Failures by the NT Government have allowed substandard iron ore mining operations to continue unchecked.

In 2016, Territory Resources, formerly known as Territory Iron, launched a Supreme Court challenge to an NT Government plan to increase the rehabilitation bond for the Frances Creek mine site from $5.4 million to $18 million.

Justice Stephen Southwood’s judgment found the NT Primary Industry and Resources (formerly Mines) Department did not properly monitor the site for several years.

He said the government cannot retrospectively increase the bond for past mining activities whose operations have ceased.

When iron prices plummeted in 2014, the mine shut down and the site went into care and maintenance.

The cost of cleaning up the site was estimated at between $20 and $30 million.

“The calculation of the initial security by the department was substantially inadequate,” Justice Southwood said in his judgement.

The judge referred to acid water seepage into the nearby Jasmine Creek, “likely” groundwater contamination from exposed potentially acid-forming material, insufficient water quality monitoring and pit backfilling.

He described the department's inspecting, monitoring and investigation of mining activities at the site as “poor”.

There was no record of any field inspection reports from the time the mine began operating in 2008

Justice Southwood said the department failed to ensure Territory Resources' mining management plan was appropriate and would minimise environmental harm.

“The department was not precluded from reassessing the amount of the plaintiff's security by inspecting, monitoring and investigating the mining activities carried out by the plaintiff,” he said.

“The department allowed the substandard mining management system of the plaintiff to persist for far too long.”

The department says it is seeking legal advice about the implications of the Supreme Court's decision for other mine sites.