Regulatory Impact Statement - Amending regulations to raise minimum competency requirements for managing small underground coal mines
Agency disclosure statement
This Regulatory Impact Statement (RIS) has been prepared by the Department of Labour (the Department). It provides an analysis of options for ensuring safety in underground mining. The options were developed based on an review of health and safety in underground mining, including a public consultation process. The impact of the policy options on businesses is not likely to be significant.
Group Manager, Workplace Policy
This Regulatory Impact Statement was finalised on 29 April 2010 and considered by Cabinet on 24 May 2010.
This is a policy proposal for a regulation change to raise the minimum qualification required to manage a small underground coal mine (where not more than 8 people work), by requiring a minimum of a coal mine underviewer certificate. This involves amending the Health and Safety in Employment (Mining Administration) Regulations 1996 (the Mining Administration Regulations).
Underground mining has the inherent risk of catastrophic events likely to cause injury and fatality. Because of public concern over the risks and following two 2006 fatalities in small to medium-sized underground coal mines, the Department reviewed health and safety in the underground mining industry.
The review found a risk to safety from inconsistent safety management practices in small underground mines (“small” meaning where not more than 8 people ordinarily work at any one time).
The review included a public consultation process, which identified a package of three best options for improving safety in small mines. Two options are non-regulatory, and are being developed by the Department. One is a regulatory option to amend the Mining Administration Regulations to raise the minimum competency required for managing small underground coal mines.
Regulation 11 of the Mining Administration Regulations requires managers of large underground coal mines to hold a first class coal mine certificate of competency, with lesser competency standards for smaller mines: a coal mine underviewer certificate for managers of mines where between 9 to 15 people ordinarily work, and a coal mine deputy certificate for mines where not more than 8 people ordinarily work (this can mean up to 24 people in shifts of no more than 8).
New Zealand has a small underground mining industry, and competes for labour with Australia which has a much larger mining industry. New Zealand’s mining industry has around 400-450 employees, and it is dominated by a handful of large employers. There are currently nine underground mines operating, comprising six coal mines and three gold mines; two are small underground coal mines; one is a small hobby gold mine. There are three small underground coal mines with permits to operate which are not currently operating, but which could start operating at any time.
The number of small underground coal mines has dramatically reduced over the last six or seven years, but this could change again in the future, notably as a result of Government plans to increase the land available for mining exploration.
According to the Extractives Industry Training Organisation (EXITO) there are: 13 current holders of a first class coal mine manager certificate (of whom four are overseas); 41 holders of a coal mine underviewer certificate; and 97 holders of a coal mine deputy certificate.
A coal mine deputy certificate requires 18 unit standards (68 credits), of which three quarters are at level 4 or below. Unit standard 21662, “Demonstrate knowledge of development and extraction plant and methods for underground coal mining”, provides basic skills in strata stability, water inflows, geology and proximate old mine workings.
Maintaining the status quo has no cost impact, but does not address evidence that the current requirement that a small underground coal mine manager hold a coal mine deputy certificate is not a sufficient managerial qualification for the safety risks of mining in small underground coal mines. The investigation and prosecutions in relation to one of the 2006 fatalities highlighted inadequacies in the coal mine deputy certificate as basis for managing a small underground coal mine.
Feedback in respect of the Department’s review of health and safety in underground mining supported the need to raise the managerial competency to a minimum of a coal mine underviewer certificate, which covers safety management of the basic, well-known safety hazards of underground coal mining, notably ventilation, geology, survey principles and site plans, and evaluating and implementing plans for managing old workings and inundations.
The objective is to ensure safety in small underground mines.
In addition to the status quo, three options were considered:
- non-regulatory options
- a regulatory option of amending the Mining Administration Regulations to raise the minimum managerial competency for small underground coal mines by requiring a minimum of a coal mine underviewer certificate, and
- a regulatory option of amending the Mining Administration Regulations to raise the minimum managerial competency for small underground coal mines by requiring a first class coal mine manager certificate.
