Shenhua Watermark coal mine negotiation silence is deafening

Last August, the government said it was negotiating with the Chinese company to excise the parts of its coal mining title that fell on strategic farming land, in a bid to protect the black soil of the Liverpool Plains.

There has been no activity on the 19,500-hectare site, as the company waits for the government to consider its application for a renewed exploration licence, which expired in February, 2016. 

However, Shenhua recently advertised for an exploration management team, which led many to believe the government is close to renewing its licence.

The NSW government gave no insight into how the negotiations were going, other than to say they were “complex”.

Lock the Gate Alliance spokeswoman Georgina Woods said the rumours had reignited the long-held fears of the Liverpool Plains farmers.

“There is still quite a bit of work that needs to be done before a sod is turned, so that is some small comfort for the community,” she said.

“But the threat of open cut coal mines on the plains will continue while ever the government allows exploration licences to be rolled over.

“We need decisive act from the NSW government to make those sorts of farm lands off limits to mining entirely.” 

Tim Buckley, director of the Institute of Energy Economics and Financial Analysis and an expert on the financial side of the energy industry, can see several reasons why the mine won’t go ahead.

“The forward price of thermal coal is now below US$67 a tonne, so the project makes no financial sense in the new market environment we face,” Mr Buckley said.

“And Shenhua is busy contemplating one of the largest energy company mergers in world history. I doubt Watermark features high on the board’s priority list.

“Finally, China continues to do incremental law changes to reduce thermal coal dependence, and to move away from coal overall.”

But Ms Woods said there was no reason to be complacent.

“People said the Maules Creek mine would not be economic or profitable – now that it’s up and running, it’s making a profit,” she said.

“We shouldn’t put the fate of the plains into hands of a company like Shenhua and hope it decides it’s not in its interest to mine.”

Ms Woods also pointed out the state government had the ability to cancel the licence at any time, at no cost, as more than eight years have past without the company commencing “substantial development” on the site.

“It is under no obligation to renew the licence,” Ms Woods said.

“It has the power and the opportunity to simply say ‘no’ to that mine, and that's what they ought to do.”

Shenhua was approached but declined to comment.

Questions

1) Are the negotiations with Shenhua still ongoing, or have they been stopped?

2) The Leader has been told the negotiations had an expiry date of June 30. Is that correct?

3) Is the government close to reaching a decision about Shenhua’s application to renew its licence?

4) Is there anything else you wish to add?

Response

The NSW Government is committed to protecting the strategic agricultural land of the Liverpool Plains.

The Government's negotiations with Shenhua are to ensure this outcome. These negotiations are complex and an announcement of the outcome will be made when final agreements are complete.

The renewal is currently being assessed in accordance with the provisions of the NSW Mining Act 1992.