16 Sep 2021

Another one bites the (coal) dust: NSW greenfield mine rejected by IPC

By Claire Smith, Caitlin McJannett

Obtaining planning approval for a greenfield coal mine is getting harder in NSW, particularly where conflicting land uses and environmental risks are at play.

A proposed new coal mine in the NSW Southern Highland has been rejected by the NSW Independent Planning Commission (IPC). The decision demonstrates that obtaining planning approval for a greenfield coal mine is getting harder in NSW, particularly where conflicting land uses and environmental risks are at play, and underscores the importance of a proponent's social licence in obtaining approval.

The Hume Coal Project and associated Berrima Rail Project is a proposal to develop an underground coal mine in the Southern Highlands, NSW to extract 50 million tonnes of run-of-mine coal over 23 years and transport it via rail to Port Kembla Coal Terminal for export.

Since exploration for the project commenced in May 2011, the proposal has undergone significant investigation and assessment. This culminated on 31 August 2021 when the IPC determined to refuse the proposal. The IPC's decision followed on from the recommendation of refusal outlined in the Department of Planning Industry and Environment's (DPIE) final assessment report.

Key points

  • Relying on "make good" provisions (such as landowner agreements) to mitigate any potential groundwater impacts that exceed the minimal impact considerations under the NSW Aquifer Interference Policy is likely to be impracticable and unacceptable where there is significant opposition to a mining project from surrounding landowners; and
  • For development within the Sydney drinking water catchment, proponents need to ensure that it has adequate contingencies in place if there is a risk that surface water measures may not be adequate in certain climate conditions. To be "adequate", these measures are likely to need to be already authorised by planning approval; and
  • Mining companies need to ensure that they have and maintain a "social licence to operate". Mining companies should consider this at the earliest stages of a proposal and for the duration of the development. Early consideration of the risk of fundamental land use conflicts is also recommended.

The IPC's decision

The IPC cited numerous reasons for refusing the proposal, but ultimately concluded that of themselves, the impact on water resources and the social impacts were significant enough to warrant refusal.

Groundwater impacts

In NSW, the potential impacts of mining on groundwater aquifers are required to be assessed under the Aquifer Interference Policy (AIP). A key feature of this framework is that the proponent must be able to demonstrate that the proposal meets specific thresholds regarding changes to groundwater attributes. These are referred to as "minimal impact considerations". In circumstances where these thresholds are predicted to be exceeded, the proponent must demonstrate that the potential impacts can be managed and mitigated through "make good" provisions. Although the AIP does not provide any guidance regarding the requirements for "make good" provisions, in practice, these are usually agreements between the mining company and private landowners that are entered into the post-consent phase and are mandated by the development consent.

The site of the Project is located above the Hawkesbury Sandstone groundwater aquifer; a groundwater source that is highly valued due to its high freshwater yields and is extensively used in the region by 363 bores. The assessment undertaken by DPIE pursuant to the AIP found that drawdown exceeded the minimal impact threshold at up to 94 registered (private) bores. While the proponent had proposed a pathway to mitigate the impacts for these bores through the implementation of landowner agreements, DPIE considered (and the IPC agreed) that these measures were unfeasible and impracticable measures due to the significant landowner opposition to the project. Further, given the landowner opposition, the process of negotiating the agreements and resolving any disputes was likely to be a source of social and economic impact that would cause disruption to the community.

Sydney's drinking water catchment and the NorBe test

The site of the Project is also within the Sydney water drinking catchment. Within this area, any proponent of new development (such as the proposal), expansion of existing development or any changes in works that require development consent, is required pursuant to the State Environmental Planning Policy (Sydney Drinking Water Catchment) 2011 to demonstrate that the development would have a "neutral or beneficial effect" on water quality (the "NorBe test"). A development will satisfy the NorBe test if it:

  • has no identifiable potential impact on water quality; or
  • will contain any water quality impact on the development site and prevent it from reaching any watercourse, waterbody or drainage depression on the site; or
  • will transfer any water quality impact outside the site where it is treated and disposed of to standards approved by the consent authority.

According the IPC decision and DPIE's assessment report, an issue for the proposal was the risk of untreated mine water being discharged into Oldbury Creek and having a detrimental impact on water quality. The IPC's conclusion that the proponent had not satisfied the NorBE test was based on findings that:

  • the proposal to temporarily store excess water in the primary water dam raised a risk that it would provide inadequate storage during wet climate conditions and trigger contamination of the drinking catchment;
  • although the risk was considered small, the impacts if it eventuated would be significant, and therefore unacceptable; and
  • the proponent needed to demonstrate that it had a suitable contingency in place (such as an approved water treatment plant) in the event that there was a greater need for short term surface water operations. To be "suitable", the contingency needed to have planning approval, otherwise there was a possibility that approval may not be granted or that it would take too long to obtain.

Social impacts and incompatibility with surrounding land uses

The social impacts of the proposal was another critical factor that led to the IPC's refusal. According to the DPIE's assessment report, the number of submissions (approximately 5,000) from the local area was demonstrative that the proposal did not have a "social licence". It is often said that mining companies need a "social licence to operate", meaning that there needs to be ongoing acceptance of a project by the community to be able to obtain any necessary permits as well as achieve any commercial requirements (such as landholder agreements).

A related issue was the suitability of the site in terms of its compatibility with surrounding land uses. Critically for proponents of greenfield mines, in considering this issue the IPC referred to the NSW Government's Strategic Statement on Coal Exploration and Mining in NSW released in June 2020. As both the IPC and DPIE acknowledged, the NSW Strategic Statement relates to new exploration release areas, and is therefore not applicable to the project. Nonetheless, given that the Project was the only greenfield site under assessment at the time, DPIE considered that it was relevant to consider the policy intent of the NSW Strategic Statement, which is to focus on mining applications that extend the life of existing mines (rather than to prioritise new mines) and to ensure that new release areas are in areas with minimal conflicting land uses where social and environmental impacts can be managed. This highlights the NSW Government's current policy approach to new greenfield mines, and demonstrates that such proposals face increasing difficulty in obtaining approval.

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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.