By MERRILL WITT
At the recent Independent Planning Commission’s hearings for the proposed expansion of the Dendrobium underground coal mine, Wollondilly Councillor Noel Lowry expressed disbelief that the Government was prioritising urban development over mining in coal-rich, semi-rural Wilton while at the same time allowing the expansion of coal mining under the Sydney Water Catchment.
“This is a discussion I just find intangible,” he said.
Councillor Lowry is not the only one to be bewildered by the Department of Planning, Industry and Environment (DPIE)’s recommendation to approve South32 Limited’s development application for the extraction of an additional 78 million tonnes of metallurgical coal from two new mining areas in the Special Areas of the Water Catchment.
The Project will extend the life of the Dendrobium Mine, just 8 kms west of Wollongong, to 2048.
Water NSW opposed to expansion
WaterNSW, the independent government agency tasked with maintaining and protecting Sydney’s 16,000 sq km Water Catchment, has been outspoken in its criticism of the Project.
WaterNSW’s Manager of Catchment Protection, Clay Preshaw, told the Commissioners that South32’s “project is predicted to double, or just over double, the amount of water losses that are already occurring from the existing mine”, accounting for “10 of the 13 megalitres a day of water loss from all mining in the Special Areas.”
The scale of the water loss alone, he said, is “justification for why we consider the predicted losses from this project to be unacceptable and that we think that they could be avoided or minimised,” further commenting that in a period of drought, which is relevant “in the context of climate change,” the reduction in surface water could amount to 3.9% and 2.9% of total flows in the Avon Reservoir Catchment and Pheasant’s Nest Catchment respectively.
The Special Areas are protected, pristine expanses of bushland near the main reservoirs. They are home to upland temperate peat swamps, which are listed as threatened ecological communities and considered vital buffers for the protection of Sydney’s water.
According to Duncan Rayner, the principal engineer at the UNSW Water Research Laboratory, the swamps “act like a sponge and a filter, releasing pure drinking water” into the Catchment.
Significant environmental impacts
The DPIE Assessment Report acknowledges that subsidence caused by the progressive collapse of the proposed 21 305-meter-wide, 1 to 2 km-long underground longwalls will cause surface cracking in 25 swamps.
“This may lead to vegetation changes to either a drier swamp community or in some places to a non-swamp woodland….putting them at greater risk of erosional scour and gullying or even burning out during bushfires in very dry periods,” the DPIE Report notes.
Despite DPIE’s candid assessment of the likely permanent damage to what could be described as an essential piece of WaterNSW’s infrastructure, it did not recommend modifications to the Dendrobium Mine’s original 2005 consent conditions which “provide considerable scope for maximising mining dimensions,” according to the Independent Expert Panel for Mining in the Catchment (IEPMC).
The IEPMC’s Review of specific mining activities at the Metropolitan and Dendrobium coal mines compared the performance measures for the Metropolitan Mine in the Woronora Special Area with the Dendrobium Mine.
It found that the Metropolitan Mine’s more stringent 2011 conditions, which include lower extraction heights, greater underground mine depths and a much narrower average width for the longwalls, contributed to less connective fracturing and an average water loss of below 0.5 ML a day versus 5 ML a day for the Dendrobium Mine.
Nevertheless, the DPIE relied on a report prepared by the private consultancy firm, MineCraft, to argue that “incremental reductions in environmental impacts as a result of narrowing longwall void widths would come at an unsustainable economic cost.”
It would lead to “lower and less efficient recovery of coal, higher operating costs for South32, a lower net present value for the Project and lower royalty income for the State,” the DPIE Report claimed.
DPIE’s Executive Director of Energy, Industry, and Compliance, Mike Young, was also somewhat dismissive of the Project’s predicted water losses.
“My understanding is it’s a very small proportion of losses associated with other things like evaporation from dams, leakage from pipes associated with Sydney Water infrastructure and so forth,” he told the Commissioners.
The DPIE believes that the $103.1 million South32 has agreed to pay for surface water loss over the life of the mine is reasonable compensation despite the IEPMC review cautioning that “limitations in monitoring and modelling mean that it is still difficult to verify conclusions by some stakeholders that mining has had negligible consequences on surface water supplies.”
Mr Preshaw also explained to the Commissioners that when the Dendrobium Mine’s original consent conditions were granted “it was expected that next to no water would be coming from the surface,” but it has in fact been “increasing over time, as they change their groundwater model predictions,” he said.
Socio-economic benefits v.s. water security issues
Typically, the DPIE seeks concurrence for approvals from affected or responsible government agencies before finalising its assessments. For the DPIE and WaterNSW to still be at loggerheads over whether this Project should be approved is unusual.
The Commission now has the difficult task of deciding whether the socio-economic benefits of the Project outweigh its very significant environmental impacts.
At face value at least, the Project looks like it offers major economic and social benefits for Wollongong and the surrounding region.
An independent assessment by BAEconomics of the business ties between the Dendrobium Mine, the BlueScope Steelworks at Port Kembla and the Port Kembla Coal Terminal (PKCT) noted that BlueScope sources around 88% of its coking coal from the Southern Coalfield, with around 68% of that proportion coming from South32’s Dendrobium and Appin Mines. Around 70% of the coal shipped through PKCT is supplied by South32.
BAEconomics presented a dramatic worst-case scenario if the Dendrobium Mine expansion is refused, claiming that the loss of the Dendrobium coal exports will likely make the PKCT economically unviable and BlueScope uncompetitive because of the higher transportation costs associated with sourcing more coking coal from Queensland’s Bowen Basin.
Faced with this kind of dire warning, DPIE’s enthusiastic support for the Project is perhaps easier to understand?
But conversely, the DPIE’s Report fails to acknowledge the potential benefits to the Wollongong environment and economy from not having a polluting steelworks plant and coal terminal on the foreshore of its main beach.
The economic value of the region’s coal export and steel making industries is also not assessed against the obviously immense but unquantified economic and environmental value of the Sydney Water Catchment.
A submission from the Sutherland Shire Environment Centre, for example, highlighted that the Water Catchment is an integral input to the production of water for two of the largest State-owned enterprises in NSW – WaterNSW and Sydney Water.
“Water supply production is not only one of the largest government operations in the State, it is also an essential service without which the city of Sydney could not operate,” its submission notes.
Climate change implications
The DPIE Report acknowledges that the Project will contribute to an increase in greenhouse gas emissions but argues that there is “no current alternative to the use of coking coal for the large scale, economic production of iron and steel.”
While this statement is technically true, Australia is not in danger of running out of coking coal from other sources anytime soon. A 2018 report by Commodity Insights highlighted that the Bowen Basin is the world’s leading exporter of metallurgical coal and can easily meet expected rising demand in future years.
To further justify its decision not to oppose the Project on climate change grounds, the DPIE Report states that “current policy frameworks do not promote restricting private development” to meet “the long-term aspirational objective of the NSW Government’s Climate Change Policy Framework.”
The Commission will likely decide early next year about whether the fundamentally different land uses of coal mining and Catchment protection can continue to be reconciled in a way that will sufficiently protect the water security for the Illawarra and Greater Sydney region’s 5 million residents.
Hopefully, it will get this very important decision right!