The Mining Act 1992 (Mining Act) aims to ensure, among other things, that mining companies effectively rehabilitate disturbed land and water to a safe and stable condition. It also requires mining companies to provide security deposits to cover the costs of the rehabilitation of mine sites. The Mining Regulation 2016 (Mining Regulation) includes requirements to achieve the rehabilitation objectives of the Mining Act.

The Department of Primary Industries and Regional Development (the Department) is responsible for overseeing and enforcing mine rehabilitation requirements in the Mining Act and the Mining Regulation. These functions are delivered by a business unit in the Department known as the NSW Resources Regulator (the Regulator). The Regulator is not a statutory body, rather it is a unit within the Department whose responsibilities include delivering the Department’s mine rehabilitation regulatory functions. This report refers to the Regulator in most instances because it has been delegated responsibility for rehabilitation monitoring and enforcement functions.

This audit assessed the effectiveness of the Department in monitoring compliance with and enforcing mine rehabilitation requirements under the Mining Act and Mining Regulation.

The audit focused on the rehabilitation of large mines, that is, those holding an Environmental Protection Licence. This includes coal mines. Large mines pose the greatest rehabilitation risk, as they generally have larger areas of disturbance and greater impacts on the environment.

The Department is not effectively monitoring and reporting on compliance with mining rehabilitation requirements under the Mining Act. However, regulatory reforms introduced in July 2021 provide the Regulator with a more robust regulatory framework for rehabilitation. These include requirements for mining companies to carry out rehabilitation as soon as reasonably practicable and to report annually on rehabilitation progress. These changes, if implemented effectively, should provide the Regulator with a consolidated view of rehabilitation progress across large mines.

Current gaps in the Department’s data framework mean that it does not have a comprehensive and reliable view of rehabilitation progress and enforcement outcomes. This limits the Regulator’s ability to effectively regulate mine rehabilitation. Further, there is no current plan to evaluate the effectiveness of its regulatory program.

The Regulator has received rehabilitation progress data that it requires from mining companies for most large mines for one calendar year (2023). According to that data, at December 2023, around one third of the total land disturbed by mining in NSW is undergoing rehabilitation. While the Regulator collects data on the amount of land under rehabilitation, it does not collect data on the amount of disturbed land available to mining companies for rehabilitation. Without this data, the Regulator is unable to determine whether a mining company has rehabilitated disturbed land as soon as reasonably practicable after the disturbance occurs. This audit could not report on the progress of mine rehabilitation against targets due to limitations in the Department’s data management.

The total value of rehabilitation security deposits held by the Department has increased from $3.1 billion in 2019–20 to around $4 billion in 2023–24. Security deposits are held for each mine and if there is a shortfall in deposits held for one mine, that shortfall cannot be covered by another mining company’s security deposit. Each security deposit is intended to cover the full cost of rehabilitation in the event of default by a mining company. The Regulator updates its rehabilitation cost estimate (RCE) tool around every four years but there is no allowance between reviews to account for inflation or changes to industry rates.

Significant regulatory reforms came into force in July 2021 that provide for a more robust regulatory framework for mine rehabilitation

The regulatory reforms introduced new standard rehabilitation requirements in mining leases to enable the Regulator to more effectively oversee and enforce rehabilitation. The reforms require mining companies to, among other things, provide annual rehabilitation progress reports against clear rehabilitation objectives and forward plans, that outline scheduled mining activities and rehabilitation progress for the next three years, in a standard format. The reforms also provide the Regulator with legally enforceable powers to act against mining companies that do not comply with reporting and rehabilitation requirements. As part of the reforms, the Regulator also updated its Rehabilitation Cost Estimate Tool Guideline to require mining companies to submit RCEs on an annual basis.

The regulatory reforms provide the Regulator with a more robust framework to monitor and enforce rehabilitation progress. Before the reforms, mine rehabilitation obligations were set out in individual mining company’s operation plans. These were ambiguous, inconsistent and often unenforceable. There were also no standard processes in place to regularly review mine rehabilitation security deposits.

The Department undertook extensive consultation when developing the rehabilitation reforms. The reforms were complex, and additional resources were required for their implementation. The Department reviewed and updated the mine rehabilitation conditions of around 700 mining leases for large mines. It also provided detailed guidance to mining companies to support rehabilitation compliance.

The Regulations came into effect in July 2021 and were operationalised for large mines in July 2022 to allow for a 12-month transition period. The 2024–25 Budget approved around $13.7 million over four years for 11 additional staff to oversee and regulate progressive rehabilitation in line with the reforms.

The Regulator is implementing its operational priorities for mine rehabilitation but planning documents do not identify emerging issues, opportunities or trends

The Regulator’s strategic plan 2021–24 outlines its overall mission, vision, objectives, regulatory approach and business goals. The Regulator also has an internal business plan for each financial year that operationalises its strategic plan by outlining projects relevant to its strategies.

The Regulator is in the process of implementing all its operational priorities. It has improved the regulatory framework for rehabilitation, recommenced its targeted assessment programs (TAPs), implemented planned inspection programs, initiated projects to improve business practices, and is reviewing its RCE tool.

However, planning and risk documents do not identify emerging rehabilitation challenges, opportunities or trends in mine rehabilitation. They also do not identify how the Regulator intends to address strategic risks and challenges or leverage new or emerging opportunities.

