Wine or mine: South Australian Supreme Court confirms Minister’s broad discretion to refuse mining leases

In Terramin Exploration Pty Ltd & Anor v the State of South Australia [2025] SASC 3, the Supreme Court of South Australia confirmed the broad discretion conferred on the Minister for Energy and Mining to refuse an application for a mining lease under the Mining Act 1971 (SA).

Background & Findings

The applicants, Terramin Exploration Pty Ltd and Terramin Australia Ltd (together, the Applicants) sought judicial review of three decisions in relation to a proposed gold mining operation in the Adelaide Hills. Two of the decisions related to a refusal by the Minister to grant the Applicants a mining lease and a miscellaneous purpose licence for their proposed gold mining operation. The third decision was by the Governor to reserve the land proposed to be mined from the operation of the SA Mining Act which prevented any further applications for mineral tenements over the land.

The Court considered the nature of the discretion conferred on the Minister to grant or refuse a mining lease pursuant s 34 of the SA Mining Act, and the operation of s 37(1)(a) of the Act in limiting that discretion.

The Court found that section 37 of the SA Mining Act does not confer an additional, or alternative, power to grant or refuse a mining lease. Rather, it is a limit on the discretionary power conferred by section 34, such that the Minister may only grant a mining lease if the Minister is satisfied that:

1. (s 37(1)(a)(i)) there is a reasonable prospect the land can be efficiently mined (the efficiently mined threshold), which has a low threshold; and
2. (s 37(1)(a)(ii)) the appropriate environmental outcomes can be achieved (the environmental outcomes threshold), which has a higher threshold.

Although meeting those preconditions is a prerequisite to the grant of a mining lease, it does not limit the Minister’s discretion to reject a mining lease application even if the preconditions are satisfied.

The Applicants challenged the fact the Minister had regard to residual environmental risks, despite being satisfied appropriate environmental outcomes would be achieved. They contended that, if the Minster determined the two section 37(1)(a) thresholds were satisfied, the Minister was bound to exercise the discretion conferred by s 34 in favour of the applicant. Alternatively, the Applicants contended that if the Minister was satisfied that appropriate environmental outcomes will be achieved, the Minister could not have regard to any residual risk that the environmental outcomes might not be achieved.

The Court rejected those contentions, finding:

• in relation to the environmental threshold, “it would be a curious result, which does not serve any conceivable public interest, if the Minister were impotent to protect the community from a catastrophic environmental consequence even though the risk of that catastrophe is relatively small“; and
• in relation to the efficiently mined threshold, “it could hardly be doubted that the Minister may decline to grant a mining lease even if satisfied that the mine can be effectively and efficiently mined, if there is a risk of substantial economic dislocation and disruption to nearby industries.” 

The Court found that section 37 of the SA Mining Act is no more than a bar to the grant of the licence unless the Minister is satisfied that appropriate environmental outcomes will be achieved. It does not create a two-stage process in the exercise of the discretion and there is no sound basis for an implication that any residual environmental risk must be ignored.

The Court also rejected the Applicants’ submission that the adverse impact of the proposed mine on future investment by adjoining wineries (and associated tourism) was an irrelevant consideration. There was evidence of material risks to the winemaking and tourism industries upon which the Minister could reasonably be satisfied that economic considerations favoured refusing the application.

The Court observed that unlike most courts, the evidence the Minister could rely on was not limited by the rules of evidence.

Finally, the Court rejected the Applicants’ challenge to the Governor’s decision to reserve land from the operation of the SA Mining Act, finding the discretion to reserve land to be a very broad discretion that may be exercised for many reasons, and the exercise of which was not unreasonable in this case.

Implications

The Minister’s decision was upheld and the application for judicial review was dismissed.
The decision provides an insight into the very broad discretion of the Minister to refuse a mining lease under the SA Mining Act.

Even if satisfied that there is a reasonable prospect the land will be efficiently mined and the appropriate environmental outcomes will be achieved, the Minister may still have regard to other factors in deciding to grant or refuse an application for a mining lease.