The Hazelwood Mine Fire Implications for Rex Minerals’ proposed Hillside Mine

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Key points

  • In 2014, a fire in the Hazelwood Coal Mine in Victoria’s Latrobe Valley blanketed the local town with smoke and ash for almost 7 weeks.
  • A subsequent inquiry found that:

o   The fire is likely to have contributed to an increase in deaths in the region

o   The original  bond paid by the mining company for clean-up and rehabilitation was completely inadequate

o   There was doubt about the viability of the company’s proposal to turn the open pit into a lake at mine closure.

  • The findings raise serious questions about the South Australian Government’s approval of the proposed Hillside copper/gold mine.

o   Why has it endorsed Rex’s minimalist and inadequate rehabilitation plans?

o   Will the amount of bond Rex will be required to lodge be adequate to cover all environmental/agricultural damage caused during operations and for the hundreds of years after mine closure?

hazelwood-mine-fire-showing-mine-face-and-smoke-data

 

The Hazelwood Mine Fire

In early 2014, a fire in the Hazelwood coal mine – one of three such mines in Victoria’s  Latrobe Valley –  burned for 45 days, blanketing the nearby community with smoke and ash.    The subsequent Hazelwood Mine Fire Inquiry (Report:  2015/16  Volume 4)  found that:

  • The fire is likely to have contributed to some increase in deaths in the Latrobe Valley in 2014;
  • The Government’s mining regulator must review the amount of bond money set aside by the region’s mining companies to reflect the real costs to clean up and rehabilitate mine sites; and
  • The owners’ plans to rehabilitate the mine at closure are questionable.

 

Inadequacy of existing bonds

  • When originally approved, Latrobe Valley’s  three huge open cut coal mines of Hazelwood, Yallourn and Loy Yang  were required to deposit a meagre $41.4 million rehabilitation bond between them.
  • This was

o   Seven times lower than the mining companies’  own estimates of the cost required to rehabilitate these sites ($276 million)

o   Up to 23 times lower than the rehabilitation estimates provided to the Inquiry by Independent consultants who put the total cost at  between $652 million and $956 million for the three sites  (Arup, the Age April 14, 2016 ).

 

Concerns about the companies’ rehabilitation plans

The Inquiry also questioned the companies’ proposal to turn the open pits into lakes at mine closure, including:

  • Whether there would be sufficient water to do this;
  • where that  water could come from;
  • how the quality of that water would be maintained post-mining;
  • how much this would cost; and
  • whether the proposed pit lakes would be stable.

It “recommended the mine owners establish a decade-long research program to address the technical uncertainties of their rehabilitation plans” (Arup, the Age, April 14 2016).

 

The Victorian Government’s response to these findings

On Friday 14th April  2016 the Victorian Premier announced that, as well as establishing new community health screenings and air quality monitoring in the Latrobe Valley, it would significantly change the rehabilitation requirements for the region’s mining companies, including

  • increasing existing bonds to 50% of the mine’s self-assessed rehabilitation costs  by June 2016, and by 100% by January 2017
  • developing a more effective system to set future rehabilitation bonds.

Under the new rules, the current bond levels for the three mines would increase six fold:  from $41.1 million to $254 million dollars. 

In announcing these initiatives,  Victoria’s premier, Mr Andrews, acknowledged that existing bonds were inadequate and ran the risk that taxpayers would be required to meet the eventual costs.  He said:

  • We’ve had companies for too long that have been allowed to put aside just a fraction of what it costs to keep their mines safe and what it costs to return those mine sites to the community, to whom they fundamental belong, at the end of useful life  (Arup, The Age, 14th April 2006)
  • There ae significant costs involved in rehabilitating these mines.  They themselves have not been required to put anywhere near an adequate amount to cover costs that they themselves have calculated”.   ………“These are profitable companies and ..if you go and ask them, they might have had a sneaking suspicion that they have needed to do a lot more for a very long time. ABC;  The WORLD TODAY:  Interviewee Tom Nightinggale, 15 April 2016:

Asked whether the increased bonds would threaten jobs, he responded:

  • “Lets not have any of this talk that jobs are at risk.  They are not at all.  Safety comes first, doing right things comes first and for too long, a number of very very profitable businesses have not put aside enough money to be responsible, to do the right thing  ABC;  The WORLD TODAY:  Interviewee Tom Nightinggale, 15 April 2016:

 

Mine Rehabilitation – A nation-wide problem

The problem of inadequate rehabilitation plans and bonds is an Australian wide issue.   Dr Peter Erskin,  environmental scientist, University of Queensland’s Sustainable Minerals Institute,  stated on ABC’s Landline Program in Sept 2015:

Across Australia, there are more than 50,000 abandoned mines…

Although state governments hold financial securities for mine rehabilitation, they are no-where near enough.  ….Taxpayers will be left with a bill running into tens of billions of dollars unless Government and industry start taking mine rehabilitation seriously

A lot of the landscape has been mined but at the moment there’s no real functional use for that land after the mine is finished.   Instead, what we see are mines placed into care and maintenance where the mining companies can avoid paying out rehabilitation bonds because the mine isn’t officially closed.  

 

Implications for the proposed Hillside Mine on Yorke Peninsula:

Inadequate rehabilitation plans

The SA Government has already failed the local community by endorsing Rex Minerals’ minimalist rehabilitation plans for its proposed Hillside mine.

Despite its own regulatory guidelines, which require mined land to be returned to a stable condition and use consistent with that which existed pre-mining, the Government does not require the Company to backfill the huge 2 square km open pit, level out the waste rock dumps, or ensure all toxic tailings and other contaminated material  are returned to the pit for safe encapsulation.

Like the rehabilitation plans for the Victorian Coal mines, Rex’s long-term outcome for the huge pit is that it will eventually (ie after 600 years) fill with water, forming a lake.  A number of questions remain unanswered – eg will the water be toxic and who will be responsible for maintaining water quality over hundreds of years into the future?

As the Hazelwood Mine Fire Inquiry found in Victoria, the Hillside rehabilitation and mine closure plan is fraught with too many uncertainties and inadequacies to be acceptable.  The company should be required to do much more than it plans to do.

 

Setting the rehabilitation bond for Hillside

The SA Government has not yet nominated the amount of bond Rex will have to set aside to cover all clean-up and rehabilitation costs for Hillside.   Questions have already been raised about the long-term environmental safety of the site, including the potential for leakage/run-off of contaminants from the tailings dam and waste rock piles.   And how can an adequate bond be calculated given the technical uncertainties of the current rehabilitation plans?

The South Australian government MUST learn from the Victorian Hazelwood Mine experience and ensure the financial surety required from Rex Minerals for clean-up and rehabilitation at Hillside is large enough to cover all future contingencies.  Anything less will leave the local community and the SA taxpayers with a huge clean-up bill.

 

 

For some media articles on the Hazelwood Mine Fire Inquiry, see:

http://www.abc.net.au/worldtoday/content/2016/s4443954.htm?site=newengland

 

http://www.news.com.au/national/breaking-news/jobs-safe-despite-higher-mine-bonds/news-story/3d1f613135e5c313eb2826b5e62da051

 

http://www.theage.com.au/victoria/latrobe-valley-brown-coal-mine-bonds-rise-dramatically-in-hazelwood-fire-response-20160415-go76u2.html

 

 

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