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Watermark Coal Mine is a cancelled coal mine in Gunnedah, New South Wales, Australia.
Location
Table 1: Project-level location details
| Mine Name | Location | Coordinates (WGS 84) |
|---|---|---|
| Watermark Coal Mine | Gunnedah, New South Wales, Australia | -31.226757, 150.438691 (approximate) |
The map below shows the approximate location of the coal mine:
Project Details
Table 2: Project status
| Status | Status Detail | Project Type | Opening Year | Closing Year |
|---|---|---|---|---|
| Cancelled | Pre-Permit | New | 2023 | – |
Table 3: Operation details
| Capacity (Mtpa) | Production (Mtpa) | Year of Production | Mine Type | Mining Method | Mine Size (km2) | Mine Depth (m) | Workforce Size |
|---|---|---|---|---|---|---|---|
| 6 | – | – | Surface | Open Pit | 40.84 | 60* | 425 |
Table 4: Coal resources and destination
| Total Reserves (Mt) | Year of Total Reserves Recorded | Total Resources (Mt) | Coalfield | Coal Type | Coal Grade | Primary Consumer/ Destination |
|---|---|---|---|---|---|---|
| 283 | – | – | Gunnedah | Bituminous | Thermal | Port of Newcastle |
Table 5: Ownership and parent company
| Owner | Parent Company | Headquarters |
|---|---|---|
| Shenhua Group | China Energy Investment Corp [100.0%] | China |
Note: The above section was automatically generated and is based on data from the Global Coal Mine Tracker April 2024 release and the September supplement.
Coal Mine Background
New South Wales government said that the application was subject to the strictest environmental conditions in the country’s mining history when the exploration licence was approved.[1] The company is now pursuing the other permissions needed.
Most of the conditions relate to the proper use and monitoring of groundwater in the area which fuels the region’s farming industry. Environment Minister Greg Hunt must also approve an additional water management plan, water impact verification report and rehabilitation plan before mining can start. A total of six project reviews confirmed the mine would use less than 0.09% of available groundwater – most of which will be extracted from the lower quality deep rock aquifer which can’t be used for agriculture.However, should the mine use more water or create larger impacts than predicted on the agricultural industry, the Minister can stop the project any time.[2]
The company is now pursuing the other permissions needed. The Taroborah Coal Project is also being pursued by the Shenhua Group.[3]
The project, and BHP-Billiton's Caroona Coal Project, have both encountered strong opposition from local farmers and residents. Despite this, in September 2011 the newly elected Liberal government led by Barry O'Farrell announced that both the exploration licences had been renewed. In the case of the Watermark project O'Farrell stated in a media release that the licence "will be subject to tougher conditions" to "ensure our valuable agricultural and water resources have much greater protection."[4]
In 2017 the New South Wales state government said it would buy back 51.4 percent of state-owned China Shenhua Energy’s license to mine at Watermark as the area under consideration for mining was reduced. In response to strong opposition the state paid back money to the company as it ruled that the plains could not be mined but the mountain ridges could be. Shenhau Watermark Coal, an Australian subsidiary, paid the government AU$300 million in 2008 but was paid back 262 million Australian dollars ($201 million) to help protect some of Australia’s most fertile farmland. Consequently Shenhua then have to propose a new mining plan.[5]
There has been speculation about the viability of the project. Chinese coal imports slumped 37.5 percent in the first six months of 2015 from the same period in 2014, a trend that if continued will see the nation lose its position as the world’s top importer to India.[6]
The project was granted conditional approvals by the New South Wales Planning Assessment Commission and the Commonwealth Environment Minister in 2015.[7]
Shenhua also said in April 2015 that it would cut its output by 50 to 60 million tonnes in the same year to help ease a supply glut, suggesting that it has plenty of domestic coal available and does not really need to import from Australia. Shenhua bought the license to develop the Watermark mine six years previously. The Watermark mine may be sunk by poor economics, but virulent opposition may make any decision to walk away easier.[6]
In September 2011 the newly elected Liberal government led by Barry O'Farrell announced that both the exploration licences had been renewed. In the case of the Watermark project O'Farrell stated in a media release that the licence "will be subject to tougher conditions" to "ensure our valuable agricultural and water resources have much greater protection."[8]
In late 2010 Shenua told a local Community Consultative Committee meeting that a development application for the project "will be lodged towards end next year, with construction starting 2013 and first coal around 2014." The company also stated that it had bought over 12,000 hectares of land for the project with further purchase under negotiation which would bring the total to 14,500 hectares.[9]
In 2013 the Caroona Coal Action Group paid for an independent review of Shenhua's Environmental Impact Statement. The result of the report reveals substantial problems with the proposed mine. The mine would likely breach a prohibition on open-cut mining on the Liverpool Plains. The report also shows that the mine's risk assessment lacked detail regarding baseline data for water quality and geochemistry, making it very difficult to properly assess the environmental impacts of the mine.[10]
On its website Shenua states that Shenhua Australia Holdings and Shenhua Watermark Coal were registered in Australia in November 2008.[11]
The mine is estimated to have an life of 30 years.[7]
Environmental concerns
The main issue is that the proposed Watermark mine is its location in prime agricultural land. There is concern that not only will it take up land that could be used for farming, but also that the mine will deplete or degrade the region’s underground water table.[6]
