Environment

Mike Baird changes tack on coal as NSW starts to prepare for industry's decline

The government has met with a series of anti-mining activists amid slumping industry fortunes, apparently making good on a pledge to give more equal weight to environmental and social issues when considering mine approvals.

The conciliatory approach with activists comes at a crucial time for the coal mining industry, with Premier Mike Baird's government considering approvals to mine 1.2 billion tonnes, after approving 1.8 billion tonnes of new coal mining since he became premier.

On Wednesday and Thursday senior officials were dispatched on a road trip to hear concerns of anti-coal activists.

Deputy secretary Simon Draper and executive director Liz Livingstone, both from the Premier's department, and a policy officer spent two days hearing from farmers, winemakers and other groups opposed to coal mine expansion.

The tour adds to signs that the push to develop coal mines is stalling, and may even face stiff new regulation.

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Officials are quietly seeking more accurate readings of the future of coal mining amid a slump in prices and demand.

Poor market conditions are likely to force companies to scale back plans or sell assets.

It is understood moves are afoot to impose tighter controls on coal mining in the so-called Special Area of the Sydney catchment.

The tour, organised by environmental campaigners Lock the Gate, included Newcastle, Bulga, and the Liverpool Plains before ending in the Pilliga where coal seam gas is also a contested issue.

"We gave them a great deal to think about," said Rosemary Nankivell​, chairman of the SOS Liverpool Plains group, who met the officials at Breeza on Thursday. "It's very significant that it's someone from the Premier's office rather than the usual rabble."'

'Nothing unusual'?

The visit to anti-mining groups follows the creation by the Premier's office in November of a taskforce to reduce conflicts between communities and resource use. The trip was "nothing unusual" as officials regularly seek a range of views, a spokeswoman said.

Others, though, take a different view, including John Krey, who heads the Bulga Milbrodale Progress Association and met the group in Bulga on Wednesday.

"They were not visiting any mining facility, they were not meeting any mining companies – the Minerals Council will probably not be happy," Mr Krey said.

The council, headed by Stephen Galilee, a former chief of staff for Mr Baird, was not given prior warning of the tour.

"We would expect the same officials to want to visit mine sites and meet with mine workers and local suppliers as part of their duties in relation to these issues," Mr Galilee said.

NSW Greens mining spokesperson Jeremy Buckingham said it was urgent the government recognised "coal is in inexorable decline" and it drafts "a strategy for a managed transition, rather than allow a chaotic collapse".

"The Baird government's approval of 1.8 billion tonnes of coal mining in less than two years is reckless in an age of climate change," he said. 

"With 1.2 billion extra tonnes of coal awaiting approval, including controversial mines on the Liverpool Plains, Bylong Valley and Southern Highlands, Premier Baird must recognise that enough is enough."

Adam Searle, Shadow Minister for Industry, Resources and Energy, said Labor supported transparent planning process for all land use: "This is something the O'Farrell and Baird Governments abandoned for a number of years."

Caroona question

When it comes to shelving mines, one candidate is understood to be BHP Billiton and its proposed 10 million tonne a year thermal coal mine at Caroona – one of the regions visited by the Draper team.

BHP denied it is planning to hand back its licence. The company "continues to progress the approvals process" and is finalising work for the start of its environment impact statement, a spokeswoman said.

Treasury, meanwhile, has once again had to slash its forecast for mining royalties, slashing the expected take by $129 million for the current fiscal year, according to its mid-year update. The reduction swells to $373 million by 2018-19. (See chart below of Treasury forecasts:)

'Profitless prosperity'

The industry's growth looks to be stalling. Coal exports volumes – about 80 per cent of which are bound for power plants and the rest used to make steel – rose every year in the last decade – doubling since 2000 – but fell 1 per cent last year, according to energy analyst Tim Buckley.

Mr Buckley, a former Citi analyst and now with the Institute for Energy Economics and Financial Analysis, said NSW is not alone – joining Queensland and federal agencies among others – in reviewing mining's prospects.

"The government in various areas is finding the historical way of doing things is not working," Mr Buckley said.

The Minerals Council said the overall mining industry contributed about $21 billion to the state last year, including $1.27 billion in royalties, and employs 35,000 directly and indirectly.

The council pointed to a report by the International Energy Agency last year that projected continued growth for the industry, with Australia set to overtake Indonesia as the world's biggest coal exporter.

Mr Buckley, though, said a bigger market share would be a poor guide of the industry's health.

"This is profitless prosperity," he said. "The average mine is making no money."

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