Opponents of Shenhua-Watermark's mega coalmine in the Liverpool Plains in north-western NSW have been given a boost by the Chinese government-owned company's annual report released on March 24, which hinted it may not proceed.
Shenhua said: “Global demand for coal is expected to manifest a downward trend in 2016.”
Whether Shenhua is rethinking the $1.2 billion mine is not clear. But its report gives ammunition to the growing opposition to the 35-square kilometre open-cut coalmine in one of Australia's most agriculturally rich farming areas.
Federal environment minister Greg Hunt approved the mine last July. Seven years previously, the then-Labor state government sold Shenhua an exploration licence for $300 million. However, the government has yet to grant Shenhua a lease to operate the mine.
The company report highlights that there is no end in sight for the global economic downturn and the worldwide coal glut. Financially, it makes little sense to proceed with the mine.
Even last August, Tim Buckley of the Institute of Energy Economics and Financial Analysis, told the Guardian “The commercial logic has gone out the door”.
He added that Shenhua had not imported coal for two years, and had closed some of its Chinese mines. China accounted for 51% of world consumption of coal in 2014 but its consumption had decreased since then.
He said that the Watermark management would be evaluating the merit of continuing with the project, adding: “Watermark remains a battle between saving face and protecting their equity capital”.
Apart from the commercial pressures on the company, political factors are weighing on the NSW and federal governments. There is broad opposition from regional city dwellers and farmers, many of whom would once have been Coalition supporters.
An independent ReachTEL survey, commissioned by The Australia Institute on March 10, showed 62% of electors oppose the mine. Just 26% support it going ahead.
Adding to the federal government's headache is that the megamine happens to be located in the New England electorate of newly-installed Nationals leader and Deputy Prime Minister Barnaby Joyce, who is facing a fight for the seat from popular independent Tony Windsor.
While Joyce has always stated his opposition to the mine, he has not lifted a finger to build the opposition. Windsor, by contrast, is known as a campaigner. He decided to re-enter the election contest recently, stating explicitly that the fight against the Shenhua-Watermark mine was the propellant.
The other problem for Joyce is that his federal and state Coalition government counterparts remain firmly committed to assisting the coal and unconventional gas industries — regardless of environmental, scientific and community objections.
Now, following Shenhua's statement, the March 29 Sydney Morning Herald reported on speculation that some sort of facesaving deal is being negotiated to allow Shenhua to exit from the Liverpool Plains.
Presumably, part of both governments' calculations is to help Joyce retain the seat for the Coalition in the upcoming federal election.
The deal being offered to Shenhua apparently involves the Mike Baird government reimbursing the multi-billion dollar mining giant its original $300 million in licence fees.
Baird has a track record in compensating wealthy mining companies for their failed projects. His 2015 NSW Gas Plan compensated several unconventional gas mining giants whose licences were cancelled after he realised the political price would be too high if he didn't act.
Fossil fuel corporations are one of the biggest welfare beneficiaries in this country. More than $10 billion in tax breaks and credits are handed over each year to polluting companies that do not have a social, let alone an environmental, licence. At least $5 billion, is spent on the diesel fuel rebate — allowing the rich mining companies tax-free fuel.
Greens mining spokesperson Jeremy Buckingham wants Baird and Joyce to “actively negotiate an exit strategy for Shenhua to hand back their coal exploration licence over the Liverpool Plains”.
“Barnaby Joyce has failed to use his significant power as Deputy Prime Minister and Agriculture and Water Minister. Unless he can negotiate a swift and fair exit for Shenhua and save the Liverpool Plains, the voters of New England should throw him out”, Buckingham said on March 29.