Licensing to operate: Understanding variations in regulatory outcomes in the Australian mining sector

Abstract

Literature on natural resources has argued that to proceed with the development of a mine, mining companies need a “licence to operate” – the approval of a legal authority, embodied in a regulatory licence; the approval of the affected community and broader society, a social licence; and the approval of investors, lenders, or purchasers, an economic licence. While conceptually distinct, in practice these licences interact. Communities and protest movements which bestow or withdraw social licence may also exert pressure on regulators, or influence economic licences through boycott and divestment campaigns. In this paper, we examine the pressures which affect business risk through the multiple dimensions of the “licence to operate,” in the case of federally regulated mines in Australia. Studying 409 mining applications that were under regulatory review, approved, or withdrawn between 2000 and 2020, we use competing risk hazard models and linear regressions to examine how measures of business risk (longer times in review and more conditions) and choices to withdraw are affected by: the attributes of the mine, competing rights claims and land-uses, levels of oppositional mobilization, changes in political parties in power, and market prices. We found that new projects, and those that triggered an independent assessment of their impact on water, were likely to experience longer reviews. Mines where agriculture was the competing land use also faced longer reviews, and mine proponents were more likely to withdraw their proposal. Contrary to our expectations, the mobilization of opposition to a mine was associated with faster time to approval, but also a higher number of conditions.