The Department’s data framework does not fully support the reforms and rehabilitation regulatory activities

The Department’s current data framework does not provide timely, complete and reliable information on rehabilitation progress, security deposit shortfall and enforcement action. For example:

• the Department was not initially able to provide complete and accurate data on rehabilitation progress, with the data containing duplicate entries, data discrepancies and missing values
• compliance data for some large mines provided for the audit could not easily be matched and manual filtering was needed to identify data specific to rehabilitation
• the Department highlighted limitations with extracting the data on security deposits, with significant manual consolidation required to identify shortfalls in security deposits held for large mines.

The Department is reviewing its systems with the aim of consolidating some of its data platforms, addressing data gaps and improving the user experience.

The Regulator publishes maps to report rehabilitation information for each mine, but it does not have a comprehensive view of rehabilitation progress

The reforms required mining companies to submit rehabilitation progress data from 2023, but some provided it voluntarily in 2022. For 2023, of around 150 large mines required to report rehabilitation performance, around 140 submitted reports on rehabilitation progress. Analysis of that data undertaken for this audit shows that at December 2023 around one third of disturbed land was under rehabilitation. The final date for the submission of 2024 rehabilitation data for some mines was the end of March 2025, which, due to timing, could not be considered in this audit.

The Department reports spatial information at an individual mine level on the Sharing and Enabling Environmental Data (SEED) portal. An in-built map in this portal enables users to view rehabilitation progress for large mines by region and mine site. The Department launched this portal in August 2024. The SEED portal is a positive step towards improving transparency and accountability for mine rehabilitation.

However, the Regulator does not yet have comprehensive information on overall rehabilitation progress because:

• the SEED portal maintains spatial data for most individual large mines for one year (2023) but is not yet able to report rehabilitation progress at an aggregate level
• it has not collected data on the amount of disturbed land available to mining companies for rehabilitation (that is, disturbed land that is not yet undergoing rehabilitation but could be rehabilitated without impacting mining operations)
• the indicators it reports are activity related and do not provide insights on regulatory effectiveness and overall rehabilitation outcomes
• there is limited information to indicate that the issues identified through its inspection programs are being resolved
• limitations in the Department’s data management have prevented reporting of rehabilitation progress against targets.

The 2017 Mining Rehabilitation Security Deposits performance audit found there was likely to be a shortfall in security held and this is a continuing issue

All mining companies must lodge a security deposit with the Department that covers full rehabilitation costs. The total value of security deposits held by the Department increased by around 30%, from $3.1 billion in 2019–2020 to around $4 billion in 2023–24, covering large mines and small mines.

Most mining companies use a tool developed by the Regulator to calculate their RCEs (the RCE tool). This tool contains unit rates and allowances relevant to rehabilitation, such as costs to move material around the site.

The rates in the RCE tool are updated around every four years to account for cost increases over time. However, there are no regular updates to the tool to account for inflation or other changes in industry rates during that period. The Regulator last reviewed the rates in its current tool between 2020 and 2021. Due to the scale of mining operations and the large quantities of material that need to be moved around a site, even small changes in unit rates can result in major changes to cost estimates. This means that total security deposits held for each mine are likely to be inadequate. It is important that the Department holds sufficient deposits for each mine because if there is a shortfall in deposits held for one mine, that shortfall cannot be covered by another mining company’s security deposit.

The Regulator is currently reviewing the RCE tool that includes updating its schedule of rates and allowances. It expects the review to be completed by May 2025 and implemented by September 2025.

The Audit Office of NSW’s 2017 Mining Rehabilitation Security Deposit audit report recommended that the former Department of Planning and Environment ensure its RCE tool adequately covers all works and expenses needed for rehabilitation and closure (Recommendation 2). This recommendation has not yet been implemented, given that the current tool does not account for inflation. Two other recommendations are also yet to be implemented (see below).

The Department has not adequately addressed some recommendations from the 2017 Mining Rehabilitation Security Deposits audit report

In addition to the recommendation in the 2017 report that the former Department ensure its RCE tool adequately covers all works and expenses, two other recommendations have not yet been implemented. These are to:

• implement a financial assurance mechanism to manage long-term environmental risks from mining (Recommendation 4)
• develop clear policy and procedures for ensuring a mine cannot be put into suspension, or care and maintenance, indefinitely (Recommendation 3). The Department should ensure controls are in place to limit multiple approvals to extend suspensions without considering mining company compliance with rehabilitation requirements.

These recommendations are outlined on pages 4 and 5 of the Mining Rehabilitation Security Deposits report.

The Department has implemented some controls to mitigate risks associated with conflict of duties, however governance arrangements need to improve

The Regulator’s previous Compliance and Enforcement Approach guideline, which was in use until February 2025, stated that it ‘is a stand-alone regulator … created to ensure that the regulatory functions of the department have clear separation from industry development activities’. The Regulator recognised that the separation of functions increased transparency and community confidence in its regulatory activities.

In May 2021, the Regulator was made a part of NSW Resources, which is a unit also responsible for industry development. The Regulator revised its Compliance and Enforcement Approach guideline in February 2025 to remove the statement regarding the clear separation of duties.

Resourcing, funding decisions and key policies and plans, such as the Regulator’s compliance priorities and the Suspension of Mining Operations Policy, are approved by the Deputy Secretary who is also responsible for developing industry support policies.

The Department identifies industry capture risks in its risk register. These risks include the real or perceived risk of industry capture, such as not taking appropriate or proportionate regulatory action due to interests in supporting the growth of the mining industry in NSW.

