) and pay freight at rates set out in the First Schedule (clause 12); (f) purchase electricity from the State Electricity Commission if available, or generate their own (clause 13); (g) provide at their cost all town housing, services, roads, and buildings for education, health and police, and make them available to the State free of charge (clause 18); (h) pay royalties under the Mining Act, with a four‑year protection from rate increases (clause 21); (i) lodge a mine closure plan (clause 15(9)-(14)); (j) prepare and implement a community development plan and a local participation plan (clauses 10A and 10B); (k) indemnify the State against third‑party claims (clause 38). The 2022 variation also authorises the Joint Venturers to treat non‑mineral lease ore and blend non‑Agreement nickel concentrates, subject to submitting proposals and obtaining approval (clause 6B and new clause 8(9)-(14)). The State’s key duties include: (a) introduce and sponsor the ratifying Bill (clause 3); (b) grant a mineral lease over the red areas and incorporate certain yellow areas (clause 15); (c) construct public roads (clause 11(2)); (d) cause the Railways Commission to transport nickel‑containing products and bulk commodities (clause 12); (e) grant water licences and search for alternative water sources (clause 14 as substituted in 1976); (f) ensure zoning and rating protection (clauses 23 and 24); (g) not impose discriminatory taxes or rates (clause 25); (h) not resume the Joint Venturers’ property without consent (clause 27). The Joint Venturers have important rights: to renew the mineral lease for successive twenty‑one year periods (clause 15(2); to assign rights to associated companies (clause 29); to terminate the Agreement if the State enacts derogating legislation (clause 26, deleted in 2022 but still applicable to the original Agreement); to refer disputes to arbitration (clause 44), except for ministerial discretions.

The Act itself does not prescribe criminal penalties for breach of the Agreement; rather, it provides for contractual remedies. The primary enforcement mechanism is the State’s right to determine the Agreement for material default, abandonment, repudiation, or liquidation of the Joint Venturers (clause 34). The State must give notice specifying the default and allow 180 days (or longer if the default is referred to arbitration) for remedy. If the default is not remedied, the State may determine the Agreement, and the Joint Venturers’ rights under the mineral lease and other tenures cease (clause 34(1)(a) and (b)). However, instead of determining the Agreement, the State may itself remedy the default and recover the costs as a debt (clause 34(5)). On cessation or determination, all buildings and improvements on the land become the absolute property of the State without compensation, unless the Minister allows removal of fixed or moveable plant and equipment (clause 35(2)-(3)). If the Agreement is terminated by the Joint Venturers under clause 26 (derogating legislation), the Minister must permit them to continue holding the mineral lease under the Mining Act (clause 35(4) as originally drafted, but that subclause was deleted by the 2022 variation). The 2022 variation also introduced a new enforcement measure: if the State is not satisfied with the systems and controls for apportioning royalties from blended products, it may suspend the authority to blend after consultation and a three‑month cure period (new clause 21(6)). Section 4 of the Act creates a limited power for the Governor to make by‑laws for townsite purposes under clause 18, and those by‑laws may prescribe penalties not exceeding $100 for breach. The by‑laws are not subject to section 36 of the Interpretation Act 1918 (repealed) but must be laid before Parliament within six sitting days. This is a minor regulatory penalty, not applicable to the core obligations of the Agreement. The Agreement includes arbitration as the primary dispute resolution mechanism (clause 44). The 2022 variation updated that clause to refer to the Commercial Arbitration Act 2012 (WA) instead of the Arbitration Act 1895, and changed the umpire to a third and presiding arbitrator. The clause also provides that arbitrators may grant interim extensions of time to preserve parties’ rights. The State’s discretionary powers (e.g. under clause 8(2)(e) , opinion that a proposal does not comply) are not subject to arbitration.

