Australia: Court refuses expansion of Rio Tinto’s Warkworth Coal Mine

On 15 April 2013, the NSW Land and Environment Court handed down judgment in Bulga Milbrodale Progress Association Inc v Minister for Planning and Infrastructure and Warkworth Mining Limited [2013] NSWLEC 48. In a landmark decision, the Court overturned the decision of the Planning Assessment Commission (PAC) to approve the proposed extension of the Mount Thorley Warkworth mine operations in the Hunter Valley. The Court disapproved the project application having regard to its findings on the significant and unacceptable impacts on biological diversity including endangered ecological communities, as well as noise, dust and social impacts.

BACKGROUND

Warkworth Mining Limited (Warkworth), operates the Warkworth open cut coal mine (Mine) located to the north east of the village of Bulga in the Hunter Valley. The Mine operates pursuant a development consent issued by the Minister for Planning in May 2003 under Part 4 of the Environmental Planning and Assessment Act 1979 (EPA Act), and permits coal mining until 2021. One of the conditions of the consent required Warkworth to conserve areas of native vegetation and landforms to the north, west and south west of the Mine designated as non-disturbance areas and habitat management areas.

In 2010, Warkworth lodged a major project application (No 09_0202) (Project Application) seeking approval under the then in force part 3A of the EPA Act to extend the Mine to the west and south west of the existing operations and extend the life of the Mine until 2031 (Project), including:

• the closure and excavation of Wallaby Scrub Road, a popular local road;
• the clearing of around 766ha of four types of endangered ecological communities (EECs) listed under the Threatened Species Conservation Act 1995 (NSW) (TSC Act);
• the removal of significant local landform, Saddleback Ridge, which separates the Mine from the nearby village of Bulga; and
• the emplacement of overburden from the Mine at the Mount Thorley mine immediately adjoining to the south (also managed by Warkworth).

On 3 February 2012, the PAC, as a delegate of the Minister for Planning and Infrastructure (Minister), approved the Project Application under section 75J of the EPA Act, subject to a number of conditions (Project Approval). The conditions of the Project Approval included a requirement for Warkworth to provide biodiversity offsets to compensate for the impact of the Project on biological diversity, including the EECs.

OBJECTOR APPEAL

A residents action group, the Bulga Milbrodale Progress Association Incorporated (BMPA), made submissions objecting to the Project. As a consequence, section 75L(3) of the EPA Act entitled the BMPA to appeal to the Land and Environment Court against the Project Approval.

The BMPA submitted that the Court should refuse the Project Application because of the Project's significant and unacceptable impacts on biological diversity, noise and dust impacts, social impacts and the public interest.

On the other hand, the Minister and Warkworth submitted that the Project Application should be approved with different conditions to those in the Project Approval to better address the impacts of the Project.

THE ROLE OF THE COURT ON APPEAL

In determining the appeal under s75L(3) of the EPA Act, the Court re-exercised the statutory power originally exercised by the Minister of Planning to determine the Project Application. In the exercising of this power to approve or disapprove the carrying out of the Project, the Court was required to consider, weigh, and balance the environmental, social and economic impacts of the Project having regard to the matters which the decision maker must or may consider. In addition to those matters set out in section 75J of the EPA Act, the decision maker must consider the objects of the EPA Act (including ecologically sustainable development), the public interest and, in the present case, the TSC Act and the National Parks and Wildlife Act 1974 (NSW).

DECISION

Project Refused

In balancing the environmental and social impacts against the material economic and social benefits of the Project, the Court refused the Project Application because it would have significant and unacceptable impacts on biological diversity, noise impacts and social impacts. Despite the economic benefits and positive social impacts in the broader area and region, the Court held that these were outweighed by the environmental and social impacts of the Project. In reaching this conclusion, the Court noted that "there is no priority afforded to mineral resource exploitation over other uses of land, including nature conservation".

Biological Diversity

The Court held the Project was likely to have significant adverse impacts on biological diversity, including four EECs being the Warkworth Sands Woodland (WSW), the Central Hunter Grey Box-Ironbark Woodland (CHGBIW), the Central Hunter Ironbark-Spotted Gum-Grey Box Forest, and the Hunter Lowland Redgum Forest. In reaching this conclusion, the Court found that the Project was likely to threaten the WSW and CHGBIW with extinction and the clearing of the EECs was likely to have a number of consequential effects such as impacts on wildlife corridors and key habitats of fauna species. These impacts were found to be of such magnitude as to require measures to avoid, mitigate and offset the impacts of the Project in order to determine the acceptability of the Project.