The Regulator has implemented some controls to mitigate the risks associated with the conflict of duties, including developing a range of internal policies, procedures and training to support its compliance activities. However, conflict of duties remains a risk which needs to be continuously managed.

The Regulator does not report on regulatory activities specific to rehabilitation and there has been a decrease in some compliance and enforcement actions

Meaningful public reporting on regulatory performance is important for accountability and continuous improvement. It ensures that those being regulated are aware of the likely responses in the case of poor performance or non-compliance and of how to meet community expectations. The Regulator reports on compliance activities under the Mining Act but it does not currently report on compliance activities specifically related to rehabilitation. For this audit, the Regulator undertook a manual process to isolate compliance data specific to rehabilitation.

The number of notices issued by the Regulator to the leaseholders of large mines declined significantly, by around 80%, in the last five years, from 60 notices in 2019–20 to 13 notices in 2023–24. The number of cautions issued to the leaseholders of large mines also declined by around 80%, from 23 cautions in 2019–20 to five cautions in 2021–22, then increased to around 35 cautions in the following two financial years. The drop in the number of notices was due to the Regulator’s conscious decision to focus on implementing the rehabilitation reforms.

The Regulator does not have an evaluation plan for its regulatory program, and it has limited information on its regulatory effectiveness

The Audit Office of NSW’ 2024 Regulation Insights report highlights some good practice principles for effective regulation based on insights generated from the last six years of audit. These include:

• providing robust reporting on meaningful regulatory information so government has oversight and can be held accountable for regulatory activities
• ensuring monitoring and enforcement activities are supported by robust information about regulatory risks and issues, and accompanied by timely, proportionate responses.

The Regulator monitors and enforces mine rehabilitation in several ways, including issuing notices, cautions, penalties and prosecutions to address non-compliance, providing TAP reports that determine whether rehabilitation measures have been implemented by mining companies, and requiring self-reporting under the Mining Regulation.

However, the Regulator does not report on the effectiveness of its regulatory program and there is no evaluation plan for a periodic review of its regulatory program.

The Regulator commenced a business improvement project for the Mining Act Inspectorate (MAI) in May 2024 to identify improvements in governance and risk management structures, key statutory processes, communications and reporting, and internal business enablers (such as systems, procedural guidance and work practices) to support effective and efficient decision-making. This project is due to be completed by June 2025 and provides an opportunity for the Regulator to address some of the gaps identified in this report.

By June 2026, the Department of Primary Industries and Regional Development should:

1. develop and implement a monitoring and evaluation plan to measure the outcomes of the regulatory program for mine rehabilitation
2. address the gaps in its data framework identified in this report to ensure that
   • it provides timely access to accurate data about rehabilitation progress, security deposits and enforcement outcomes
   • data is used to inform regulatory strategy, planning and activities
3. develop and report publicly on key performance indicators and targets that
   • are consistent, measurable and demonstrate performance and outcomes against the requirements for rehabilitation set out in the Mining Act 1992 and Mining Regulation 2016
   • describe compliance performance and trends in the emergence and resolution of non-compliance with regulatory reporting, rehabilitation and security obligations
   • inform strategic planning and continuous improvement in activities related to mine rehabilitation
4. enhance its governance and regulation for mine rehabilitation by
   • ensuring the Regulator’s strategy and risk documents are evidence-based, including by taking into account new and emerging strategic risks
   • implementing controls to address all risks resulting from a conflict of duties, including ensuring the NSW Resources Regulator uses best practice regulation to meet its rehabilitation objectives under the Mining Act.

Significant regulatory reforms came into force in July 2021 that provide the Regulator with a more robust regulatory framework for mine rehabilitation

The Department introduced mine rehabilitation reforms through the Mining Amendment (Standard Conditions of Mining Leases—Rehabilitation) Regulation 2021 (the Mining Amendment Regulation) in July 2021. The aim of the reforms was to provide greater clarity of rehabilitation obligations for mining companies and strengthen regulatory mechanisms. Before the reforms, mine rehabilitation obligations were set out in individual mining company’s operation plans. These were ambiguous, inconsistent and often unenforceable. There were also no processes in place to regularly review mine rehabilitation security deposits.

The reforms introduced new standard conditions to all mining leases. These conditions established enforceable rehabilitation and reporting requirements for mining companies to:

• rehabilitate land and water as soon as reasonably practicable after disturbance occurs to ensure progressive rehabilitation
• update mining lease rehabilitation conditions to achieve approved final land use
• undertake a rehabilitation risk assessment and implement control measures
• prepare, implement and publish a rehabilitation management plan (large mines only)
• prepare a forward program over three years and report annually to the Regulator.

The Regulator also updated the Rehabilitation Cost Estimate Tool Guideline to require mining companies to submit rehabilitation cost estimates (RCEs) on an annual basis as part of their forward programs.

These new standard conditions provide the Regulator with a more robust framework to monitor and enforce rehabilitation progress. The reforms require mining companies to provide regular progress reports against clearer rehabilitation objectives and forward programs, which outline a schedule of mining activities and rehabilitation progress for the next three years, in a standard format. These changes, if implemented effectively, should provide the Regulator with a consolidated view of rehabilitation progress across large mines.

A 12-month transition period was provided to allow mining companies to transition to the new requirements. Regulatory reforms were operationalised for mining companies with large mines in July 2022. Mining companies were required to submit rehabilitation progress data against a forward program from July 2023.

The implementation timeframe for the reforms is set out in Exhibit 3.

