09 Dec 2021

IPC rejected mine extension project declared State Significant Infrastructure

By Claire Smith, Cloe Jolly

The NSW Government has declared the South32 Dendrobium Extension Project as State Significant Infrastructure, preventing the NSW Independent Planning Commission from making a final determination on the proposed coal mine extension and creating a pathway for the submission of an alternative mine plan when the project was already rejected by the IPC.

The NSW Government recently announced that South32's proposal to extend its Dendrobium coal mine has been declared State Significant Infrastructure (SSI). The Minister for Planning can deem projects SSI if they consider them essential for economic, environmental or social reasons.

In February this year, the NSW Independent Planning Commission (IPC) refused consent for South32's proposal to extract an additional 78 million tonnes of coal until 2048 from two new underground areas near the Avon and Cordeaux dams. The IPC criticised, amongst other things, the company for failing to properly explore ways to minimise its environmental impacts and found that:

"Based on the potential for long-term and irreversible impacts — particularly on the integrity of a vital drinking water source for the Macarthur and Illawarra regions, the Wollondilly Shire and metropolitan Sydney — it is not in the public interest."

The IPC also factored in the project's greenhouse gas emissions, which were estimated to be more than 250 million tonnes across the life of the project.

South32 has since gone to the NSW Land and Environment Court seeking to have the IPC's refusal declared void. However, the company also has the option of submitting a different plan for the coal mine expansion to the Department of Planning Industry and Environment in a fresh attempt to gain consent.

The Dendrobium Mine SSI declaration means South32 can now submit a new plan for the project for which the Minister for Planning and Public Spaces will be the consent authority rather than the IPC. This will include submitting an Environmental Impact Statement that will be subject to public exhibition and consultation.

The decision to declare the project SSI states that it is due to the mine's role in providing essential metallurgical coal for local steel production in NSW. The Minister responsible for Resources, Paul Toole, said that "Dendrobium is a critical source of coking coal for the Port Kembla steelworks and the decision to declare the project SSI will provide thousands of workers with greater certainty on the future of their jobs".

The decision recognises the proposal's potential economic benefits, with the mine already contributing $1.9 billion to the NSW economy each year, employing 4500 workers and supporting another 20,000 jobs across the Illawarra region. However, the NSW Government did not mention the water supply or greenhouse gas emissions impacts in its statement regarding the SSI declaration decision.

An alternative approval process for contentious infrastructure projects?

This is an unprecedented step, providing a pathway for the submission of an alternative mine plan to the NSW Minister for Planning and Public Spaces to be assessed as SSI where the project was already rejected by the IPC. The IPC has the benefit of operating independently of other government departments, including the NSW Department of Planning, Industry and Environment, and plays an important role in building community confidence in the decision-making processes for major development.

The decision to declare the project SSI is particularly interesting in this case as steelmaking is one of the biggest greenhouse gas emitters worldwide and is a focus for the emerging green hydrogen industry.

If the decision to declare the project SSI remains unchallenged and South32 submits an alternative plan for assessment by the Minister, this could serve an interesting precedent for future contentious infrastructure projects that can demonstrate significant economic or social benefits to NSW.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.