The Court found that the Project proposed no avoidance measures to reduce the scale and intensity of impacts to the four EECs, and to the contrary, actually reverses some of the avoidance measures that were put in place by the 2003 development consent which deemed some areas of land to be permanently protected. Due to the fact the Project involved total clearing and open cut mining of all lands within the disturbance area, there would be a reduced scope of possible avoidance measures available, and any pre-clearing protocols and salvaging of resources within the disturbance area were deemed to be of little impact.

The Court held that the proposed offsets package was inadequate to address the impacts of the Project on the four EECs, particularly because it failed to provide like-for-like. Further, the offsets requirements for the impacts of the Project on the EECs in the disturbance area were found not to provide any immediate conservation gain, and did not address the problem that the direct offsets did not deliver, at least in the short and medium term, an overall conservation outcome that improves or maintains the viability of the impacted EECs. In so finding, the Court had regard to the principles for the use of biodiversity offsets in NSW.

Noise and Dust Impacts

The Court held that the noise impacts of the Project on the residents of Bulga would be intrusive and adversely affect the reasonable use, enjoyment and amenity of the residents of Bulga and the surrounding countryside. Further, the proposed mitigation strategies were unlikely to reduce noise impacts to an acceptable level. The Court found that the approach of combining the Mine (as extended by the Project) and the Mount Thorley mine in setting noise criteria and noise mitigation strategies would make monitoring and enforcing compliance difficult. In addition, any condition imposed on the Project must relate to the Project and be capable of implementation by Warkworth and, for this reason, any condition combining the criteria and strategies was of doubtful legal validity.

Although the air quality criteria and the mitigation strategies proposed in the conditions of the Project Approval may have satisfactorily addressed dust impacts, the Court held that the approach of combining the setting of air quality criteria and the mitigation strategies for the Mine and Mount Thorley mine would make operating the mines, managing air quality, monitoring performance and enforcing compliance difficult. As a consequence, the Court could not confidently conclude that the dust emissions from the Project will comply with the proposed conditions of the Project Approval.

Social Impacts

Despite the fact that the Project would result in some positive social impacts, in particular by continuing employment in the local and broader community, the Court held that there would be significant negative social impacts arising from the continuation of adverse visual impacts as well as those arising from a change in the composition of the Bulga community. The methodologies used by Warkworth in assessing social and visual impacts were found to have given insufficient weight to concerns expressed by Bulga residents in interviews, and the Project's extension through Saddleback Ridge would "exacerbate the loss of sense of place, and materially change and adversely change the sense of the community, of the residents of Bulga and the surrounding countryside".

Economic Issues

The Court did not accept that the economic benefits of the Project outweighed the environmental, social and other costs. Warkworth had undertaken the Input-Output Analysis (IO Analysis), which assessed the incremental difference in economic impacts between approving or disapproving the Project, and the Benefit Cost Analysis (BC Analysis), which estimated the monetary values for the main intangible environmental, cultural and social impacts of the Project.

The Court held that the IO Analysis and the BC Analysis had deficiencies in the data and assumptions which affected the reliability of the conclusions and, more fundamentally, they did not assist in weighing the economic factors relative to the various environmental and social factors. The Court noted that the weighting and balancing of the relevant matters to be considered are essential tasks for a decision maker when determining the Project Application.

IMPLICATIONS

This refusal of the Project is the second coal mine expansion project to be refused by the Land and Environment Court in recent months (click here). These judgments demonstrate willingness on the part of the Court to weigh up all the relevant matters and, in circumstances where environmental and other factors outweigh the economic benefits, refuse major coal projects overturning the findings of the PAC.

The case has important implications for proponents of mining projects because it provides guidance in assessing the overall environmental, social and economic impacts of such projects. Where a mining proposal has significant adverse environmental impacts which are not made acceptable by avoidance measures or an offsets package, the Court has confirmed that this is a fundamental matter to be considered by the decision maker to which significant weight should be assigned. Following this decision, it is doubtful whether economic benefits alone could outweigh the significant adverse environmental impacts of a project.

Warkworth has appealed the decision to the NSW Court of Appeal.

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