The Regulator has identified its operational priorities for regulating mine rehabilitation and is implementing these priorities

The Regulator’s strategic plan 2021–24 outlines its overall mission, vision, objectives, regulatory approach and business goals. The Regulator also has an internal business plan for each financial year that lists its priority projects related to rehabilitation, timeframes and accountabilities. The Regulator has advised it plans to update its strategic plan in 2025.

The Regulator’s strategy and business plans detail mine rehabilitation priorities that are focused on day-to-day operations. For example, its strategic plan 2021–24 states it would:

• improve the regulatory framework for mine rehabilitation
• focus on security deposits returned
• improve the sharing of information, learnings and expectations
• increase proactive assessments of critical controls and rehabilitation management, that is, implementing its TAPs
• focus on quality data collection and analysis
• focus on whole-of-mine life (including planning stage), not just pre-closure.

The Regulator’s internal business plans operationalise its strategic plan by outlining key projects relevant to its strategy. For example, the 2024–25 business plan states that it plans to implement:

• TAPs on revegetation and tailings dam management
• planned inspection programs on reviewing progress with mine rehabilitation obligations
• projects to improve business processes and practices
• streamlined frameworks to improve compliance and enforcement decision-making
• a review of its RCE tool, which is used by mining companies to estimate their Rehabilitation Security Deposit.

The Regulator is in the process of implementing these operational priorities. It is currently streamlining its framework for compliance and enforcement decision-making, has recommenced its TAPs, implemented its planned inspection program, and initiated projects to improve business practices, as well as reviewing its RCE tool.

Planning and risk documents do not identify emerging issues, opportunities or trends, nor how the Regulator plans to address areas of risk

Planning and risk documents at the Department and Regulator level do not identify emerging rehabilitation challenges, opportunities or trends in mine rehabilitation. They also do not identify how the Regulator intends to address strategic risks and challenges or leverage new or emerging opportunities.

For example, the NSW Resources group and the Regulator’s strategy and risk documents do not address how the Regulator will understand and address important challenges related to:

• increases in coal mine closures over the next 20 years, including risks associated with long-term environmental degradation after mines are closed and security deposits returned
• the potential impacts of climate change on rehabilitation over the long-term (such as increased erosion, increased temperatures and longer dry spells), which would affect RCEs and, in turn, the necessary value of rehabilitation security deposits and the rate of rehabilitation
• a shifting environmental risk profile and associated rehabilitation risks as the nature of mining changes over time, such as tailings dam management, associated with the long-term increase in large metalliferous mines to support the transition to renewable energy.

Some of these gaps are known to the Regulator. For example, the Regulator’s internal business plans identified relevant strategic projects in 2019–20, including alternative post-closure land use and options to manage long-term environmental risks related to poor rehabilitation. However, these plans were not detailed, and the projects were among over 300 other broader projects that were not prioritised. Some strategic challenges were also identified in the Department’s New Policy Proposal submission to NSW Treasury in March 2024, but they are not documented in any current strategy or plans.

The Department has advised that macro trends and strategic risks in mine rehabilitation are considered at the departmental and group level, rather than limited to the Regulator. The Department has a Statement of Intent that notes it will protect primary industries and regional economies through its regulatory and compliance functions. However, the Statement of Intent does not identify and address strategic challenges specific to mine rehabilitation.

The Regulator’s operations are not prioritised consistently with its risks for mine rehabilitation

The Department has identified several risks in its NSW Resources Risk Register for 2023–24 relevant to rehabilitation regulation that it considers as having a high residual risk rating, with major consequences. These are:

• regulation and enforcement – ineffective administration and maintenance of the Mining Act and the Mining Regulation
• rehabilitation – failure to comply with rehabilitation framework
• information and communications technology (ICT) – corporate ICT systems are not fit for purpose and not aligned with operation and service delivery requirements.

The Department has undertaken steps to address these risks through implementing the rehabilitation reforms and commissioning ICT improvements. Despite these measures, a greater focus on mining rehabilitation is needed to adequately mitigate the Department’s high residual risk ratings in relation to the regulation of mine rehabilitation.

The Regulator commissioned a review on the structure of its governance panels, completed in June 2024. The review, among other things, recommended the Regulator’s Compliance and Enforcement Approach document be reviewed to ensure it gives equal importance to all its regulatory functions. The Department updated the document in February 2025, but the content is largely the same as the previous version.

Regulation of rehabilitation is funded by the Minerals and Petroleum Administrative Fund

The Department has other responsibilities in addition to regulating mine rehabilitation under the Mining Act, including licensing and fostering industry.

Regulatory activities and community and industry liaison carried out in connection with the Mining Act are funded from the Minerals and Petroleum Administrative Fund (the Administrative Fund) through an annual levy on industry, equating to one per cent of the security deposit amount. In 2023–24, around $44 million was allocated to the Administrative Fund. Of this, the Regulator spent around $7 million (16%) to support activities carried out under the Mining Act. The requirements of the Mining Act are broader than rehabilitation. The proportion of the $7 million spent on mine rehabilitation is unclear, although the Regulator has advised that 70‒80% of levies allocated to the Mining Act are spent on rehabilitation regulatory activities.

