Native title year in review 2025-2026

What you need to know

• The Federal Court ordered the Northern Territory Government to pay native title holders more than $54 million compensation for the impact of the McArthur River Mine and Bing Bong Port on their native title rights and interests (Davey on behalf of Gudanji, Yanyuwa and Yanyuwa-Marra Peoples v Northern Territory [2026] FCA 153) (McArthur River). The decision has not been appealed.
• This was only the second time a Court has calculated the dollar value of native title compensation (the first being the High Court's landmark Northern Territory v Griffiths [2019] HCA 7 decision (Timber Creek)). This award dwarfs the $2.5 million awarded in Timber Creek.
• In considering economic loss, the Court applied the freehold comparison approach endorsed in Timber Creek and rejected the Claim Group's case for a much larger amount based on a hypothetical voluntary bargain that might have been reached with the mining company.
• The Court would have awarded $60 million compensation for cultural loss but reduced it by 10% to $54 million because of a 2025 ILUA between the mining company and the Claim Group.

What you need to do

• Consider whether the benefits provided under existing agreements with Traditional Owner groups are likely to be considered as a set off in the calculation of cultural loss associated with any relevant project.
• Consider the Court's findings in the context of the later decision in Yindjibarndi Ngurra Aboriginal Corporation RNTBC v State of Western Australia (No 2) [2026] FCA 585 and monitor the appeal in that matter.
• Consider the Court's findings in both decisions about the matters affecting the calculation of economic loss and cultural loss for future negotiations with Traditional Owners about the benefits payable in relation to particular projects. Traditional Owner groups will no doubt do the same.

The compensation claim and the development of the McArthur River Mine

The Northern Territory Government and Mount Isa Mines Limited (MIM) entered into the McArthur River Project Agreement in 1992 to facilitate the development, construction and operation of the McArthur River Project, which was ratified by the McArthur River Project Agreement Ratification Act 1992 (NT) (Project Act).

The McArthur River Project includes an open-cut zinc-lead-silver mine, a road and a coastal port at Bing Bong.

The Gudanji, Yanyuwa and Yanyuwa-Marra Peoples hold non-exclusive native title rights and interests over the McArthur River pastoral lease, which includes the project area (Ngajapa v Northern Territory of Australia [2015] FCA 1249).

In 2020, the Claim Group brought a claim for compensation from the Northern Territory for the extinguishment or diminution of their native title rights and interests as a result of various acts that facilitated the development of the McArthur River Project including the Bing Bong Port. Those acts included the grant of mineral leases, 2007 legislation validating the conversion from underground mining to open-cut mining, the grant of permits for dredge spoil storage at the port, construction of a connecting road and the grant of a pipeline licence.

The Project Act was enacted before the Native Title Act 1993 (Cth) and did not expressly deal with the rights and interests of native title holders. However, it did provide that the Territory was liable to pay compensation to remedy any acquisition of property on other than "just terms".

Statutory entitlement to compensation

The Court first considered the Claim Group's statutory entitlement to compensation, which arose under section 4B(1) of the Project Act. It provides:

To the extent that a relevant legislative or administrative act results in the acquisition of property on terms that would not (apart from this section) be just, the Territory is liable to pay compensation sufficient to remedy the injustice.

"Acquisition of property" is defined under the Project Act as including the extinguishment or diminution of an interest in or right in relation to land and any effect on such an interest or right, being an effect of a kind referred to in section 174B or 174D of the Northern Territory Mining Act in relation to private land.

The Claim Group and Northern Territory Government were in dispute about a number of liability issues under this compensation regime. The Court made several findings about whether particular dealings were "acquisitions of property" that provide useful guidance when considering whether a dealing is a "future act" under the Native Title Act. This is because the definition of "acquisition of property" in the Project Act is similar to the definition of a "future act" (ie an act that affects native title). We do not consider those issues in this article.

Assessment of compensation for economic loss

The Court applied the unencumbered freehold value comparator approach endorsed by the High Court in Timber Creek and assessed economic loss (generally as at 30 June 1993) at $743,408, with an entitlement to interest.

The Court rejected the Claim Group's primary case on economic loss. They argued that economic loss is measured by the loss of what the Claim Group could fairly and justly have demanded, in a hypothetical voluntary bargain, for their agreement to the infringement of their native title rights by the grant of the mineral leases. This might be, for example, a revenue sharing arrangement negotiated between the Claim Group and the Northern Territory.

