One Step Forward, Two Steps Back

New coal mines in the Hunter Valley

23 new coal projects are proposed in NSW, with total production capacity equivalent to 15 Adani-sized mines. Ten Adanis’ worth of these projects are proposed for the Upper Hunter. Local and international factors mean not all of these projects can proceed. A moratorium should be placed on new coal approvals while a coherent regional planning framework is developed for the Hunter. This framework should be based around a world with net zero emissions in 2050.

The coal industry is currently proposing 23 new coal mines and mine extensions in NSW with a combined additional annual production of more than 155 million tonnes. This is equivalent to around 15 new Adani mines’ worth of output.

The rush to mine coal is accelerating, not slowing, as proponents scramble for approvals before a potential downturn in the market driven by climate action and cheap renewable energy. Eleven new coal projects were added to the NSW major projects list in 2020 alone, with annual capacity of nearly 70 million tonnes, far more than in preceding years.

In the Upper Hunter Valley, proposals for new projects have a combined output of 98 million tonnes per year, equivalent to ten new Adani-sized mines.

These proposals for major new coal mines in NSW, and in the Upper Hunter in particular, follow the doubling of production from 130 million tonnes in 2000 to 260 million tonnes in 2014. Governments and the coal industry expected this growth to continue, but NSW production peaked in 2014 and the boom is not coming back:

  • Existing coal mines are operating well below their approved capacity.
  • Plans to expand the export capacity of the Newcastle Port were scrapped in 2018, with the coal industry itself citing a lack of world demand for export coal.
  • Estimates of capacity required for the Hunter coal railways have been revised down.

The legacy of the boom lives on, however, in the approvals of existing mines and the new projects in the planning system. Current approvals could see over 165 million tonnes produced in 2030. For context, the Port of Newcastle’s record annual throughput is 165 million tonnes. It is simply incapable of exporting the coal from these new mines.

The case for new coal mines is, of course, undermined by increasing international climate ambition and continuing declines in the price of renewable energy. Put simply, world demand for coal is likely to fall not rise over the life of the new mines being proposed.

The local impacts of coal mines are inadequately considered. The vast majority of NSW coal production either occurs in, or is transported through, the Upper Hunter region which already has some of Australia’s most polluted air. The likely failure to rehabilitate existing and proposed mine sites to anything like their original condition will deliver lasting scars on the Upper Hunter, reduce the ability of the agriculture, wine, equine and tourism industries to grow, and potentially leave significant liabilities for the NSW Government.

The scale of new mine proposals, and the subsequent noise, air and water impacts, not only imposes significant ‘external costs’ on other industries and residents but acts as a deterrent to potential investment. Even mines that do not go ahead can stop investment in other industries on nearby land for decades.

While the proponents of each new coal project make optimistic claims about how their project will deliver a significant increase in coal exports, royalty revenues, and employment, it is clear that all of these claims cannot simultaneously be true. With flat or falling world coal demand, no plans to expand the volume of coal exports the Port of Newcastle can handle, and no likelihood of new coal fired power stations being built in NSW there is simply no market for, nor transport infrastructure to market, an enormous increase in new coal production in NSW or the Upper Hunter Valley. Building new coal mines when existing coal mines are under-utilised increases disruption to the existing workforce and imposes additional external costs on other Hunter Valley landowners and communities.

Despite the constraint on world demand, the local constraints on export infrastructure, and the cumulative impact of so many new mines on local air, water and biodiversity, the NSW Department of Planning, Industry and Environment oversees a process in which each mine is evaluated separately rather than evaluated within a coherent regional framework.

Given the combined scale of the proposed new coal projects, the current state of national and international climate commitments, and the risks to the Hunter Valley of building new mines in the short term that cannot deliver benefits in the long term, this paper concludes that the NSW Government should introduce a moratorium on new coal mine projects until it has undertaken a cumulative assessment of the economic, environmental and social consequences of pursuing so many new coal projects at this point in history. Regional planning is required if strong economic, social and environmental outcomes are to be delivered. The number and scale of the proposed new coal mines, combined with the impact that each mine has on the potential for other industries to develop, ensures that a system based on case by case approvals cannot possibly deliver a coherent, efficient, or equitable outcome for the Hunter Valley or other coal mining areas of the state.

The paper also recommends that the NSW Legislative Council to conduct an inquiry into:

  1. The adequacy of the existing system of rehabilitation bonds for coal projects in light of the unique financial and environmental risks faced by the coal industry.
  2. Whether and to what extent the companies bearing rehabilitation obligations have the financial capability to meet those obligations and whether that capability is being monitored by the Government during the course of the mine’s life.
  3. Whether those companies have a history of responsible stewardship of natural resources and can be regarded as being fit and proper to fulfil the obligations imposed on them with respect to remediation
  4. The quality of rehabilitation that has been conducted at coal mines in NSW to date.
  5. Whether the rehabilitation standards and obligations which have been imposed in the past and which are being imposed today represent world’s best practice.
  6. The potential land uses for sites that have been remediated.

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