Of the $44 million allocated to the Administrative Fund, the Department spent around $40 million in 2023–24. It advises that other expenditure under the Administrative Fund includes around:

• $17 million for the administration and assessment of exploration and mining titles, including security deposit management and support for the Mine Rehabilitation Portal and other systems
• $7 million for policy development and support for the Mining Act
• $5 million for corporate overheads and geological surveys
• $3 million for governance and communications support for the Mining Act Inspectorate (MAI)
• $1 million for the legacy mine program.

The balance remaining from the Administrative Fund in June 2024 was around $25 million.

The Department has implemented some controls to mitigate risks associated with conflict of duties, however governance arrangements need to improve

The Regulator’s previous Compliance and Enforcement Approach guideline, which was in use until February 2025, states:

The NSW Resources Regulator is a stand-alone regulator … created to ensure that the regulatory functions of the department have clear separation from industry development activities. This framework is designed to ensure a consistent and responsive regulatory approach and to provide increased transparency and community confidence in relation to our regulatory activities.

In May 2021, a departmental restructure led to the Regulator being moved into the NSW Resources group, alongside the industry support functions responsible for ‘fostering the social and economic benefits to NSW that result from the efficient development of mineral resources’. The Secretary of the Department has delegated decisions around compliance and enforcement to the Deputy Secretary responsible for the NSW Resources group and to staff within the Regulator.

The Regulator revised its Compliance and Enforcement Approach guideline in February 2025 to remove the statement regarding the clear separation of duties.

The Regulator has identified industry capture risks in its risk register associated with conflict of duties. These include the risk of the Regulator not taking appropriate or proportionate regulatory action due to interests in supporting the growth of the mining industry in NSW.

However, this audit has identified gaps in controls that give rise to risks associated with conflict of duties. These include:

• decisions regarding requests for additional resources for the Regulator, including data system updates, require the support of the Deputy Secretary who is also responsible for industry development
• key policies and plans, such as the Regulator’s compliance priorities and the Suspension of Mining Operations Policy, are approved by the Deputy Secretary who is also responsible for industry development.

The Regulator has implemented some controls to mitigate the risks associated with the conflict of duties, including:

• developing a range of internal policies, procedures and training to support its compliance activities
• publishing a stakeholder engagement policy, guidelines and other information on mine rehabilitation on its website to enhance transparency around its regulatory processes; the Regulator updated its website in late 2024 to improve accessibility.

However, conflict of duties remains a risk which needs to be continuously managed.

The Regulator commissioned a review of its structure and is improving business processes

It is good practice for regulators to conduct performance evaluations as part of their governance practices.

The Regulator commissioned an external review of its MAI in July 2023. The review found:

• its current structure did not promote effective or efficient business processes
• there were unclear roles and responsibilities that reduced output and outcomes
• delivery of MAI business objectives could be improved through better prioritisation of activities, building communication and providing clarity of responsibilities between teams.

The review indicated that areas for development included priority setting, education and training, active monitoring, and performance measurement and evaluation.

In response to the review, the Regulator is developing a risk prioritisation tool and implementing regular prioritisation meetings to monitor progress with the recommendations. The Regulator also advises that it has clarified the roles and responsibilities of MAI teams.

The Regulator also commenced a business improvement project for the MAI in May 2024 to identify improvements in governance and business risk management structures, key statutory processes, communications and reporting, and internal business enablers (such as systems, procedural guidance and work practices) to support effective and efficient decision-making. This project is due to be completed by June 2025.

The Regulator has staff with the relevant skills and experience and is in the process of filling key roles in its organisational structure

The Regulator advises that all relevant staff within its MAI are tertiary qualified in environmental or natural resource management. This matches the expectations the Regulator set for these roles in its role descriptions.

The Regulator provided role descriptions for Principal Compliance Manager, Principal Operations Manager and Senior Inspector Rehabilitation Technical Services. The role descriptions indicate these roles are important in the regulation of rehabilitation. The Regulator advises that it has recently filled vacant positions including the Principal Operations Manager and Principal Compliance Manager.

The Regulator has provided training to staff to support regulatory activities

The Regulator has developed a skills matrix that maps training requirements against roles, including training in relation to penalty notices, notice writing, regulatory operations manual, report/brief writing, risk assessment, and RCEs training. The Regulator advises training related to notice writing, brief writing, risk assessment and RCE tool training are to be rolled out in FY2025/26.

The Regulator’s training records indicate relevant staff have participated in industry webinars for its TAPs. Inspectors are also receiving on the job training through their involvement in TAPs, which includes inspections across a large sample of mines.

The Regulator conducted an internal audit of its training needs and records in May 2023. The internal audit found there was no centralised location to record the critical training requirements of the Regulator, to track employees’ current skills, training attendance or certificates, and to undertake a skills gap analysis.

In response, the Regulator developed its skills matrix and now stores training records for staff and training requirements for each role in its training register. Most MAI staff also completed mandatory training, including online Regulatory Operations Manual training in late 2024.

The Regulator has provided a project plan to update training procedures and business rules for assessing rehabilitation costs with a project end date of December 2024. This plan states the Regulator will conduct a training needs analysis for RCEs. The Regulator is yet to provide the outcomes of this. This is important because assessments of these cost estimates are used to determine the required security deposit for each mine.

The Regulator screens for pecuniary interest risk and documents how it is managing conflict of interest declarations

The Department has a code of conduct and ethics requiring staff to declare any conflicts of interest. The code also requires staff to properly document any conflict of duty that arises, and to gain approval before accepting any secondary employment. The Department’s conflict of interest policy requires NSW Resources staff to make an annual declaration. The Regulator provides MAI staff with training in the code of conduct and ethics, and fraud and corruption awareness training. The Department’s code also includes a policy on gifts, benefits and hospitality. This outlines circumstances and processes for staff accepting gifts and benefits.