The Court rejected this case on a number of grounds. The Court noted that the economic loss component of native title compensation is for an infringement of the Claim Group's native title rights and interests. It is not directed at a bargain encompassing access to minerals or royalties in which the native title holders have no interest, or compensation for loss of a process of negotiation. It is not concerned with compensation for the loss of any opportunity that a native title holder may have had to engage in a statutory process (eg the right to negotiate under the Native Title Act) about the grant of a compensable act because statutory rights do not form part of the bundle of native title rights and interests.

The Court said (at [566] and [567]):

The approach endorsed by the High Court in Griffiths HC is workable, based on orthodox principles and open to consistent application. The plurality's encouragement of the need for efficiency and simplicity in the approach to economic loss valuation (at [92]) in such native title compensation claims must be respected and embraced.

Consistency in an approach to compensation is also more likely to provide workable parameters for consensual negotiations, empowering and assisting Claim Groups and other parties to agree compensation without the uncertainty of expensive, divisive and time-consuming litigation.

The Court ultimately found that the freehold value of the claim areas the subject of the established compensable acts as at 30 June 1993 was $1,369,500. This encompassed the freehold valuations in relation to each of MLNs 1121-1126, the pre-1996 non-pastoral use permits, the relevant part of the Road and the relevant part of the Pipeline Licence area.

The Court then considered what percentage reduction should be applied to the freehold value to take into account the nature of the native title rights and interests in this case. It said that this required an evaluative judgment of the comparative limitations on the non-exclusive title relative to a full exclusive native title and noted that the value of the non-exclusive rights in Timber Creek was 50% of freehold value.

The Claim Group's native title rights and interests are non-exclusive because the right to exclude others was extinguished by the grant of historical pastoral leases prior to the time of the compensable acts (which was also the case in Timber Creek).

However, unlike the situation in Timber Creek, under their native title determination it was open to the Claim Group to be accompanied by others onto the land as required by traditional laws and customs, and so there was a limited right to allow others onto the land. Further, the Determination recognised that the exercise of rights to use the natural resources of the land was not limited to domestic or traditional subsistence purposes but could include commercial purposes.

The Court held that the percentage reduction should be slightly less than that applied in Timber Creek because of these differences in the non-exclusive native title rights and interests in each case. It said at [806]:

To do otherwise is to pay insufficient regard to the great care taken by Claim Groups and the courts in assessing and recording the nature of native title rights and interests in consent determinations and contested determinations of native title. I do not consider the distinctions are significant, but I wish to reflect them in the assessment.

The Court assessed the economic value of the native title rights and interests at 55% of the freehold value. For the non-pastoral use permits, the Court applied a further 35% discount to reflect the short term nature of these interests.

Ultimately, this resulted in an assessment of compensation for economic loss for the compensable acts at $743,408.

Assessment of compensation for cultural loss

The Court found that, subject to the qualification below, the Northern Territory would be liable for $60 million compensation for cultural loss.

The Court began its consideration of cultural loss by noting that, in light of the High Court's decision in Timber Creek, it was not in issue that compensation for cultural loss was to be assessed as a monetary figure arrived at from a social judgment about what the Australian community, at this time, would consider to be an appropriate award for what has been done.

The Court's task was to address what figure was appropriate, fair or just.

The parties agreed that the guiding principles relevant to the assessment of cultural loss under s 51(1) of the Native Title Act provided by the High Court in Timber Creek should apply in relation to compensation for cultural loss payable under s 4B of the Project Act. This was so despite textual differences between the respective provisions.

Over 90 pages of the judgment, the Court took into account the following in assessing cultural loss:

• the nature of the Claim Group's connection to country;
• the effect of compensable acts on connection to country;
• prior diminution of native title rights and interests;
• environmental impact;
• temporal limits – ie the extent to which there should be a reduction in compensation to reflect the finite nature of some of the compensable acts and the effect of the non-extinguishment principle (eg for the mineral leases);
• geographical issues (eg only part of the project area was fenced off to prevent access);
• protection of sacred sites and AAPA-conducted consultations;
• the relevance of agreed benefits as informing the assessment; and
• the risk of double recovery ie because compensation would be payable for future mining leases.

Calculating the dollar figure for cultural loss

The Court's task was not assisted by the disparity in the parties' submissions about the appropriate amount. The Claim Group submitted that the amount should be no less than $225 million and the Northern Territory submitted that the amount should be no more than $10 million.