Regulatory impact analysis
The Department’s review of health and safety in the underground mining industry included a public consultation process from April to July 2008 on the best options for improving safety. Submitter feedback from the public consultation process, confirmed by further Departmental research and analysis, supported the need for a package of three measures for improving safety in small mines:
- two non-regulatory options –tailored guidance for small mines on taking a systematic approach to managing safety, and guidance on technical standards to provide accessible information on good safety practice, and
- one regulatory option – amending the Mining Administration Regulations to raise the minimum competency for managers of small underground coal mines to a coal mine underviewer certificate rather than a coal mine deputy certificate.
The non-regulatory options are already being developed by the Department. Completion of the tailored guidance on systematic safety management is due by early 2011. The Department is using materials from the New South Wales Department of Primary Industries, which were developed over 10 years and which they have found effective in improving safety in small mines and quarries. This technical standards work is due by 2011-2012.
The guidance will increase small mine operators’ knowledge of how to manage basic safety in underground mining, and will make their safety practice better and more consistent. However, the submitter feedback indicated that these should be supplemented by a regulatory option of improving managerial competency.
Regulatory option to require a minimum of a coal mine underviewer certificate
This was the regulatory option identified in the review. Submitter feedback in the review strongly supported raising managerial competency by amending the Mining Administration Regulations. Half the submitters specifically approved the revocation option across both employer and employee perspective submitters.
Upgrading from a coal mine deputy certificate to a coal mine underviewer certificate requires completion of the following additional unit standards, worth 91 credits.
|# Unit Standard||Title||Level||Credit|
|7145||Design, establish and maintain effective ventilation systems for an underground mine||5||20|
|15666||Demonstrate knowledge of geology for underground extraction||4||10|
|17743||Demonstrate knowledge of survey principles and apply to an extraction site||4||4|
|17744||Read and interpret an underground extractive site plan||4||5|
|21629||Evaluate and implement plans to manage old workings and inundations in underground sites||5||10|
|21151||Demonstrate knowledge of planning rehabilitation operations of an extractive site||6||15|
|21153||Demonstrate knowledge of dewatering, pump maintenance, cleaning settling ponds at extraction sites||3||12|
|21823||Analyse and select mining and transportation plant for underground coalmines||6||15|
No existing mines would be affected. The managers of both small underground coal mines currently operating hold coal mine underviewer certificates.
The impact for future small mine operators is estimated to be small. These mines will need to recruit a manager with a higher qualification, and potentially pay a higher salary.
There are factors impacting on the ability to recruit qualified mine managers. There is a competitive workforce with Australia, but their legislative framework already requires managerial competency higher or, at minimum, equivalent to coal mine underviewer level. Mining may increase as a result of the Government’s plans to allow exploration in land currently not available for mining, although this is more likely to attract larger operators. By way of example, it took one small mine that opened in 2005 seven months to find a manager qualified as a coal mine deputy. Notwithstanding these factors, the existence of 41 holders of a current coal mine underviewer certificate in the current New Zealand workforce, approximately 9 percent of the workforce, and the fact that the two operating small mines have been able to recruit a coal mine underviewer manager shows that it is feasible for new mines to find appropriately qualified managers.
There is unlikely to be a major salary impact for mine operators, estimated at no more than around $5,000 to $10,000 per annum. The 2009 Australia/New Zealand Hays salary survey provides a good indication of salary levels – this has been confirmed by discussions with industry. The Hays’ salary range for coal technical “undermanager” positions (which would equate to managing a mine with coal mine underviewer certificate) is $115,000 to $130,000; and the salary range for “deputy” positions (roughly equating to managing with a coal mine deputy certificate) is $105,000 to $120,000.
Requiring a minimum of a coal mine underviewer certificate to manage a small underground coal mine will impact on existing holders of coal mine deputy certificates who wish to take up a mine manager role. They will need to upgrade their qualification, with the additional cost of $4,550 ($50 per credit), and they require 910 hours of course time, and would take on average between eight and 18 months to complete.
