When is $262 million in government spending not worth $262m?
That will be when, and if, Chinese miner Shenhua decides to fork out for a coal mining licence.
NSW Government paid Shenhua $262m on Wednesday, buying back half of the company’s exploration licence at the Watermark project at Breeza, in the fertile farming area of the Liverpool Plains.
Shenhua bought the exploration licence for $300m from the Labor government in 2008.
At that time, Labor also set a $200m fee for a mining licence at Watermark, which is required by Shenhua if it decides to move beyond exploration and into production.
Shenhua has not applied for its licence to mine. NSW Resources Minister Don Harwin has been keen to emphasise this point and stressed an actual mine is not yet a done deal.
NSW government hailed the partial exploration licence buyback as a victory for farming.
The deal restricts future mining to ridge country and excludes the Liverpool Plain’s prized black soil country below.
That means if Shenhua decides to build its mine, and shells out $200m for its licence, NSW government would be $62m out of pocket.
Shenhua would be $200m ahead and the mine plan would remain unaltered.
Essentially, what government has bought is surety Shenhua will not mine the black soil.
This prompts the question: was the $262m buyback necessary?
The Department of Planning, the ultimate consent authority, could achieve the same outcome by ruling mining the black soil is unacceptable, and future applications to do so would be rejected.
Now the government is under fire on several fronts.
Farmers say the risks to agriculture and water resources are still unacceptable, and remain unchanged, noting that Shenhua had not planned to mine on the excluded area.
Radio shock jock Alan Jones attacked Premier Gladys Berejiklian yesterday over the failure to kill the project, telling her “you have put your head in a noose”.
“We looked at every option we had, the company had demonstrated time and time again in that eight year period they had attempted to mine, the reason they hadn't been able to was because we had stopped them at every turn. That is why we were not able to reduce the amount the taxpayers,” she told Mr Jones.
Ms Berejiklian was referring to calls for Shenhua’s licence to be cancelled, given it had exceeded the eight year development deadline that is written into the licence conditions.
An exploration licence is contingent on the owners intention to invest in a mine. Companies cannot lock up land with no intention to use it.
Shenhua has long argued government’s protracted approvals process had stymied investment
But despite the decade of indecision, environmentalists are mobilising and have committed to join farmers’ fight if Shenhua’s dozers roll into the ridges.
Lobby group Lock the Gate questioned if the buyback made mining more conducive for Shenhua.
“Our biggest concern is that this partial exploration buyout might actually facilitate the start of the mine, by handing Shenhua the $200M needed to get the mining licence,” said Lock the Gate national campaign co-ordinator Carmel Flint.
“Seen in that light, it's a straight out subsidy from the NSW taxpayer to a foreign-owned company to mine our foodbowl.”
2GB is part-owned by Fairfax Media, which publishes this website.
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