The Department provided a conflict of interest register listing recent declarations by MAI staff. The register includes examples of how it is managing conflicts that have been declared.

The Regulator has a Rehabilitation and Securities Panel to bi-annually review the risk rankings for all sites and review security deposit re-assessments that have a significant variation. The panel meetings can include external attendees and the terms of reference requires all attendees to declare any conflicts of interest. However, this is not a standing item on the agenda, and it is unclear if this is occurring.

Applications for secondary employment by staff at the Regulator have significantly increased since 2023. The Regulator advises that most applications relate to volunteer roles or secondary employment roles with limited time commitments outside working hours. All applications are assessed to ensure they have negligible impact on the staff member’s role within the Regulator.

The Department has a group integrity clearance policy in place that outlines the pre-employment and post-employment screening for pecuniary interests, such as national police checks, conflict of interest declarations, and bankruptcy and qualifications checks. The policy also requires all employees within the Regulator undergo periodic post-employment rescreening every two years. The Regulator conducted some integrity rescreening of its staff in 2024.

The Regulator does not have a comprehensive view of rehabilitation progress

The 2021 reforms require mining companies with large mines to provide a rehabilitation forward program and report annually on rehabilitation progress to the Regulator.

The Regulator’s guideline on annual rehabilitation reports requires reports to contain, among other things, data on areas of disturbance and rehabilitation progress.

Mining companies with large mines are required to provide the Regulator with progress data against key rehabilitation indicators annually, including:

• total disturbance
• rehabilitation – land preparation
• ecosystem and land use – establishment and development
• rehabilitation completion
• new active disturbance area
• new rehabilitation that has commenced.

The Regulator advised that mining companies were not required to submit rehabilitation key performance indicators (KPIs) in 2022, but some did so voluntarily. Of around 150 large mines required to provide rehabilitation progress data, around:

• 70 (47%) submitted progress data for 2022
• 140 (95%) submitted data for 2023
• 100 (68%) submitted data for 2024.

The limited reporting for 2024 is largely due to some mines having reporting arrangements that allow them to provide this data by March 2025. The timing of this reporting means the Regulator does not yet have a complete view of total rehabilitation progress for large mines in NSW.

Around a third of land disturbed by mining is being rehabilitated in 2023

For all large mines that provided KPI data to the Regulator on rehabilitation progress in 2023, analysis undertaken for this audit shows that the total area of disturbance recorded was around 75,400 hectares. Of this area:

• around 34% (or around 25,500 hectares) of the total area of disturbance is being rehabilitated
• less than 1% (around 450 hectares) is completed rehabilitation (that is, signed off by the Regulator).

Of these, 54 large mines that are closing or have leases expiring in the next ten years have reported:

• a total area of disturbance of around 16,700 hectares
• around 35% (or around 5,800 hectares) is being rehabilitated
• less than 1% (or around 60 hectares) is completed rehabilitation.

The reported percentage of total disturbance area being rehabilitated for these mines is around the same as those reported for other large mines.

To date, the Regulator collects data on the amount of land under rehabilitation but does not collect data on the amount of disturbed land available to mining companies for rehabilitation. That is, disturbed land that is not yet undergoing rehabilitation but could be rehabilitated without impacting mining operations.

The Regulator has advised there is likely to be a significant variation in the land available for rehabilitation at each mine site because mining companies are able to use the land for operations up to the date of development consent expiry. The Regulator has also advised that mining companies’ commercial decisions can change mine operations and rehabilitation planning.

For the 23 mines under suspended operations that reported to the Regulator on rehabilitation progress, they reported:

• total area of disturbance of around 5,700 hectares
• around 40% (or around 2,300 hectares) is being rehabilitated
• around 1% (around 80 hectares) is completed rehabilitation.

Of these 23 mines, nine reported that more than 30% of the disturbed area was being rehabilitated, with one reporting 90% being rehabilitated. However, seven other mines with areas of disturbance reported no areas being rehabilitated. Current regulations require mining companies to progressively rehabilitate unless exempt in their approval to suspend operations.

The Regulator has advised that rehabilitation can take several decades, and the most aggressive rehabilitation can only occur in the later years of a mine’s life and often after closure. It also advised that completed rehabilitation is likely to be higher because of the limited time series data that is currently available.

The amount of rehabilitation security deposits has increased but there is still a shortfall

All mining companies must lodge a security deposit with the Department that covers the full cost of rehabilitation at each mine. The Audit Office of NSW’s 2017 performance audit found it was unlikely the Government held sufficient security deposits in the event of mining companies defaulting on rehabilitation obligations and recommended the former Department improve assurance that security deposits are sufficient.

The total value of security deposits increased by around 30%, from $3.1 billion in 2019–20 to around $4 billion in 2023–24, covering large mines and small mines.

Over the same period, the total number of active large mines has been relatively stable. Exhibit 5 shows the increase in security deposits held over the last five years to 2023–24. The Department has advised there were a few factors contributing to the increase. These include the Regulator now assessing Rehabilitation Cost Estimates (RCE) annually and implementing changes to its RCE tool in 2022.