The cost is mitigated by a training subsidy from EXITO (through the Tertiary Education Commission) currently $1,000 per trainee per year. This can also be shared between a trainee and a mine operator on a two-thirds/one third basis (if the operator contributes towards the trainee’s fees). Alternatively, if the training cost is over the subsidy allocation, then the operator or trainee would have to agree to pay the extra cost involved prior to training taking place.
No other cost impacts have been identified. Large mine operators, current and future, are unaffected. The deputy qualification will continue, although not as a managerial qualification, as Solid Energy (a state owned enterprise, and the country’s largest mine operator) incorporates it into the their competency-based pay scale, and intend to continue doing this. EXITO has indicated that raising the minimum managerial competency to coal mine underviewer would have minimal impact on them. Training providers may have greater uptake of courses.
Overall, the estimated impacts are slight and the potential safety benefit is significant, as it could avoid a tragedy similar to one of the fatalities in 2006.
Regulatory option to require a minimum of a first class mine manager certificate
A first class coal mine certificate qualifies the holder to manage any underground coal mine and represents a high level of capability. To move from a coal mine deputy to a first class coal mine manager certificate requires 25 additional unit standards (265 credits), mostly at level 4 and above, requiring nearly three times the time and effort required to obtain a coal mine underviewer certificate. At $50 per credit, it would cost $13,650 to complete, and is likely to take three times as long to complete as the coal mine underviewer certificate.
The impact of requiring a minimum of a first class coal mine manager certificate is considerable, and disproportionate to the level of competency required. In a competitive labour market, there is a premium on this level of qualification, and it is held by only a handful of people working in New Zealand (two percent of the workforce). It is hard to identify a Hays salary scale position corresponding to this role, but the scale could range up to $160,000 per annum (as a long wall coordinator, project manager, or production supervisor).
Requiring a first class coal mine manager certificate would affect existing small mines, and also mines where nine to 15 people work. Further pressure would be created by any industry growth from the Government’s plan to make more land available for mining exploration.
The review of health and safety in underground mining included a full public consultation process in 2008. The discussion paper was publicly launched by the Minister of Labour, publicised in the media and on the Department’s website, and was sent out individually to over 50 industry stakeholders.
To encourage comprehensive industry involvement, the discussion paper contained enough detail and practical examples to inform stakeholders and gather feedback, yet had a broad range of regulatory and non-regulatory options so as not to stifle stakeholders’ ideas.
There were submissions from 17 stakeholders, and provided good representation from what is a very small industry. There were no submissions from any mines with fewer than 35 employees, as there were no small mines operating at this time.
Submitter feedback supported a package of three best options for improving safety in small mines, as has already been described above.
A report summarising the feedback from submissions was published on the Department’s website in October 2008.
The draft Cabinet paper was consulted with government agencies.
Conclusions and recommendations
The mine underviewer qualification includes unit standards covering the basic hazards of underground coal mining, and therefore better ensures the safety of people working in small underground coal mines. It was identified through a robust process as a recommended option for improving safety.
No small mines currently operating would be affected, although there be some impact on potential small mine operators, and some mine workers, but this is estimated to be small. Overall, the impacts are mitigated and the benefit of improved safety outweighs the cost.
It is therefore recommended to amend the Mining Administration Regulations to raise the minimum competency requirement for managing small underground coal mines by requiring a coal mine underviewer certificate (and removing the ability to manage a small mine with a coal mine deputy certificate).
Implementation issues, including risk analysis
The proposed timing is for regulatory change by the end of 2010. This is a small industry and a likely change to the Mining Administration Regulations has already been well heralded. The change would be implemented by notifying any known mine operators likely to be affected by letter, notifying industry stakeholders, and by publicising the change on the Department’s website. There are no implementation issues. New operators are required to notify the Department when they commence operation, and the Department will be able to notify any currently unknown operators of the requirement.
Arrangements for monitoring, evaluation and review
Because of the small size of the industry affected by this proposed change, the Department will not have a formal arrangement for monitoring, evaluating and reviewing this change. As well as being notified of new operations, the Department’s health and safety inspectors aim to visit all small mines on a 6-month cycle, and identify the qualification levels held by managers.