The Agreement is explicitly given paramountcy over other State laws. Clause 4(3) states that all provisions of the Agreement operate and take effect notwithstanding the provisions of any Act or law. Similarly, section 3B(3) of the Act provides that the 2022 variation agreement operates and takes effect despite any enactment or other law. This creates a statutory override of inconsistent State legislation. For example, the Mining Act 1904 (and later the Mining Act 1978) is displaced in certain respects: labour conditions on the mineral lease are waived (clause 15(3) and clause 16(1)(a)); the form of the mineral lease is prescribed by the Second Schedule of the Agreement rather than the standard form under the Mining Act; and the surrender and renewal provisions of the Agreement prevail. The 1976 variation inserted clause 30A to allow mortgages over mineral claims to be deemed mortgages over the mineral lease upon surrender and incorporation under the Mining Act. The 2022 variation introduces the Mining Act 1978 explicitly (new definitions and clause 15(3a) on rent, clause 15(8) on the Mining Rehabilitation Fund Act 2012, and clause 15(9)-(14) on mine closure planning). It also deems the mineral lease to be subject to mine closure plan conditions as if it were a mining lease under the Mining Act 1978. The Agreement also interacts with the Land Act 1933 (WA): special leases and occupancy rights for the town site are granted under that Act but with modifications set out in clause 17(3) (e.g. deletion of certain sections). The Sale of Land Act 1970 is also modified to allow the Joint Venturers to sell lots on condition of building (clause 17(4)). The Local Government Act (1960, later 1995) is overridden for rating purposes: valuation of most lands is on unimproved value, and no discriminatory rates are permitted (clause 24). The 2022 variation substituted a new clause 24 referencing the Local Government Act 1995 and specifying improvements that are excluded from that treatment. The Agreement also addresses native title: clause 2A, inserted by the 2022 variation, provides that nothing in the Agreement exempts the State or the Joint Venturers from compliance with native title laws. The Environmental Protection Act (EP Act) is referenced in the new clause 8(2) and (7): proposals must be assessed under Part IV of the EP Act, and the Minister’s approval under the Agreement must incorporate conditions from EP Act approvals. The Agreement also preserves general laws for certain activities: the 2022 variation deleted provisions dealing with railways, ports and electricity supply, and new clauses 20 and deletions acknowledge that transport and port activities will be undertaken under general laws. Arbitration proceedings are governed by the Commercial Arbitration Act 2012 (WA), replacing the Arbitration Act 1895 (clause 44(1) as substituted). The Interaction with Commonwealth laws is addressed in clause 39: the Joint Venturers must obtain necessary Commonwealth licences, and the State will make representations on their behalf.

The Act was originally passed in 1974 as the Nickel (Agnew) Agreement Act 1974 (No. 81 of 1974), assented to 10 December 1974 and commenced on that date. The Act consisted of sections 1-4 and the First Schedule (the original Agreement). The first amendment came via the Nickel (Agnew) Agreement Act Amendment Act 1976 (No. 98 of 1976), which inserted section 3A (ratification of the Variation Agreement), amended section 2 to include the definition of “the Variation Agreement”, and inserted the Second Schedule (the 1976 Variation Agreement). That Variation Agreement adjusted several provisions: it changed the mining capacity threshold from 1 million tonnes to 300,000 tonnes of ore per year (amending clause 6(1)); introduced a new clause 6A requiring continued study for increased capacity; amended road construction timetables (clause 11(2)); increased advance freight payments and changed railway upgrade targets (clause 12); substituted an entirely new water clause (clause 14) with more detailed provisions on search, licence and third‑party use; revised mineral claim surrender requirements for the yellow areas (clause 16); added a new clause 30A on substituted securities; and added a new clause 47 requiring consultation with the State. The Second Schedule itself was substituted with a new First Schedule to the Agreement setting out freight rates for nickel concentrates and matte with escalation formulae. The Act was reprinted in 2003 incorporating these amendments. The next significant change was the Standardisation of Formatting Act 2010 (No. 19 of 2010), which made minor formatting adjustments: it deleted the heading “By‑laws” from after section 4 and amended the headings of the Schedules to remove the word “Act” (from “First Schedule , Nickel (Agnew) Agreement Act 1974” to “First Schedule , Nickel (Agnew) Agreement”). The most recent and substantial amendment is the Nickel (Agnew) Agreement Amendment Act 2023 (No. 17 of 2023), which inserted section 3B (ratification of the 2022 variation agreement) and amended section 2 to include the definition of “2022 variation agreement” and added the Third Schedule (the full text of the 2022 variation agreement). That variation agreement, executed on 20 December 2022, came into operation on 18 August 2023 (the day after assent). It made numerous changes: updated definitions (e.g. Leinster concentrator, mine closure plan, Mining Act 1978, MRF Act, Specified Mining Tenements); inserted clause 2A on native title; inserted clause 6B on non‑mineral lease ore and non‑Agreement nickel concentrates; substantially rewrote clause 8 with new approval procedures incorporating EP Act and native title processes; inserted clauses 10A and 10B on community development and local participation plans; deleted railways, port and electricity supply obligations; added rent calculation under Mining Act 1978; introduced mine closure planning; inserted clause 16A to incorporate specified mining tenements into the mineral lease; substituted a new clause 24 on rating and a new clause 20 on ports; amended royalty reporting to quarterly returns; deleted clause 26 (derogating legislation) except the heading; and updated arbitration provisions to refer to the Commercial Arbitration Act 2012 and added a jurisdiction clause (clause 46).

