Australian state to pay Chinese miner to stop coal mine

The Australian state of New South Wales (NSW) will pay A$100mn ($77.5mn) to Chinese state-controlled miner Shenhua to withdraw the proposed development of the 10mn t/yr Watermark thermal coal project in the Liverpool Plains region of northern NSW.

The NSW state government undertook the decision following opposition from local farmers and environmentalists as the region is home to some of the richest agricultural land in the country.

The latest move by the NSW state government follows the purchase of 51.4pc of the exploration licence that covers the Watermark coal project for A$262mn in July 2017.

Following the latest payment, the NSW government will cancel exploration licence 7223, releasing Shenhua from its obligations under the exploration licence, NSW deputy premier John Barilaro said in a statement. "The cancellation of this project will mean that no open cut coal mining can occur in the area," NSW treasurer Dominic Perrottet said.

NSW has also placed restrictions on the expansion of the 5mn t/yr Dartbrook thermal coal mine in the Hunter valley region by banning the mine operator, the Australian mining firm Australia Pacific Coal (APC), from expanding Dartbrook through an open-cut mine but it is allowed to maintain underground mining activities, Barilaro said.

The Dartbrook mine was put on care and maintenance by previous owner UK-South African mining firm Anglo American in 2006. In November, the NSW Independent Planning Commission allowed APC to continue mining at Dartbrook until December 2027 instead of December 2022. APC had undertaken pre-feasibility studies to resume the Dartbrook mine through an open-cut mine.

The NSW state government has also opened up more areas for coal exploration with the Wollar area, west of the Wollembi national park and to the southwest of the Hunter Valley coal mining region in NSW.

NSW is Australia's largest state for thermal coal exports.

By Kevin Morrison