19 October What the FIRB? An update on Australia’s foreign investment rules for energy and resources October 19, 2022 By AMPLA Admin Conference, General, Resources and Energy ForeignInvestment, FIRB, Energy&Resources, ER Law National Conference 0 Mellisa Lai, Partner, Johnson Winter & Slattery For over a decade, I’ve helped investors navigate Australia's foreign investment laws. The area saw a significant change in 2015 when a lot of things that were set out only in policy were brought into the legislation. Since then, we’ve had a number of changes around critical infrastructure associated with the port of Darwin lease in 2016, followed by COVID changes in 2020 and more critical infrastructure changes linked to national security in 2021. At the same time, the government has been looking at critical minerals facilitation and the changing geopolitics of the world. At the ER Annual Conference I’ll be giving a snapshot of these changes and how they impact you. Often people think that it’s just major transactions that need to be reviewed by the Foreign Investment Review Board but in reality, the foreign investment laws are a broad set of rules and many things can be caught up in them. The day-to-day operations of a mining company or an energy provider may be caught by the rules when it comes to things like internal corporate changes or establishing new projects, including acquiring real estate or critical energy assets like mining tenements. There are many doors that can lead an investor into the rules - all of which have to be closed, or approval obtained before proceeding with a transaction or project in Australia. The first question is whether you are considered a foreign investor. The concept is much broader than it seems and Australian incorporated entities can still be considered to be foreign investors. Another thing to be aware of is that, ultimately, whether or not to grant a foreign investment approval (conditionally or unconditionally) is a discretionary decision of the Treasurer of Australia having regard to Australia’s national interest. This decision is supported through a broad consultation within government and could include the Critical Minerals Facilitation Office, the Australian Competition and Consumer Commission, the Australian Taxation Office and national security agencies, for example. State government agencies might also be involved. A decision will only be made by the Treasurer if the transaction is not contrary to Australia's national interest, or for a subset of national security related transactions, is not contrary to Australia's national security. To support this, investors need to understand the political landscape and impact of their investment on national security, competition, the economy and community. The character of the investor is also considered. Operational matters such as investment in energy transition projects, decommissioning existing power plants, or new capacity building can all be caught by Australia’s foreign investment rules. Each engagement may also result in new conditions being imposed for past investment decisions. Given this year’s change in government, there are questions about whether any significant changes will arise for the foreign investment rules. We’ve already seen the application fees that foreigners pay to engage with the system have doubled to almost $1.1 million since the change in government. At the moment, businesses are looking for certainty - particularly with energy transition being a focus - however this is a constantly changing area and investors should seek advice early to keep projects on track. To hear more about this join me at the ER Law Annual Conference in October. You can register to attend the ER Law Annual Conference HERE Related Articles How foreign investment changes may impact the mining and energy sector In early June 2020, the government announced a review of the foreign investment rules, expanding them to apply to all foreign investors in anything deemed a ‘sensitive national security business’. The changes are scheduled to come into effect on 1 January 2021. There are concerns that this will impact foreign investment in the mining and energy sectors, and in particular the critical minerals space. The states boost the energy and resources sector This year will be remembered for the many challenges that it brought to both individuals and industry. As Australia starts to return to some normality, many states are looking to boost industry, increase jobs and innovate for the future. In this article, we look at various state initiatives designed to boost the energy and resources sector. Submission - DISER Consultation Paper December 2020 ‘Enhancing Australia’s decommissioning framework for offshore oil and gas activities’ The impact of coronavirus on the energy and resources industry The last few weeks have seen the world face an unprecedented disruption with the novel coronavirus (COVID-19). First reported in China, we’re now seeing many countries shutting down for periods of time to try to contain the spread of the virus. Australia is facing a particularly difficult year given the bushfires that ravaged the country recently. Now with COVID-19 adding to the pain, the energy and resources industry is being impacted in several ways outlined below. What the Federal budget and election mean for the sector The Federal election has now been set for May 21st and follows the recent 2022/23 Federal Budget announcement and Opposition’s reply. The Liberal party’s budget positions the energy and resources sector for growth with $2.4 billion allocated to the industry, energy and emissions reduction portfolio. The budget included an investment of $1.3 billion to maintain energy security and reduce the pressure on prices while encouraging emissions reduction. Changes to the Fair Work Act may benefit the energy and resources sector The energy and resources sector is a significant contributor to the economy, and its impact is estimated to continue to grow over the next decade. The Australian Resources and Energy Group (AMMA) estimates that the sector will add over 24,000 new workers by 2026 to support 98 new and expansion projects worth over $83 billion. The roles available could double depending not the construction and flow-on work required. Western Australia and Queensland are expected to benefit the most from these initiatives. Showing 0 Comment Comments are closed.