On Alpha coal approval, Burke clearly right in battle with Newman

The Federal Government has given the go-ahead to the Alpha coal development (this picture shows the existing trial mine), but will it ever be built? Greenpeace/Andrew Quilty

Picking who is right in political disputes is often hard but this one is different.

Queensland Premier Campbell Newman was clearly wrong in stating that the Federal Environment Minister Tony Burke is standing in the way of project approvals in Queensland.

In early June the Premier attacked Tony Burke as a “rogue minister” for not agreeing to approve Gina Rinehart’s Alpha Coal Mine within 30 days under federal environmental law after the Queensland Coordinator-General delivered a report recommending approval of the mine.

Minister Burke has now approved the mine, prompting the war of words to flair up again.

The mine requires approval under both federal environmental law and Queensland mining and environmental legislation. The Coordinator-General is a powerful bureaucrat appointed under Queensland legislation to facilitate large-scale developments in the state.

He has a role in both state and federal approval processes because of a bilateral agreement under federal environmental law but his report was merely one step along the way for the assessment at both levels.

As was pointed out at the time, the Premier’s attack was misconceived because approval of the mine under Queensland law still has 12-18 months to run so the Minister’s approval could not legitimately be said to be holding the mine up.

The Premier said at a doorstop interview yesterday that there were other projects the Minister was “sitting on” and that he should “get out of the way”.

The Minister called the Premier’s bluff in an open letter in response after having checked with his department on which projects are awaiting approval where the companies have completed their assessments and the next step falls to him. His department advised that there were no such projects.

The project at the centre of the dispute, the Alpha Coal Mine, remains a perfect example of how wrong-headed the Premier’s position is. It has now been approved under federal environmental law but approval under Queensland law is still likely to be 12-18 months away.

This means that the Premier’s position is wrong and that federal environmental approval has not stood in the way of the project’s approval.

Will the mine proceed?

Whether the mine will be approved under Queensland laws is still uncertain although the political impetus to approve it is obvious. The mine is controversial and still has to be publicly advertised for objections from farmers and others who are concerned about its impacts. Those objections will be heard by the Queensland Land Court and a final decision lies with the Queensland Minister for Mines and Queensland Minister for the Environment.

Whether the mine will actually proceed is even less certain.

BHP Billiton’s chief executive Marius Kloppers said today, in the context of his company’s decision to shelve its existing Olympic Dam plans:

… what I am seeing on the Eastern Seaboard in Australia is that the coal industry has been very heavily impacted by lower prices, higher operating costs, carbon taxes and increased royalties.

As a result, my take is that a very substantial chunk of the energy coal production and a sizeable proportion of the metallurgical coal production is non-cash generative at today’s cost structures and prices.

The coal from the Alpha Coal Mine is relatively low-grade thermal coal used in power stations for energy production, which is much less valuable than metallurgical coal used in steel production.

The Alpha Coal Mine is also located a long way from the coast and requires a very substantial investment in a rail-line to connect the mine to a port, so BHP Billiton’s decision to shelve Olympic Dam bodes ill.

So, while the mine has now been approved at a federal level, the Queensland approval processes still have a long way to run and the mine may well be shelved before the state-level approvals are granted.