The eight-year hitch: controversial Shenhua Watermark coal mine to pass kill date

The mine is opposed by green groups and National Party leader Barnaby Joyce. Photo: Andrew Meares The proposed site for the coal mine. Photo: Louise Kennerley


The disturbance area of the Shenhua Watermark coal mine is 1½ times larger than the City of Sydney. Photo: Fairfax Media

It has been 2916 days since controversial former state Labor minister Ian Macdonald issued China’s state-owned Shenhua a licence to explore for coal in Australia’s richest farming region, the Liverpool Plains, in return for a $300 million cash payment to the NSW government.

On Saturday, a key date – the 2920th day or eight years since the exploration licence for the Watermark mine was issued – will be tripped.

A clause in the original 2008 exploration licence allows for the state government to cancel the project after eight years if no “substantial development” of the mine has occurred.

Shenhua has spent more than $500 million on licences, approvals and the purchase of 40 properties but Watermark remains little more than the overgrown home to some grazing cattle, according to its nearest neighbour.

The mine is opposed by green groups and National Party leader Barnaby Joyce.

Three local groups fighting the mine have seized on the clause in the 2008 exploration licence and written to NSW Energy Minister Anthony Roberts asking the government to sink the controversial project once and for all.

“Shenhua’s exploration licence [2008] as renewed in 2012 stipulates that if the licence holder fails to commence ‘substantial development’ of a mine in the area within eight years of the grant of the original exploration licence, the mining minister has the power to cancel the exploration licence in accordance with Mining Act processes. The Mining Act makes it clear that the title holder is not entitled to compensation merely because the authority is cancelled,” the letter co-signed by SOS Liverpool Plains, Lock the Gate and Upper Mooki Landcare.

But Mr Roberts’ office has revealed to Fairfax Media that Shenhua has applied for an exemption to the kill date and the government is considering its request.

In August, the NSW government dispensed with another controversial Liverpool Plains coal project, BHP Billiton’s proposed Caroona mine, 20 kilometres from Shenhua Watermark after paying the company $220 million to buyback its $100 million exploration licence.

Premier Mike Baird said “coal mining under these highly fertile black soil plains …. poses too great a risk for the future of this food bowl”.

But any prospect of Shenhua walking away from the Liverpool Plains appear remote, despite the assessment of some mining economists that the mine has become commercially-unviable due to years of depressed coal prices.

Mr Roberts’ office said Shenhua had officially requested an exemption from the 2008 clause under a provision that allows the minister to extend the licence if there is a “reasonable excuse …. and intention to proceed with mine development”.

“The condition only allows cancellation of the licence if there are no reasonable excuses for not substantially commencing the mine development within eight years of the grant of the original exploration licence,” said a spokesman for Mr Roberts.

“The company has applied for a suspension of the condition, as the company contends it has made all reasonable efforts to comply with this provision, but has been prevented due to numerous legal and other regulatory interventions which are outside of its control.

“The Division of Resources and Energy is reviewing this application and will be providing an advice to the Minister. The Minister is yet to receive the advice; therefore no comments on the determination can be made at this stage.”

Mr Roberts’ office said the government remains in negotiations with Shenhua at excising parts of the mine title that encroach onto the strategic agricultural land of the Liverpool Plains.

But SOS Liverpool Plains spokeswoman Rosemary Nankivell said eight years was long enough for local farmers to live with the prospect of a mine.

“We’re over it. It’s been eight years, they are not doing anything and what gives them the right to hang around leaving everyone else in limbo while other major agricultural projects don’t go ahead because people don’t know if there’s going to be a mine here?” she said.

Cotton and wheat grower John Hamparsum, whose property adjoins the Watermark site said no major development or drilling had taken place.

“It’s just noxious weeds growing and some cattle on land that’s been leased,” he said.

Shenhua’s Australian office in Gunnedah did not return calls from Fairfax Media.

Jeremy Buckingham, the NSW Greens MP who has spent years on the fight against Shenhua, said: “The Shenhua Watermark coal mine is a reckless proposition in the middle of our most fertile farm land and the entire licence should be cancelled or bought-back, not just part of the licence.”

Mr Joyce has been asked for comment.

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