Queensland australia

In December 2013, Waratah Coal’s $6.4bn coal and rail project in Queensland was granted federal approval – much to the dismay of environmentalists and green politicians who believe that the development, which could become the largest coal mine in Australia, will endanger bird species and devastate the Great Barrier Reef.

But both Waratah Coal and the Queensland Government, which approved the project, insist that the rigorous environmental approvals process it has undergone means the economic benefits of the Galilee Coal Project more than outweigh the environmental damage it will cause.

The project is proposed to consist of a combination of open cut and underground mining and will produce 40 million tonnes of thermal coal per year (Mtpa) over an expected life of about 30 years. The mine will be linked to the Abbot Point coal terminal near Bowen by a new 453km heavy haul railway line.

It’s not the only project of its kind in the region. In fact, there are currently three coal projects in the Galilee Basin that have received both state and federal government approval after an average assessment period of four years: Alpha Coal (GVK Hancock), Kevin’s Corner (GVK Hancock) and Waratah Coal’s proposed development.

"The Newman government is committed to help open up the Galilee Basin to mining to grow the resources pillar of the Queensland economy," said Queensland’s Deputy Premier and Minister for State Development, Infrastructure and Planning Jeff Seeney. "Proposed projects for the basin have a total forecast investment of $28.4bn and could provide more than 15,000 jobs during construction and over 13,000 jobs during operation."

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By GlobalData

Former CEO of Fortescue Metals, Andrew Forrest, has promised to provide Pakistan with new mining technology in exchange for tougher laws on slavery.

Waratah Coal’s project will be a huge contributor to these overall figures. "Establishing Waratah’s Galilee Coal Project (Northern Export Facility) and associated infrastructure, which will include a 40 Mtpa mine, 400 Mtpa rail and 240 Mtpa port, will create 6,000 jobs during construction and 2,460 jobs during operation in a massive boost to the local, regional, state and national economies," explained Waratah Coal’s managing director Nui Harris.

Environmental conditions: stricter than necessary

But the enormous project is not without its drawbacks, as environmental campaigners and green politicians have been keen to stress, stating that the mine and its rail link will threaten endangered bird species and destroy part of the 8,000 hectare Bimblebox Nature Refuge (BNR). The Australian Greens have also said that it is one of two major mining projects approved in Queensland that will devastate the Great Barrier Reef, underground water supplies and the environment.

According to Harris, though, protection of the Great Barrier Reef and offsetting the damage done by destroying part of the BNR will be key priorities for Waratah Coal."Protection of the Great Barrier Reef is at the forefront of Waratah’s management plans, which include containment structures at mine, rail and port facilities stopping sediment from leaving site," he noted. "As a first, Waratah will cover rail coal wagons, preventing coal dust spreading into the atmosphere and surrounding water ways."

Moreover, the project was only approved with the condition (along with 48 others) that Waratah Coal finds an offset area of at least the size of the BNR and of equivalent or higher ecological value.
Seeney, however, was keen to stress that this is over and above what is actually required by law. "The BNR provides a lower order of protection than other conservation estate categories such as a national park," he explained. "The legislation supporting a nature refuge declaration does not rule out the right to explore or develop mineral and petroleum gas resources. This condition has been placed on the proponent even though state and federal government offset policies do not require proponents to offset the loss of a nature refuge."

On balance, according to Seeney, the Queensland Government’s Coordinator-General decided to approve the project because he didn’t consider the values of the BNR significant enough to warrant disallowing the project to proceed, given its significant benefits to the state. "All environmental impacts have been addressed in the Galilee Coal Project’s environmental impact statement and the Coordinator-General’s conditions on the project will ensure its impacts are appropriately managed, mitigated or offset," he said.

"The legislation supporting a nature refuge declaration does not rule out the right to explore or develop mineral and petroleum gas resources."

The Australia Institute: economic worries

But it’s not just the possible environmental impact of the project that has been criticised by observers. In 2011, the Australia Institute released an analysis of the economic impact statement commissioned by Waratah Coal to help make the case for the mine, which showed that the project could cause significant job losses across other industries in Queensland.

"Employment in manufacturing will be reduced by around 2,000 and agricultural jobs will decline by around 200," confirmed Roderick Campbell, an economist at the Australia Institute, adding that this will drive up the exchange rate, albeit by a small amount.

Campbell also believes the project has additional risks. "All Galilee basin projects are marginal or worse at long term thermal coal prices," he explained. "That’s why they’ve never been developed. Over the last ten years coal prices have been up – so the projects are being proposed. But in the last year or so they’ve returned to more-or-less historical levels, so they’re in trouble. As Macquarie Bank has said, to develop these projects, you need to ‘ignore conventional economics’."

For Harris, however, a project of this size is essential for Australia. "It will provide a massive boost to our economy," he said.

And Seeney agrees. "The environmental assessment found that the project could lead to an increase in state economic output in excess of $5bn per annum as well as providing employment, businesses opportunities, increases in household incomes and increases in state and Commonwealth government revenues. "While there may be some flow-on changes to the Queensland economy, as is possible with any major project of this magnitude, the project is not expected to have any long term significant impact on other sectors of the economy."

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