The legislation text does not cite any decided cases. Clause 44 of the Agreement provides for arbitration of disputes, and judicial proceedings would likely be rare given that arbitration is the primary forum. No court decisions are referenced in the Act or Schedules. The 2022 variation agreement added a jurisdiction clause (amended clause 46) stating that the parties submit to the courts of Western Australia for any dispute not referred to arbitration, but this is a submission clause, not a reference to prior litigation. There is no mention of any previous arbitration awards or court rulings in the source. The Act itself is a ratification statute, so litigation about its interpretation would generally arise from actions under the Agreement. The only potential judicial consideration could relate to the meaning of “force majeure” (clause 32) or the reasonableness of conditions imposed by the Minister under clause 7 or clause 8, but the text provides no examples. The 1976 variation agreement inserted a consultation clause (clause 47) but again no litigation is referenced. The 2022 variation agreement acknowledges that earlier amendments were made by agreements under clause 31 of the 1974 Agreement (dated 6 August 1977 and 15 May 1995), but those are not litigation. Given that the Joint Venturers are well‑resourced entities (BHP), any significant dispute would likely be settled or arbitrated confidentially. The arbitration provisions in the 1974 Agreement originally referred to the Arbitration Act 1895 (WA), which has been repealed, but the 2022 variation updated this to the Commercial Arbitration Act 2012 (WA). The only enforcement mechanism mentioned is the State’s right to determine the Agreement or enter and remedy defaults (clause 34). The absence of cited cases is consistent with the nature of State agreement Acts, which are designed to create stable contractual frameworks often kept out of court by the arbitration clause and the strong commercial incentives to maintain the relationship.

Several provisions contain traps for the unwary. First, the definition of “the Agreement” in section 2 includes the original agreement as altered from time to time in accordance with its provisions and by the Variation Agreement and the 2022 variation agreement. That means any future variation made under clause 31 (variation by agreement) that is not ratified by Act may still be part of the Agreement provided it is in writing and executed by the parties. However, clause 31(2) requires such agreements to be laid before Parliament and subject to disallowance. Practitioners must check whether any unratified variations have been made. Second, the Minister’s discretionary powers are broad and often expressed as “to the Minister’s satisfaction”. Under clause 44(2), these discretions are not referable to arbitration. For example, the Minister’s opinion under clause 8(2)(e) that a proposal does not comply is expressly excluded from arbitration. That gives the Minister significant control. Third, the force majeure clause (clause 32) includes “inability ... to profitably sell nickel‑containing products” as a force majeure event, but the party affected must promptly give notice and minimise the effect. If a party fails to give notice, it may lose the protection. Fourth, the indemnity in clause 38 is extremely broad: the Joint Venturers indemnify the State for all third‑party claims arising out of any work carried out by or on behalf of the Joint Venturers, including the construction, maintenance or use of works. This could cover claims by contractors or the public. Fifth, the 2022 variation agreement introduced a suspension power for blending activities if the State is not satisfied with the apportionment systems (new clause 21(6)). That is a potentially crippling remedy that could halt operations. Sixth, the mine closure plan obligations (clause 15(9)-(14)) survive cessation or determination of the Agreement and expiry of the mineral lease, meaning the Joint Venturers remain liable for rehabilitation long after the Agreement ends. Seventh, the 2022 variation deleted clause 26 (derogating legislation) except the heading. That means the Joint Venturers no longer have a contractual right to terminate if the State enacts legislation that modifies their rights or increases obligations. That is a significant loss of protection. Eighth, the 2022 variation also deleted clause 35(4), which previously allowed the Joint Venturers to continue holding the mineral lease under the Mining Act if they terminated under clause 26. Without that, the Joint Venturers’ tenure is less secure if a future dispute arises. Ninth, the community development and local participation plans (clauses 10A and 10B) impose ongoing obligations that are not one‑off. The Joint Venturers must implement the plans and report annually, and the plans can be amended at the request of either party. Failure to implement could be a material default under clause 34. Tenth, the requirement in clause 10B(7) to include provisions in third‑party contracts requiring compliance with the local participation plan means the Joint Venturers must actively enforce those provisions , if a contractor breaches, the Joint Venturers may still be liable.