The site lies on the fertile Liverpool Plains, and is seen as a threat to water resources and impact the iconic koala population.[7] Shenhua expected to translocate 262 koalas over 30 years of mining.[7]
Nicky Chirlian, Chair of Upper Mooki Landcare said, "The mine is proposing to forcibly translocate Koalas if they don't move away 'naturally', but evidence from previous translocation projects show that it causes Koala deaths, including one project in Victoria where 90% of translocated Koalas died" she said.[12] There are concerns about the highly-productive Gunnedah Formation groundwater aquifer, the main source of water for local farmers. A 150m buffer will be maintained between the mining areas and the neighbouring black soil floodplain.[7]
Opposition
Barnaby Joyce, the federal agriculture minister is a vocal opponent of the mine which would be within his constituency.[6] A farmer who is the head of the Caroona Coal Action Group, Tim Duddy, told the Australian Broadcasting Corporation that the project was “agricultural genocide”.[6]
Transport of Coal
The output from the mine will be transported by rail along the Werris Creek to Moree Railway Line on to the existing Main Northern Railway Line to the Port of Newcastle for export. A rail spur and loop, and associated train load out facility, and a rail connection between Werris Creek and Moree Railway Line will be constructed as part of the project.[7]
Economic Impact Assessment
Shenhua Watermark Coal claims that "the project would create $913 Million direct and indirect regional output or business turnover each year while providing 1,015 direct and indirect jobs to the regional economy (Gunnedah, Tamworth, Liverpool Plains, Narrabri and Upper Hunts LGAs). The New South Wales economy will gain $1,554 Million annual direct or indirect output or turnover and 3,260 direct and indirect jobs."[13]
A Benefit Cost Analysis which was undertaken by Gillespie Economics on behalf of Shenhua Watermark Coal determined net production benefits of $3,047 Million. $1,726 Million out of this amount are net production benefits to Shenhua Watermark Coal, $745 Million are net production benefits to the Commonwealth government, $565 Million are net production benefits to the New South Wales government and $11 Million are net production benefits to the local and regional community in the form of voluntary contributions.[14]
Review of Economic Impact Assessment
An independent economic impact assessment by Economists at Large said that the case for the mine had been overstated.[15] Economists at Large claim key data in the economic assessment are missing and that the assessment is not suitable for decision making in its current form. They suggest Gillespie Economics‘ estimates of coal prices, royalty and tax rates results in an overstatement of tax revenue by almost $700 Million - $47 Million rather than an initial estimate of $745 Million. This tax revenue is overstated for two reasons:
1. The tax revenue is based on Shenhua's optimistic forecast of semi soft coking coal prices. Estimating company revenue based on this price will overstate the value of tax collected.
2. The assumption of a corporate tax rate of 30% is not very likely due to ignores a wide range of rebates, tax exemptions and depreciation allowances. This results in an effective corporate tax rate which is much lower. Economists at Large used a tax rate of 15.5%.
Furthermore the current economic impact assessment assumes the project will be able to sell 86% of its production into metallurgical coal markets. Historically, much PCI coal is not able to be sold into metallurgical coal markets and is instead sold more cheaply as thermal coal. Royalty revenue is the most important benefit from the project for NSW decision makers to consider. According to Economists at Large, the project economic assessment overstates royalty revenue in present terms by $82 Million. They claim the assessment's royalty calculations are not transparent or adequately explained. [16]
Contact details
- Website: http://www.ecolarge.com/
- Website: http://www.shenhuawatermark.com/
External articles
Articles and Resources
Additional data
To access additional data, including an interactive map of world coal mines, a downloadable dataset, and summary data, please visit the Global Coal Mine Tracker on the Global Energy Monitor website.
References
- ↑ Don Harwin "Media Release: Shenhua Watermark Exploration Licence Renewal",NSW Government, 19 July 2018.
- ↑ Marion Lopez, "Watermark approval 'strictest in history'", Australia's Mining Monthly, 9 July 2015.
- ↑ Shenhua Watermark Coal, "Welcome to the Taroborah Coal Project", Taroborah Coal Project website, accessed October 2019.
- ↑ "Mining licences renewed in north west NSW", Sydney Morning Herald, September 16, 2011. (This is an AAP story).
- ↑ Rod McGuick, "Chinese coal mine plans scaled down on Australian farmland", AP News, 12 July 2017.
- ↑ 6.0 6.1 6.2 6.3 6.4 Clyde Russell, "China Shenhua's Australian coal mine on troubled path: Russell", Reuters, 15 July 2015.
- ↑ 7.0 7.1 7.2 7.3 7.4 7.5 Cite error: Invalid
<ref>tag; no text was provided for refs namedtech - ↑ "Mining licences renewed in north west NSW", Sydney Morning Herald, September 16, 2011.
- ↑ Shenhua Watermark"Watermark CCC Meeting At Gunnedah", October 13, 2010 (no longer available).
- ↑ "Chinese mine in NSW fails to meet standards", Sydney Morning Herald, May 12, 2013.
- ↑ Shenhua Watermark Coal, "Watermark Project", Shenhua Watermark Coal website, accessed September 2011 (no longer available).
- ↑ Lock the Gate,"Landcare Group Launches Landmark Legal Challenge Against Liverpool Plains Mine", Lock the Gate Alliance website, 4 May 2015.
- ↑ "EIS Consultation Continues with a Presentation to Tamworth Regional Council", Shenhua Watermark Coal, April 3, 2013.
- ↑ "Watermark Coal project - Economic Impact Assessment", Gillespie Economics, February, 2013.
- ↑ "Chinese mine in NSW fails to meet standards", Sydney Morning Herald, May 12, 2013.
- ↑ "Checking the Watermark: Review of Shenhua's Watermark coal project economic assessment", Economists at Large, accessed June 2013.