The Claim Group put forward a mathematical comparison with the figure awarded in Timber Creek. On their methodology, on relative areas of affected country, an equivalent amount for cultural loss in this case would be in the order of $133.79 million. They then submitted that the cultural loss was greater in this case because of the greater impact on Dreamings, the landscape and ability to access sacred sites.

The Court accepted that the exercise undertaken of applying a rate per hectare provides a form of check on parameters, but it must be approached with caution. It held that cultural loss is not dependent upon size. Size is relevant in that substantive infrastructure is likely to be undertaken on larger tracts of land. However, if there had already been development in the area, there may already have been a diminution in the sense of connection. On the other hand, land may be remote with a strong sense of uninterrupted connection maintained.

Depending on location, there may be more sacred sites and Dreaming paths affected on larger tracts of land, and other more far-ranging impacts. On the other hand, there may be a concentration of sacred sites and cultural law associated with a small area, and minimal connection with a large area. The focus must remain on the compensable acts and their effects on the particular native title rights and interests, and the task of recognising such effects in terms of compensation.

The Court ultimately assessed cultural loss at $60 million (subject to the effect of the ILUA – see below) for the following key reasons:

• The Australian community would readily accept that the impact of the compensable acts in this case greatly exceeds that considered in Timber Creek.
• The quantum must reflect and recognise the very real impact of the compensable acts on the Claim Group over a long period of time. The effects have been ongoing, and in some regards escalating, since 1993. Their effect has not dissipated over time. The impact will continue.
• The nature of the Claim Group's connection to country is complex and founded in Dreamings. There is a wealth of sacred sites and Dreamings centred around those areas.
• The compensable acts that give rise to the most significant cultural loss are the grants of the mineral leases that facilitated the development of the mine and the port.
• The Court took into account the presence of the cattle station and the limited drilling and mining initiatives in the mine area prior to the compensable acts. However, the diminution of native title rights and interests prior to the compensable acts was limited, particularly in the mine area, where Claim Group members were still able to move around freely and exercise their custom and law.
• The effect of the compensable acts is significant and ongoing. The Court said (at [1405]):

The impact in the mine area is striking. It is not only the irreversible cutting of the Snake and the disturbance of its home and route that has caused cultural loss, but the inability of the Claim Group to stop that course or to continue to protect the Dreamings by accessing the sites along their routes. It is the inability to access those areas in a manner that permits the continuation of knowledge and customs between generations. It is the inability to access the fenced sacred sites, albeit that they may be protected from physical harm by the fencing. It is the limitation on caring for country and attenuation of such knowledge and customs over time, and the cultural sensitivities that flow from what is regarded as a failure to undertake these obligations. It is the ongoing impact of anticipating harm and sanctions from failure to look after country.

• Even though supervised access to certain areas within the mine fence is permitted by the mining company from time to time, it is not possible to properly exercise aspects of culture when being watched, and because the area has changed. Even where access was permitted, there was a sense of failure or an inability to speak for country.
• Witnesses felt shame and a sense of guilt about what had happened to country and its impact, both spiritual and physical. Even though it was the mining company that built the mine, some of the members of the Claim Group feel blamed by others for what has happened.

Impact of earlier agreements and the 2025 ILUA

In December 2025, the Claim Group and the mining company entered into an Indigenous Land Use Agreement (ILUA) that provided for certain benefits to be paid to the Claim Group. The Court held that some of the benefits under the ILUA affected the assessment of cultural loss for which the Northern Territory is liable and applied a 10% reduction to the sum of $60 million.

Accordingly, the final cultural loss was assessed at $54 million.

This is the first time that a court has been required to consider the extent to which there should be a reduction in compensation to reflect benefits already received by a Claim Group in relation to the compensable acts.

This is an important issue for both:

• Governments, who are generally liable for native title compensation under the Native Title Act; and
• Proponents, who are generally the entity that has provided the relevant benefits under project agreements. Proponents are also exposed if the Government's liability is passed on to them contractually or by legislation.

The Northern Territory submitted that the compensation award should be reduced to take into account benefits already received in relation to the compensable acts. The rationale was that benefits received inform the loss that remains to be compensated. It assumes that the benefits are directed towards the same loss that is said to be payable by the Northern Territory.

