This post is a follow-up to my original June post on Fossicking vs. Prospecting, in light of new information from Mineral Resources Tasmania (MRT).

Background

A little while ago I wrote to the Director of Mines asking some questions about ownership of minerals in Tasmania. The Director of Mines is the person charged with administering the Mineral Resources Development Act of 1995 (MRDA). This is the Act that governs all mining, exploration, prospecting and fossicking in Tasmania. The act gives power to Mineral Resources Tasmania to enforce mining law, and makes the Director of Mines the main person responsible for all mining matters, after the Minister.

My specific question was about ownership of minerals in Tasmania. The advice MRT has been providing to prospectors is that prospecting is the same as fossicking, but outside of designated fossicking areas. They have also been advising that prospecting is exclusively a hobby occupation, and you cannot sell anything you find while prospecting. I think this advice is wrong, and unsupported by the law, and this post explains why.

The question:

If you have the time to read the definitions of prospecting and fossicking in Section 3 of the Act, which I covered in my original post, you’ll quickly notice that the law says fossicking is not allowed to be for commercial gain. In contrast, prospecting is not subject to such restrictions. Previous advice received from MRT contradicts this.

By way of comparison, all mainland mining acts have some sentence that gives a person who is fossicking or prospecting unquestionable ownership of what they find. For example, if you go to the appropriate sections of the mining acts of Victoria and New South Wales, they say clearly that minerals you pick up while fossicking and prospecting in those States become your property. This occurs by virtue of your licence or Miners Right. Opposite to the situation on the mainland, Tasmania’s MRDA does not have any explicit paragraph giving prospectors ownership of the minerals they find.

So I asked the Director of Mines to clarify the following: Do minerals collected in Tasmania under a prospecting licence belong to that prospector or not? After all, I’ve been coughing up my hard-earned cash to pay for a prospecting licence for nearly 20 years on the understanding that they do.

The answer:

The Director of Mines has replied to my letter by saying:

So what is a prospecting licence for, then?

The Director’s answer leaves me feeling a bit dumbfounded. I have paid for a prospecting licence for uncounted years on the understanding that this was the way by which I got to own what I found. I have been told outright by MRT officers that this was so, and the law and rules in every other State specifically say prospectors own what they find. MRT have been saying that prospecting is fossicking (but outside of designated fossicking areas), and the conditions of fossicking areas state:

What exactly have I been paying for, when I was sold my prospecting licence year after year? I feel like I’ve been defrauded by MRT.

This statement from the Director of Mines, who is supposed to be the ultimate authority on mining matters, is factually wrong, and I will expand how below.

Ownership of minerals in the MRDA 1995

I briefly covered how the Act is ambiguous by not making it clear who owns what, in my original post. The only statement the MRDA makes on the ownership of minerals is Section 6, which says that all minerals in the ground are owned by the Crown (with some exceptions). The crucial thing here is that the Act is silent not just on whether prospectors own what they find, but on the matter of who owns ALL minerals dug up in Tasmania, under any kind of licence, or mining lease. Following the line of logic of the Director of Mines, all lessees and licensees selling minerals in Tasmania are selling something they do not own.

This in itself hasn’t been massively problematic. The Act sets out, in Part 4, Section 102, for the payment of royalties, by which mineral sales occur. For most minerals the royalties are payable on profit, not the quantity or value of the minerals dug up. This includes all the minerals that prospectors would dig up, such as gold, gemstones, and lapidary materials.

Warning, things start to get convoluted!

It’s important to establish what the Act actually says. The key phrases in Part 4, Section 102 are:

and

By looking at the definitions provided, in this part of the Act (Part 4), “licensee” means:

So in the MRDA, the rules setting out the process of payment of royalties to enable mineral sales are the same for mining leases, and ALL licenses, including prospecting licences.

There are some caveats under the law: holders of exploration licences and retention licences have to get permission from the Director of Mines to sell minerals.

Section 23.4 (authority of exploration licences):

Section 58.4 (authority of retention licences):

However, these restrictions don’t apply to mining leases or prospecting licences.

To summarise, neither lessees (mines) nor licensees (prospecting, exploration, retention, production) own any minerals they dig up. The process by which sales are enabled (royalties) are exactly the same for all of them, but restrictions apply to exploration and retention licences. Following the Director’s logic, if the sale of prospected minerals is illegal under the MRDA, so is the sale of all minerals produced in Tasmanian mines, since the law is the same for leases as for prospecting licences.

This is of course ridiculous, and so the Director’s letter stating that sales of prospected materials are not permitted under the Act is a fallacy. But why say something plainly wrong to prospectors? We’re not sheep, and most of us are capable of reading and understanding the Act. Is it just ignorance of prospecting and prospectors?

As prospectors, we’re a drop in the ocean compared to the revenue generated by mining activity. Because we generate no revenue we’re seen as unimportant. This also probably explains why regulators seem unfamiliar with the laws they’re charged to enforce when it comes to prospectors. They spend very little time dealing with prospecting-related matters. MRT probably see us as an annoyance (or at least they probably see ME as one by now!), and a waste of their time. However, there are hundreds, if not thousands of people in Tasmania who like to fossick, noodle, prospect, or otherwise collect pretty rocks. We are, BY LAW, part of MRT’s stakeholders, and our rights are set out under that law. The law does not give MRT the power to use definitions for fossicking and prospecting that are at odds with those set out directly in the Act itself.

The fact is that prospectors rarely, if ever, turn a profit such that they’d need to pay royalties. Once you take into account travel, accommodation, supplies, depreciation of gear, and the cost of your own time (salary), you’d be very lucky to break even on a trip. We do it because we love it.

MRT do not collect royalties from prospectors because they choose not to. The paperwork would be a nightmare and a waste of their meagre resources, for no appreciable return. The fact that they choose not to chase prospectors for royalties does not, in my opinion, forbid the sale of prospected material, contrary to what the Director’s letter says. However royalties would be payable if you turned a profit.

I’d be personally quite happy with that. If I stubbed my toe on the next “Welcome Stranger“, I’d probably eventually want to sell it, and would be happy to pay any royalties due!

Why bother with all this?

As I went over in my original post, there are some fairly stiff penalties if we do the wrong thing, so you’ll want to be careful to stay within the law. Fines up to $77,000 and confiscation of all your gear (including the car you used to get there) are available penalties.

Unfortunately the current situation is that MRT are telling prospectors and fossickers that certain things are illegal, when even a basic reading of the MRDA shows it isn’t so.

In my opinion, we need the Mineral Resources Development Act of 1995 updated. It needs to make clear that miners and prospectors own the material that they dig up. If MRT decide that it would be worth their while to collect royalties from prospectors, then the mechanism to do so already exists under the current law.

And with this, I’ll get off my mighty high horse!

As always, please keep in mind that this post is just my own personal opinion. Although I’ve spent a lot of time poring over the MRDA, I am not a lawyer, and I don’t pretend to be handing out legal advice. The MRDA is actually not that long, particularly the bits relevant to us, so there’s no substitute for reading it yourself and making up your mind.

Have you come across problems like this before? Are there particular types of posts that you find more interesting? If you like the content at Apple Isle Prospector, feel free to get in contact, or leave a comment.