Feb. 15, 2013, 10 p.m.
THIS week's decision by federal Environment Minister Tony Burke to approve the Maules Creek open-cut coalmine in north-western NSW has created a firestorm of controversy.
Mining company Whitehaven Coal says it is pleased it can finally get on with the job of mining the area, but environmentalists are vowing to continue fighting an operation that has come to symbolise the battle over mining's place in society.
Looking behind the headlines, it is worth remembering that mining has been planned at Maules Creek since the 1970s, and an open-cut mine was approved there in June 1990.
Had the mine started then, the federal government would not have had a hand in its approval because the legislation giving Burke the power to intervene - the Environment Protection and Biodiversity Conservation Act - only came into being in 1999.
Land-use approval, mining or otherwise, is fundamentally a state government responsibility and the new plans for Maules Creek were approved in October last year with a typically long list of environmental and operational conditions.
The mining industry tends not to complain about these conditions but there is no doubt they add substantially to the cost of production of an industry competing in a global market.
But as critics of the system point out, how stringent can these conditions be if they allow open-cut mining in a state forest?
For all the talk in the Independent Commission Against Corruption this week about secretive and confidential mining areas, the various mining leases and exploration areas that cover most of NSW can be downloaded from the NSW Department of Trade and Investment website.
The broad thrust of the state's coal seams has been known since the 19th century, with broad areas of former seabed running from coastal Newcastle north-west to Gunnedah and on past Narrabri.
The NSW Minerals Council says mining began at Gunnedah in 1889 and, although production has been modest until recently, it holds an estimated 1.5 billion tonnes or about 13 per cent of the state total.
A handful of small mines operated in the area throughout the 1990s, but things changed in the early 2000s when BHP Billiton offered the state government $100 million for the Caroona exploration area, south of Gunnedah. Two years later a Chinese-government-backed company, China Shenhua, pledged $300 million to look at the nearby Watermark area, near Breeza.
Both companies have agreed to pay substantially more if their mines go ahead, and Shenhua lodged a new development application with the government in October last year that values the Watermark project at $844.6 million.
THE main limitation with mining beyond Gunnedah has always been the rail link to Newcastle, more than 350 kilometres away on the coast.
The sheer distance adds cost in itself but the main barrier is the Liverpool Ranges, a winding and sometimes steep section of single track that requires the use of extra "banker" locomotives to push laden coal trains over the worst of the inclines.
The federal government's Australian Rail Track Corporation, which operates the state's coal rail network, said plans for a better crossing had been on the books for more than 80 years.
Plans for major new tunnels through the area have been put to one side and the rail corporation has instead begun a program of passing loops and "progressive duplication".
The rail corporation says it recoups the cost of its operations from access charges to coal companies, and it is confident the staged improvements will ensure the rail keeps pace with the mines at one end, and the port of Newcastle at the other.
Rio Tinto had held Maules Creek for nine years when it sold it in November 2009 to Nathan Tinkler for $480 million at the height of the global financial crisis.
The market thought Rio had secured a very good price at the time but it was valued at $1.2 billion less than a year later in August 2010, when Tinkler floated the company that owned it, Aston Resources, on the stockmarket.
In October 2010, Aston announced the sale of 15 per cent of Maules Creek to Japanese power company Itochu for $345 million - valuing the company at $2.3 billion.
In March 2012 it sold a further 10 per cent to another Japanese company, J-Power, for $370 million, valuing the whole company of $3.7 billion, or nearly eight times what Rio had sold it for less than three years before.
Much of the higher valuation came from big increases in coal prices but exploration also showed Maules Creek had better quality coal - and more of it - than was first thought.
With so much riding on its development, Maules Creek became a lever in the industry's battle for space at the various Newcastle coal loaders.
In 2011, Tinkler asked for state government approval to build his own coal loader on the former BHP steelworks site, but the plan was formally rejected a few weeks after Tinkler and another Gunnedah coal company, Whitehaven, announced a $5 billion merger of their assets and operations.
Things have not gone so smoothly since then - Tinkler's relationship with the company's senior executives has soured dramatically - but Maules Creek and Whitehaven's other assets, including 70 per cent stakes in Narrabri North underground and the Tarrawonga open-cut, mean the company is still valued at about $3.5 billion.
Maules Creek is a big mine - although by no means the biggest in the region - and analysts say it accounts for about 40 per cent of the valuation put on Whitehaven.
The delay in approving the mine has added to its development costs, which have almost doubled from an original estimate of $450 million to the most recent figure of $766 million.
Aston Resources lodged its application for Maules Creek in August 2010 and the mine was approved in October 2012 after an investigation by the Planning Assessment Commission.
Submissions during the public hearing raised many concerns about environmental impacts, but also indicated that mining had brought substantial economic benefits to the region, the commission said.
Maules Creek would clear 1165 hectares of native vegetation, including 754 hectares of critically endangered box gum woodland.
But the commission found that "on the whole, the project has merit".
Because Maules Creek and extensions to the adjacent Boggabri open-cut were deemed to have a "significant impact" on the environment, they also needed consideration under the federal Environment Protection and Biodiversity Conservation Act.
It was while waiting for this approval that Newcastle environmental activist Jonathan Moylan hit upon his publicity-generating scheme to publish a fake media release claiming that ANZ had withdrawn $1.2 billion in funding to Whitehaven, money destined at least partly for the Maules Creek project.
AT Narrabri, mayor Conrad Bolton says the mines are a big win for the community and a comprehensive state approvals process means the environmental issues have already been "well covered".
Maules Creek Community Council spokesman and farmer Phil Laird said Narrabri council had a conflict of interest due to the $13 million or more it was set to receive from a voluntary planning agreement signed with Whitehaven, but Bolton denied this.
He said he had faith in the mining companies' abilities to clean up after themselves.
Others are not so sure.
Opponents of the mine have pledged a legal challenge to Burke's federal approval, although Laird said the state government's cuts to funding of environmental court cases meant more of the money would have to come from the community.
Responding to Burke's approval, Whitehaven chief executive Tony Haggarty said Maules Creek was one of the "most viable coal development projects in the world".
State approvals allow Maules to produce 13 million tonnes of raw or "run of mine" coal a year until 2034 but Haggarty said there was enough coal to run it for more than 30 years.
He expected mining operations to start from mid-2013, with full production reached from mid-2016.
At current prices, Maules Creek's coal could easily fetch $1 billion a year, while providing employment for an estimated 470 people.
But to the environmentalists and farmers who object to the project, none of this will compensate for the damage they see already inflicted in other areas by widespread open-cut mining.
When Laird says he does not want to see his area become the next Hunter Valley, everyone knows exactly what he means.
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