The Regulator reviews rehabilitation outcome documents for large mines but there are some mines that have missing or out of date information

The 2021 rehabilitation reforms required mining companies to provide rehabilitation outcome documents to the Regulator. For large mines, rehabilitation outcome documents include:

• a rehabilitation objectives statement, which sets out the rehabilitation objectives required to achieve the final land use for the mining area
• a rehabilitation completion criteria statement, which sets out criteria, the meeting of which will demonstrate the achievement of the rehabilitation objectives
• the final landform and rehabilitation plan, showing a map of the final land use.

The Regulator has developed internal procedures to assist its inspectors with the assessment and determination of the rehabilitation outcome documents.

The Regulator advises that, at early March 2025, 91% of mine operations have an approved rehabilitation objectives statement and final landform design. This means that around 14 large mines do not yet have an approved statement. It is unclear what compliance actions the Regulator has taken to ensure all large mines have approved documentation in place. The Regulator does not report on the proportion of mines with an approved rehabilitation objectives statement. It also does not report on the outcomes of its assessments of these documents.

In addition to the outcome documents mining companies are required to provide to the Regulator, the companies are also required to make public their rehabilitation management plan, forward program and annual rehabilitation report. The Regulator has advised that it conducted a compliance audit of all large mines in 2022, including confirming whether rehabilitation management plans were published on the company website.

This audit reviewed ten mining company websites at random in February 2025 to establish whether companies were meeting these reporting requirements. Seven had all the required and up to date rehabilitation documents published on the company’s website. Three had either missing or out of date documentation.

The Regulator seeks relevant information on rehabilitation requirements and compliance activities from most stakeholders

The Regulator is responsible for commenting primarily on rehabilitation, including final land use upon completion of mining and for environmental assessment requirements for mine development. It provides input into the rehabilitation requirements for mine development consents and aims to ensure that all the technical challenges associated with development consents are addressed in the application. It has developed a set of procedures to support this process.

The Regulator meets with the NSW Environment Protection Authority in relation to challenging issues at some higher risk mines. The Regulator also meets with the Department of Planning, Housing and Infrastructure regarding compliance with development consent conditions in large mines. It also meets with other entities to discuss site issues including Water NSW, Local Land Services, local councils and the Department of Climate Change, Energy, the Environment and Water.

However, the Regulator has not sought input from the Natural Resources Access Regulator regarding the management of water take at mine sites that could impact on mine rehabilitation. NSW Resources advises that water management is not its responsibility and is regulated by the Natural Resources Access Regulator. However, many mines will be diverting surface and ground water into mine voids and underground workings for an extended period after they close. Input from the Natural Resources Access Regulator could assist in the management of this water take.

The Regulator has reviewed its regulatory operations but does not have an evaluation plan to support continuous improvement

In August 2023, the Department commissioned an internal audit of the Regulator’s processes for all its regulatory functions. The review found, among other things, that there was:

• a presence of controls and guidance material for staff but no formalised processes for regular review of policies and procedures
• a good record keeping system and compliance workflow system but limited adherence to internal procedures and guidelines
• educational and guidance materials to support compliance and community participation but no formal stakeholder engagement plan
• a presence of proactive and reactive compliance activities but opportunities exist to improve mine risk profiling processes.

The review recommended improvements to regulatory practices, including that the Regulator:

• maintain a document review register to facilitate regular reviews, including defining criteria for policies that require more frequent reviews
• implement processes for a compliance manager to check that all internal procedures are complied with before final sign-off in its system
• conduct periodic audits to assess compliance with internal procedures
• finalise a stakeholder engagement plan
• establish a risk-based inspection schedule and update its risk profiling procedure.

The Regulator advises it has implemented all recommendations. However, the Regulator is yet to develop and implement an evaluation plan for a periodic review of its regulatory activities. An evaluation plan would assist the Regulator in clarifying how it is going to identify the impacts of its regulatory activities on mine rehabilitation and support continuous improvement.

The Regulator’s performance indicators that are reported to executives provide limited information on regulatory effectiveness and rehabilitation outcomes

Good practice for a regulator is to report against a comprehensive set of performance indicators that are quantifiable, consistently measured and set with reference to the broader policy goals it is expected to achieve.

Exhibit 6 shows the Regulator’s key performance indictors (KPIs), and targets related to mine rehabilitation that were reported to the Department’s executives from 2021–22 to 2023–24. The exhibit highlights significant shortcomings in the indicators reported, including:

• only one indicator (related to mine rehabilitation security deposits) is specific to mine rehabilitation, with the remaining indicators related to safety or the Mining Act, therefore covering requirements other than mine rehabilitation
• indicators are activity related and do not provide insights on regulatory effectiveness, including in relation to the 2021 reforms, and overall rehabilitation outcomes
• indicators are inconsistently reported, which risks inadequate information being provided to executives with decision-making responsibilities.

The Regulator was not able to demonstrate how it sets or amends its targets, or how it uses indicator outcomes to inform the departmental objectives, priorities and regulatory approach.

Source: Audit office of NSW analysis based on Department performance data, 2020–21 to 2024–25.

Some examples of rehabilitation outcome indicators that would assist in gauging the effectiveness of rehabilitation progress and reforms include the proportion of:

• controls identified in risk assessments that have been implemented by large mines
• RCEs being submitted in accordance with reporting requirements
• forward plans and progress reports submitted on time.

Some examples of indicators that would assist in informing rehabilitation regulatory effectiveness include the proportion of:

• mines with approved rehabilitation outcome documents
• penalty notices and cautions issued that have been complied with
• directions issued that have been addressed, including assessments and directions issued as part of its targeted assessment programs (TAPs).

