Gloucester Resources decision benefits our competitors.
Updated: Mar 19, 2019
Last week’s decision by the NSW Land and Environment court to decline a development
application for the Rocky Hill coal mine is detrimental for jobs and economic opportunities
in regional NSW. It also places the approval process for new resource investment in a
position of confusion and uncertainty.
The beneficiaries from the latest NSW court decision will be producers with spare
production capacity including those in the United States, Canada, Russia and Mongolia.
Further, the decision potentially presents a set of new obstacles that producers in NSW
could face with expansion and new mine approvals.
Industry analysis by Commodity Insights in late 2018 relating to metallurgical coal demand, forecasts an increased import requirement in Asia of close to 100 million tonnes annually by 2030. In part this will be met by increases in output from other countries to the detriment of projects such as Rocky Hill. The potential missed economic opportunity is even greater if we reject new thermal coal developments.
The basis of the court knock back includes the view that the project will add to global
greenhouse gas emissions.
The court indicates it can consider as part of its decision the greenhouse emissions from
coal as it is used in the making of steel in another country. In other words, if this rationale became accepted all our resource exports would have to account for the emissions applying to their downstream use, including gas, iron ore and thermal coal.
However, under the Paris Agreement it’s up to individual countries to put in place Nationally Determined Contribution plans to deal with emissions at their source. It’s not about the unilateral banning of particular industries or commodities in supplier countries. Of course, the United States, a significant coal exporter, is not even part of the Paris Agreement.
The court also held a view that stopping a particular export coal mine in NSW could lead to lower global emissions. This was based on a view that users may deliberately reduce coal consumption, become more efficient or adopt new ways to make steel.
For a start, Australia is a significant exporter of metallurgical coal but not a monopoly
supplier. Secondly apart from recycling scrap steel, using coal is a pre-requisite input to
modern steel making. Finally, Australia’s customers in Asia using affordable coal for energy or building infrastructure will not compromise their economic advancement and will continue to consume coal.
The NSW Government must decisively reject the approach of the court. It needs to send a signal to investors, regional residents, taxpayers and consumers of government services that development in the state and the resulting economic benefits including higher royalties, won't be at risk.
Editor’s note: The Coal Council of Australia (CCA) has been formed to advocate for and support the coal industry at the national level.