The Court considered the legal principles governing double compensation and the appropriate approach in this case. The Court held that this was not a standard case of double compensation - the circumstances are specific. Only the Northern Territory has a statutory liability to pay compensation to the Claim Group for the diminution of native title rights and interests caused by the compensable acts. There was no suggestion by the Claim Group, nor the Northern Territory, that the Claim Group had a cause of action against the Commonwealth or the mining company for such loss.

The Court considered three agreements that provided benefits to Traditional Owners in relation to the Project but found that only the December 2025 ILUA was relevant to cultural loss.

The ILUA provides for the Claim Group to support the Project (including consent to mining rights) and for the mining company to create a benefits trust. The ILUA provides that the benefits payable under it are in full and final satisfaction of the mining company's compensation liability, but that nothing in the ILUA limits the Claim Group's rights to seek compensation or damages from the NT Government or the Commonwealth, including in this compensation claim.

The Court held that the commercial purpose of the ILUA was to facilitate the future of the project by cooperation between the mining company and the Claim Group, and to discharge the mining company's liability in respect of acts or activities that are undertaken on or after the date of the ILUA. It said that "whilst there is no doubt the Claim Group stand to receive significant funds in the future under the ILUA, the particular benefits referred to in this section that are sufficiently connected to amelioration of the effects of the compensable acts on cultural loss are the payments relating to the keeping place and establishment and support of the Gudanji Rangers." On this basis, the amount for cultural loss was reduced by 10% to acknowledge these benefits.

The Court considered the purpose and beneficiaries of the other two agreements and found that the benefits provided were not relevant to cultural loss for the compensable acts.

Key insights

The McArthur River $54 million cultural loss award dwarfs the $1.3 million awarded for cultural loss in the High Court's landmark Timber Creek decision. It reflects the very significant impacts of the mine (including the deviation of the McArthur River) and port on the native title holders' connection to country and the irreversible disturbance of Dreaming sites and routes. It also reflects the fact that the native title holders' ability to exercise their native title rights and interests was relatively undisturbed until the Project began in 1993 (notwithstanding the history of pastoral leases and exploration in the area). Although this scenario is by no means unique, the award is not necessarily a benchmark for cultural loss in other parts of the country.

The Federal Court applied the Timber Creek principles to calculate the economic loss and interest component of the award, and these amounts are not surprising or controversial. The Court's careful consideration of the non-exclusive native title rights and interests in this case to award 55% of freehold value (instead of Timber Creek's 50%) shows that each claim will be considered on its merits.

This was the first time that a court has been required to consider the extent to which compensation should be reduced to reflect the finite nature of the compensable acts and the effect of the non-extinguishment principle. The Court's refusal to consider anything other than a "small reduction" acknowledged that the compensable acts (particularly the mineral leases) had in part, but not fully, permanently suppressed the exercise of native title rights and interests. This will not be the case for all acts to which the non-extinguishment principle applies but will likely be the case for many other long-term mining projects.

This was also the first time that a court has considered environmental issues in assessing cultural loss. Their impact was outweighed in this case by other issues, but this issue is likely to be raised again in other cases.

The Court's reasoning on economic and cultural loss was very similar to the reasoning in Yindjibarndi Ngurra Aboriginal Corporation RNTBC v State of Western Australia (No 2) [2026] FCA 585, which was decided shortly after McArthur River. See our Native Title Year in Review 2025-2026 article "Federal Court creates more precedent for native title compensation", for more information about that decision.

The Court's reasoning for its rejection of the Claim Group's hypothetical voluntary bargain argument was compelling, and based on similar reasoning to that in Yindjibarndi. However, appeals have been filed in Yindjibarndi so the Full Federal Court will ultimately determine the correct method of assessing economic and cultural loss.

The Court's consideration of the extent to which there should be a reduction in compensation to reflect benefits already received in relation to the compensable acts is highly significant. It is clear that the Courts are willing to look into the details of existing agreements (including the beneficiaries) to determine whether they are truly designed to provide compensation for economic or cultural loss. This issue will become even more relevant in circumstances where a State has passed on compensation liability to proponents.

Want to know more?

• Federal Court creates more precedent for native title compensation (30 October 2026)
• Glacial progress of developments in native title compensation (9 September 2025)
• Native Title Year in Review 2024-2025 (9 September 2025)

Authors: Tony Denholder, Partner and Leonie Flynn, Expertise Counsel.