The Regulator has advised it is developing system changes that will allow targets for rehabilitation assessments to be tracked, monitored and publicly reported in 2025.

The Regulator has governance arrangements to support consistent compliance and enforcement activities

The Regulator established several committees, with the necessary delegations, to support consistent compliance and enforcement decisions, and identify areas for improvement. These committees included:

• a Compliance and Enforcement Panel to ensure accountable, consistent, transparent and proportionate decision-making is applied to compliance and enforcement outcomes consistent with the Regulator’s relevant policies and guidelines
• a Review and Allocation Panel to ensure a consistent and appropriate assessment and triage of incidents, complaints and other allegations of non-compliance
• a Strategic Review Panel to case manage and provide strategic direction on ‘priority’ compliance matters and other sensitive and contentious issues
• a Rehabilitation and Securities Panel to bi-annually review the risk ranking for all sites and review security deposit re-assessments that have a significant variation; this is not a decision-making panel but has been established to provide recommendations to decision- makers.

The Regulator commissioned a review of the structure of its governance panels, completed in June 2024. In response to the review, it advised that it is consolidating the Compliance and Enforcement Panel, the Strategic Review Panel, and the Assessment and Review Committee into a single panel that only deals with critical, priority and other sensitive enforcement matters. It also advised that it is abolishing the Review and Allocation Panel and allocating triaging responsibilities to staff within the Mining Act Inspectorate (MAI). It planned to finalise these arrangements in May 2025.

The Regulator reports on its compliance activities under the Mining Act that are not specific to rehabilitation

Meaningful public reporting on regulatory performance is important for accountability and continuous improvement. Done well, reporting can ensure that those being regulated are aware of what responses to expect in case of poor performance or non-compliance, and how to meet community expectations.

The Regulator publishes data in its quarterly reports and annual reports on compliance activities under the Mining Act. The published data captures broader requirements under the Mining Act and does not provide a breakdown of activities as they relate to rehabilitation. It also does not provide an indication of the proportion of time the Regulator is spending on rehabilitation compliance. This limits the Regulator’s ability to demonstrate that it is ensuring mining companies are undertaking progressive rehabilitation. The Department advises that 70‒80% of compliance activities under the Mining Act are related to mine rehabilitation.

The Regulator reports data relating to the Mining Act on:

• suspended or cancelled authorities
• breaches of conditions
• failures to comply with notices, orders, directions or undertakings
• late or unsatisfactory reporting
• enforceable undertakings
• desktop and site assessments.

Data for this audit indicates a decline in some rehabilitation enforcement activities from 2019–20

The Regulator has issued cautions and notices to large mines in relation to compliance activities under the Mining Act. Cautions are warnings issued to a mining company when an inspector forms a belief there is sufficient evidence to establish non-compliance. Notices are directions issued by an inspector to ensure that non-compliance is remedied; they are not a sanction for non-compliant behaviour. Penalties are issued for less serious breaches of non-compliance that warrant sanction but are not serious enough to warrant prosecution.

Exhibit 7 lists the number of notices, cautions and penalties issued by the Regulator to large mines in the last five financial years. The Regulator reports on compliance activities under the Mining Act but does not currently report on compliance activities specific to rehabilitation. The Regulator undertook a manual process for the purposes of this audit to isolate compliance data specific to rehabilitation.

The number of notices issued by the Regulator to large mines declined by around 80%, from 60 notices in 2019–20 to 13 notices in 2023–24. The number of cautions issued by the Regulator to large mines also declined by around 80%, from 23 cautions in 2019–20 to five cautions in 2021–22. The Regulator has advised this was due to a decision to suspend some regulatory activities when introducing the reforms and to focus on industry education.

The number of cautions issued increased to 35 notices in 2022–23 and remained at this higher level in 2023–24. The Regulator has advised the number of cautions issued increased due to it taking escalated responses from February 2023 for non-compliances with rehabilitation requirements that came into effect for large mines in July 2022.

The Regulator has not yet established targets for intervention and intervention follow-ups in relation to the issuing of notices and cautions.

The Regulator has rehabilitation regulatory programs, but there is limited information on their effectiveness

The Regulator takes steps to ensure mining companies undertake progressive rehabilitation through:

• assessment finding letters and notices to address poor rehabilitation performance or non-compliance
• TAP reports and rehabilitation information releases
• cautions, penalty infringement notices, prosecutions, suspensions and cancellations to address compliance issues
• mining companies’ self-reporting under the Mining Regulation.

The Regulator also advised it reported quarterly to NSW Treasury on the percentage of site inspections completed for high-risk mines sites as per project plans. Results indicate the Regulator completed all planned inspections in the first quarter of 2024–25 and the last two quarters of 2023–24 but not for prior periods. However, as noted elsewhere in the report, the Regulator does not report on its regulatory effectiveness and there are gaps in its follow-up of enforcement action.

The Regulator uses a risk-based approach to monitor rehabilitation progress

The Regulator uses risk criteria and a risk scoring system to determine the mine sites on which it will focus its regulatory efforts in relation to rehabilitation. The risk scoring system includes a score for each mine type, its operational status, level of surface disturbance, compliance history, knowledge of or potential for significant environmental issues, and past rehabilitation performance.

The Regulator’s risk assessment data on around 150 large mines indicates 23 mines have risk scores ranked as high or critical. Exhibit 8 provides an overview of the number of large mines identified by risk ranking.