Nhulunbuy mine deal rips off public, wrecks environment

February 18, 2013
Refinery in Nhulunbuy.

Northern Territory Chief Minister Terry Mills announced a deal on February 8 to secure power for the Nhulunbuy bauxite mine and alumina refinery. The deal was hailed as saving the community through protecting the industry that provides it with half its jobs.

But the decision has disastrous environmental impacts and shows the lack of choices available to remote communities under the logic of the mining market. To survive, communities are asked to provide public funds to private companies to perform environmentally damaging activity.

Nhulunbuy, also known as Gove, is about 600 kilometres east of Darwin. The township itself is made up of about 4000 people; a further 16,000, mostly Aboriginal people, rely on the services provided by the town such as shops and a hospital.

Mining giant Rio Tinto’s alumina refinery and bauxite mine directly employ 1500 people and it is this industry that means this remote town has services like the hospital.

But it is an energy-intensive industry and Rio has been relying on trucked-in diesel fuel to power the industry. Representatives from Rio argued in October last year that this was too expensive and threatened to shut down the mine.

Mills secured a deal on February 8 to provide the mine and refinery with the gas necessary to remain in operation — at the taxpayer’s expense.

Mills told the NT News on February 11: “Today’s decision was an extremely important one for the Nhulunbuy community, and it should provide them with the assurance and certainty they have been seeking.

“The Northern Territory Government has now guaranteed a gas supply for the Gove refinery, and it is now up to Rio Tinto to make a commitment to keep the operation open.”

According to ABC online on February 8, Rio Tinto also wants the NT government to underwrite the $800 million necessary to build a 1000km pipeline from Wadeye to Gove to transport the gas.

Mills told the NT parliament on February 13 that would lead to a $1.2 billion project to supply gas to Gove.

On February 13, ABC News said the cost would be made up of about “$500 million in infrastructure upgrades to allow gas company Eni to move gas from the Blacktip field to Gove, $200 million for Pacific Aluminium to convert generators to gas... and $500 million to construct a gas pipeline.”

Mills has failed to get Rio Tinto to say how long it will keep the refinery open. "We need to keep the refinery going, we need to have our gas infrastructure increased," he told ABC online.

“If Rio, as they have already indicated, maybe some time in the future intend to sell, we will still have an operating refinery, we will still have gas infrastructure.”

NT Labor opposition leader Deliah Lawrie only opposed the scheme insofar as it took too long. “What we saw was Terry Mills putting a whole lot of furphies in the path of what is ultimately a full capitulation,” she told ABC online.

There are other reasons to oppose the deal. The Nhulunbuy mine and refinery are intensely environmentally damaging industries. Alumina refining is a very energy intensive process and the greenhouse gas emissions are high. Gas is hailed as a greener alternative to coal or diesel, but recent studies have shown that natural gas can be, in the short term, as devastating as other fuels.

The deal will cause a huge expansion of gas projects in the area.

Rio Tinto chief executive Sam Walsh said in a February 13 press release:
“Gas to Gove is not only important for the refinery and the community of Nhulunbuy, it is important to the entire Northern Territory.

“This project will double the size of the domestic gas market, drive further investment in gas exploration, increase long-term gas supply, attract new industries and create jobs for Territorians."

The project will use public funds to line the pockets of a mining giant at the same time that the NT government is asking NT residents to pay up to 40% more in electricity and water rates.

Is this the best way to spend public money?

Environment Centre NT (ECNT) director Stuart Blanch disagrees. On February 4, Blanch said: “I call on the Chief Minister to task the Major Projects Group of his department, plus experts in PowerWater and the Department of Mines and Energy, to compare life cycle costs and energy reliability of gas and renewable energy options for Gove.”

ECNT said a large solar and wind farm was proposed by traditional owners to power Nhulunbuy in 2010, equivalent to almost a quarter of the installed electrical generation capacity at Gove.

Blanch said: “The Territory Government, Rio Tinto and Nhulunbuy should look seek funding from the federal Australian Renewable Energy Agency, which wants to subsidise mines to replace dirty fossil fuels with solar and wind.”

At the moment, mining giants like Rio Tinto hold all the cards. The community have to choose between poverty and public funds going to private polluters. For a clean energy future like that proposed by the ECNT, their power needs to be broken and their resources put in public hands.

You need Green Left, and we need you!

Green Left is funded by contributions from readers and supporters. Help us reach our funding target.

Make a One-off Donation or choose from one of our Monthly Donation options.

Become a supporter to get the digital edition for $5 per month or the print edition for $10 per month. One-time payment options are available.

You can also call 1800 634 206 to make a donation or to become a supporter. Thank you.