Will villagers halt Australia's mining reboot?

A court is weighing the interests of mining companies – key to Australia's economic growth for two decades – against those of small communities that are concerned about environmental impacts.

By , Correspondent

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    Iron ore from Australia is unloaded at Tianjin Port, one of China's biggest ports for importing the commodity, in Tianjin municipality, in 2010.
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Behind John Krey’s homestead lies a wilderness of prehistoric pine trees, ancient Aboriginal rock art, and hidden valleys. So vast and rugged is the World Heritage-listed Wollemi National Park that in the late 1990s a group of hikers stunned botanists when they found a grove of a previously unknown species of conifer whose fossil ancestors date back to the early Cretaceous period, some 110 million years ago.

The view from his verandah in New South Wales sweeps across the Hunter Valley, famous for its vineyards, horse studs, and dairy farms. Mr. Krey spent years looking for a setting like this where he could build his own home and retire in peace.

It seems an unlikely spot for a David vs. Goliath showdown with a massive multinational corporation – at least, until Krey points to a gap in the trees revealing the sleepy nearby village of Bulga, and beyond that, clouds of dust rising as coal trucks the size of houses criss-cross the gray seams of the Mount Thorley Warkworth coal mine.

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Earlier this year, a judge stunned many in New South Wales, Australia's most populous state and one of its most productive mining regions, by ruling that London-based Rio Tinto could not extend Mount Thorley Warkworth's operations to within 1-1/2 miles of Bulga – population 350. 

Rio Tinto lodged an appeal in the state's Supreme Court this summer, arguing that the ruling set a precedent that could jeopardize other infrastructure projects. The decision, expected in November, is being watched closely both by an array of mining companies, key economic engines that now face rising production costs and slackening demand from China, as well as small communities, who argue that restoration and environmental concerns have too long been ignored.

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Economic boon or environmental bust? 

Mining has been one of the mainstays of Australia’s economy since the gold rushes of the 1850s. Australia accounts for one-third of the world’s coal output and is the leading producer of bauxite and iron ore.

Demand from rapidly developing countries such as China and India has seen coal production double since 1991, to 532 million tons a year. Australia was the only advanced economy to grow in 2009 during the global economic crisis, due in part to mining revenue.

But reaping these rewards has come at a cost to the environment. Huge swaths of the once-pristine Hunter Valley bear the scars of open cut mining. Whole villages have been abandoned as the vast mines creep across the verdant landscape. Tens of thousands of acres supposedly rehabilitated after mining lie vacant, the land deemed unsuitable even for grazing.

Environmentalists and health workers blame the dust caused by mining operations for higher rates of respiratory illnesses than found nationally. So far there have been 150 air pollution alerts in the Hunter Valley this year, sometimes forcing schools to close. 

But supporters say the valley’s 24 mines provide thousands of jobs directly and indirectly, and provide nearly $1 billion Australian ($952 million US) in royalties to the state government.

“Most Hunter residents understand that, along with agriculture and tourism, mining is one of the three key pillars that keep the entire region’s economy strong,” says Stephen Galilee, the chief executive officer of the Minerals Council of NSW, an industry association that calculates that mining accounted for 25 percent of Hunter Valley’s gross regional product last year.

In April, Justice Brian Preston of the Land and Environment Court stunned a packed courtroom in Sydney by overturning the government’s decision to grant Rio Tinto approval to extend its Warkworth mine any closer to Bulga. For the first time in the state’s history the long-term viability of a town had been judged more important than the money and jobs a coal mine would generate. 

“What we achieved was not just the saving of our village but I think we’ve also saved other villages along the way,” says Krey.

Rio Tinto saw things differently. Chief executive for energy Harry Kenyon-Slaney, said the court’s decision put at risk tens of billions of dollars worth of investment. “Courts are no place to decide the future of major mining projects,” he said, adding that Australia’s productivity and future economic welfare was at risk “unless governments take charge of the myriad approvals processes that are weighing down the nation’s resources sector.” 

Meanwhile the New South Wales state government is seeking to amend its environmental planning policy so that much greater weight is given to the claimed economic significance and benefits of a mining proposal.

Mining boom ‘reboot’

The battle between Bulga and Rio Tinto comes at a crucial time. The mining boom that has helped propel Australia to 22 years of positive economic growth is starting to falter as production costs rise, demand from China softens, and commodity prices come off their record highs. 

The Supreme Court case is being closely watched by other mining companies, says Steve Hall, director of the Western Australian School of Mines at Curtin University in Perth. 

“What the industry wants more than anything is certainty. Time is money and these are massive projects that require huge investments.”

The newly elected center-right Liberal-National coalition, which places the blame on the previous Labor government for introducing mining and carbon taxes and creating unnecessary amounts of “green tape,” is promising to reboot the boom. 

Mr. Hall says the change of government is already starting to have an effect. “Before there was a certain amount of wait and see. Now we are getting deals done and seeing investment flowing into projects.”

With the mining industry's contribution to the Australian economy at $121 billion a year and its export income generating $138 billion, according to official statistics, the new government can’t afford to lose such an important source of revenue.

Land rehabilitation

Also watching the outcome of the Bulga case are the few remaining residents of Camberwell, another village in the Hunter Valley. They are awaiting their appeal to the Land Environment Court to stop Chinese-owned Ashton Mining from developing the South East Open Cut, which would come to within 500 yards of their village.

Deidre Olofsson, one of only half a dozen residents who have refused to sell their homes to the mining company, has been fighting to save the village since 2002. Ms. Olofsson, who works as an electrical fitter at the local power station, refused to move even when Ashton’s previous mine came to within a few hundred yards of her home, blanketing furniture and floors with coal dust. “People are secondary. All they want to do is get us out of the road,” she says.

When presenting her community concerns to the court last month, Olofsson also highlighted the danger of mine waste entering the local creek and affecting wine producers downstream. “The wine industry relies on creek water and if that goes the tourism industry will go bankrupt as well,” she says. “If we are not careful the Hunter will look like a desert.” 

Mr. Galilee of the Minerals Council rejects such claims, saying that most mining takes place on land that is marginal in the first place. 

“Mine rehabilitation is an integral part of the ongoing operations of the mine. The mining industry in NSW is committed to improving rehabilitation techniques to ensure that mined land continues to have value to the community post-mining,” says Galilee.

What is clear to the residents is that no amount of rehabilitation can erase the effects of mining completely. The Hunter is now littered by so-called "final voids" - large holes in the ground, often filled with saline water - that are left after open-cut mining is finished. Hills and ridges have disappeared and valleys have been altered. 

"Sometimes you have to make a stand. You can't have everything the industry's way," says Olofsson. "It's about preserving the community. You have to fight for something and this is my last fight."

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