Compliance requires careful attention to the layered obligations in the Agreement as varied. First, the Joint Venturers must ensure that all activities are within the scope of approved proposals. For any significant modification, expansion or variation beyond existing approvals, the Joint Venturers must give notice to the Minister and submit detailed proposals within two months (clause 8(1)). The proposals must cover specified matters (mining, roads, water supply, power, environment, etc.) and must be submitted with evidence of marketing arrangements, finance availability and readiness to proceed (clause 6(4)). The Minister will approve, defer, or require conditions. The Joint Venturers must then implement the approved proposals in accordance with the EP Act and any approvals thereunder (clause 8(7)). Second, for activities involving non‑mineral lease ore or non‑Agreement nickel concentrates under clause 6B, the Joint Venturers must first obtain approval under clause 8. The proposals must clearly identify source, tonnage and duration (clause 8(11)). Without prior consent, the Joint Venturers cannot submit proposals for non‑mineral lease ore from outside Australia (clause 8(12)) or for new leases or licences (clause 8(13)). Third, the Joint Venturers must lodge a mine closure plan within six months after the variation date (23 August 2023) for approval by the Minister for Mines with the concurrence of the Minister (clause 15(9)). The plan must be reviewed at times required by the Mining Act 1978 and approved (clause 15(10)-(11)). Implementation obligations survive the Agreement (clause 15(13)-(14)). Fourth, the Joint Venturers must prepare and submit a community development plan within three months after the variation date (clause 10A(3)), and a local participation plan within three months (clause 10B(3)). Both plans must be implemented and reported on annually (clauses 10A(5)-(6) and 10B(6)-(7)). For the local participation plan, the Joint Venturers must ensure that contracts with third parties include provisions requiring those third parties to comply with the plan (clause 10B(7)). Fifth, the Joint Venturers must comply with royalty obligations: pay rent under the Mining Act 1978 from the variation date (clause 15(3a)), and submit quarterly returns for minerals mined and for non‑mineral lease ore treated and non‑Agreement nickel concentrates blended (clause 21(3)-(3B)). They must maintain adequate systems and controls for apportionment (clause 21(5)). Sixth, the Joint Venturers must keep the State informed: quarterly reports on operations (clause 5(2) for initial studies, but ongoing obligations under clause 8(1) and clause 10A/B reporting). They must also consult and keep the State informed about actions that could significantly affect the State’s interest (clause 47). Seventh, the Joint Venturers should maintain careful records of all force majeure events, giving prompt notice and taking steps to minimise impact (clause 32). Eighth, in any assignment or sublease, the Joint Venturers must ensure compliance with clause 29: assignments to associated companies are as of right, but to others require the Minister’s consent, and the Joint Venturers remain liable unless the Minister agrees to release them. The 2022 variation allows subletting of the Townsite Lease without approval for shorter terms (new clause 29(3)). Ninth, the Joint Venturers must ensure that any construction or operation complies with environmental laws (clause 37 , nothing exempts them from environmental requirements). Finally, the Joint Venturers should be aware that the State’s powers to acquire water facilities (clause 14(10)) and sewerage facilities (clause 19(2)) are exercisable on six months’ notice, and the State may also acquire electricity facilities (clause 13(4) now deleted, but the original provisions may still apply if not superseded). The practical approach is to maintain a compliance matrix tracking all obligations under the Agreement, the community plan, the local participation plan, and the mine closure plan, and to engage proactively with the Minister and relevant State agencies to avoid defaults.