Bloomberg News

Xstrata Wins Approval for Biggest Australian Coal Mine

March 27, 2012

Xstrata Plc (XTA), the world’s largest exporter of power-station coal, won court approval to build the A$6 billion ($6.3 billion) Wandoan coal mine in Australia that opponents say threatens the Great Barrier Reef.

Carmel MacDonald, president of the Land Court of Queensland, ruled today that opponents hadn’t proved the mine would cause environmental harm justifying it being blocked.

“It is difficult to see from the evidence that this project will cause any relevant impact on the environment,” MacDonald wrote in the 148-page ruling posted on the court’s website.

Environmentalists argued in court that mine approvals should take into consideration the long-term effects of exporting coal and burning it, as well as the immediate impact in the project vicinity. A victory by environmental group Friends of the Earth would have made it more difficult for companies including Vale SA (VALES) and BHP Billiton Ltd. (BHP), which have about 30 mines in development in Queensland, to get approvals.

The burning of coal from the Wandoan mine in power plants in China and elsewhere will contribute to greenhouse gases linked by scientists to global warming and damage the Great Barrier Reef, Friends of the Earth argued in court in August.

Xstrata Evidence

MacDonald cited expert evidence presented by Xstrata that said if it doesn’t mine the coal, demand for the fossil fuel will be met by mines elsewhere and the impact on the environment won’t change.

Bradley Smith, a spokesman for the Brisbane chapter of Friends of the Earth, said the group is considering appealing the ruling.

Xstrata Coal Queensland Chief Operating Officer Reinhold Schmidt said the court ruling acknowledges the company has “followed a thorough and rigorous environmental assessment and review process.”

Xstrata won initial state approval for the mine, about 350 kilometers (220 miles) northwest of Brisbane, in November 2010 and federal approval in March of last year.

The mine’s initial capacity is intended to be 23 million metric tons a year, expanding to 63 million tons, Xstrata said in an e-mailed statement last month.

‘Economic Benefit’

The project will have a “very significant economic benefit” for the region, creating 1,700 jobs and providing governments with about A$3.7 billion of royalty payments over the 30-year life of the mine, Xstrata’s lawyer David Jackson said during the trial. Xstrata will also pay about A$500 million a year in port charges, to ship the coal abroad, he said.

The company said it’s spending A$250 million on reducing pollution from the project.

Xstrata owns 75 percent of the project, with Itochu Corp. (8001) and Sumitomo Corp. (8053), each holding a 12.5 percent stake. The companies are studying options for the project’s development, Xstrata said.

The exported coal will create as much as 1.3 billion tons of carbon emissions over 30 years, or 0.15 percent of annual global emissions, Smith said during the trial.

Those emissions will contribute to climate change, which has already harmed the Great Barrier Reef, Smith said.

“Upward of A$1 billion could be lost to local Queensland communities every year from climate impacts on the Great Barrier Reef,” he said.

The marine park stretches more than 3,000 kilometers along the Queensland coast. The coral reef is longer than the Great Wall of China and the only living thing on earth visible from space, according to its website.

To contact the reporter on this story: Joe Schneider in Sydney at jschneider5@bloomberg.net

To contact the editor responsible for this story: Douglas Wong at dwong19@bloomberg.net


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