After a long-anticipated wait, reforms to Queensland’s financial provisioning scheme (Scheme) which were proposed in early-2023 and passed in mid-2024 have finally commenced as of 1 October 2025, bringing certainty to the Queensland resources sector about financial provisioning obligations moving forward.
In this alert, we unpack the new changes to the Scheme and what they mean for industry.
What is the Scheme?
In Queensland, the Mineral and Energy Resources (Financial Provisioning) Act 2018 (Qld) (MERFP Act) requires the holders of environmental authorities for resource activities (resource EAs) to provide financial provisioning to the Scheme Manager to address the State’s financial risk where holders fail to comply with environmental and rehabilitation obligations.
At a high level, the financial provisioning requirements for each resource EA are informed by:
- the estimated rehabilitation cost (ERC) of the resource activity, which is determined by the Department of the Environment, Tourism, Science and Innovation under the Environmental Protection Act 1994 (Qld) having regard to a departmental guideline and calculator; and
- the risk profile of the entity that holds the resource EA, which is determined by the Scheme Manager under the MERFP Act having regard to matters such as the financial soundness of the resource EA holder (including its parent corporation) and the characteristics of the resource activity.
The forms of financial provisioning a resource EA holder can be required to pay are:
- ‘contributions’, which are payments made annually into the Scheme fund to provide a source of funds to the State for a range of environmental compliance and rehabilitation purposes; and/or
- ‘sureties’, which provide security for a specific resource EA and can take the form of a bank guarantee, insurance bond or cash payment (or a combination of these) as approved by the Scheme Manager.
Background to the reforms
The Scheme commenced on 1 April 2019 and included a three-year transition period for existing resource EA holders.
Following the conclusion of the Scheme’s transition period in April 2022, a post transition review was conducted to identify opportunities for refining and improving the Scheme. Legislative amendments to the Scheme were subsequently proposed via the Mineral and Energy Resources and Other Legislation Amendment Bill 2024 (Qld) (MEROLA Bill) on 18 April 2024.
Notwithstanding the MEROLA Bill passed on 12 June 2024 and received assent on 18 June 2024, a commencement date for the changes to the MERFP Act had not been set and remained uncertain.
On 1 August 2025, the Queensland Government published a proclamation fixing 1 October 2025 as the commencement date for the MERFP Act reforms. A suite of both revised and new guidance material and fact sheets are also due to be published on 1 October 2025 to aid in the implementation of the revised Scheme.
What changes have been made to the Scheme?
Key changes
The below table summarises the key changes to the Scheme.
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PREVIOUS POSITION (BEFORE 1 OCTOBER 2025)
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NEW POSITION (FROM 1 OCTOBER 2025)
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Example
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The Scheme’s risk categories for resource EA holders and associated payment obligations
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The Scheme’s risk categories for resource EA holders and associated payment requirements were:
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The payment arrangements for the ‘Very low’, ‘Low’ and ‘High’ risk categories remain the same. The annual contribution amount for the ‘Moderate’ risk category has decreased to 2.25% of the ERC amount. Following feedback that there was not enough flexibility in between the ‘Moderate’ and ‘High’ risk categories, a new category of ‘Moderate to High’ now exists, requiring payment of an annual contribution that is 6.5% of the ERC amount. |
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When the Scheme applies to a resource EA
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The Scheme applied to resource EAs with an ERC amount of at least $100,000. Resource EAs with ERCs under $100,000 Resource EAs with an ERC amount under $100,000 did not participate in the risk assessment process and had to provide a surety for the full ERC amount. |
The Scheme now applies to resource EAs with an ERC amount of at least $10 million. This is designed to reduce administrative burden, given the $100,000 ERC trigger resulted in a large number of resource EAs needing to undergo risk assessments as part of the Scheme. Resource EAs with ERCs under $10 million Resource EAs with an ERC amount under $10 million will not participate in the risk assessment process (or pay the fees associated with doing so) and must provide a surety for the full ERC amount. Resource EAs with ERCs between $100,000 and $10 million For resource EAs with an ERC amount that is at least $100,000 and less than $10 million, and a risk category of:
The amended MERFP Act contains extensive detail about how the above-mentioned ‘election’ process will work, including in the context of any ‘changed holder events’ (e.g. any asset or share sales of the relevant resource project). To confirm, the reforms make clear that the obligation on a resource EA holder to notify the Scheme Manager of a ‘changed holder event’ applies to all resource EAs with an ERC amount of at least $100,000 (rather than only applying to resource EAs with ERC amounts of at least $10 million). |
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The Scheme’s ‘fund threshold’ and how it affects financial provisioning requirements
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The ‘fund threshold’ is designed to ensure the Scheme is not overexposed to risk from one particular entity or corporate group. It was set at $450 million (which represented 5% of the State’s total ERC exposure at the time the Scheme commenced). Implications of fund threshold If the ERC amount for an individual resource EA exceeds the fund threshold and the risk category for the EA is:
Where the aggregate ERC for all resource EAs held by a holder (including via its corporate group) exceeds the fund threshold, the Scheme Manager may require a surety for the full ERC amount for the relevant resource EA to preserve the viability of the Scheme. |
The fund threshold:
Implications of fund threshold The implications of the fund threshold largely remain the same, noting the new ‘Moderate to High’ risk category is treated the same as the ‘Very low’, ‘Low’ and ‘Moderate’ risk categories. |
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Annual review day
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The Scheme Manager must annually review and re-decide the risk category for resource EAs. These annual re-assessments were required to occur within 30 business days before the anniversary date for the relevant resource EA (noting anniversary dates vary for each EA). |
In an effort to streamline annual risk re-assessments, the Scheme Manager will now set ‘annual review allocation days’ for resource EAs, rather than this date and process being tied to the anniversary date of each resource EA. Where a holder has more than one resource EA, all of the holder’s EAs will be allocated the same annual review date. Holders will have the ability to apply to the Scheme Manager to change a set annual review allocation day. |
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Transitional provisions
The amended MERFP Act contains a raft of transitional provisions, separated into those applicable to resource EAs with ERC amounts of at least $10 million, and those applicable to resource EAs with ERC amounts of at least $100,000 but less than $10 million.
The transitional provisions are designed to clarify how some of the above changes will operate in practice, particularly where existing processes (such as risk category assessments) are already underway as of 1 October 2025.
Other changes
In addition to the above legislative changes, the revised guidance material for the Scheme will introduce assessment pathways to reflect more nuanced assessments, including a ‘streamlined’ assessment for those resource EAs with a mine that is unchanged year-on-year and with an ERC of $50 million or more attracting a 50% reduction in the assessment fee that would otherwise be payable.
Next steps
Queensland resource EA holders should:
- review their current ERC and financial provisioning arrangements and consider how the new changes to the Scheme may impact on financial provisioning moving forward, including in light of the extensive transitional arrangements; and
- carefully consider (and respond to, where required) any correspondence from the Scheme Manager that has been received to date or will be issued in due course, including in relation to new ‘annual review allocation days’ and invitations to elect to remain in the Scheme where the relevant ERC amount is between $100,000 and $10 million.
Please get in touch with the KWM team below if you would like to discuss these financial provisioning changes further and what they mean for your business.
