NSW IPC criticised for shock decision on Dendrobium coal mine extension

Job losses caused by the Independent Planning Commission’s shock rejection of the $1 billion Dendrobium coal mine extension may be far greater than the 500 first thought.

Job losses caused by the Independent Planning Commission’s shock rejection of the $1 billion Dendrobium coal mine extension may be far greater than the 500 first thought, with pressure heaped on the ­viability of South32’s other ­Illawarra colliery, which ­employs 1120 workers.

The commission’s decision also threatens BlueScope’s 3000 steelworkers at Port Kembla, because importing coal by sea will add as much as $100m a year to the facility’s production costs compared with continuing to source it from the local area.

Following the IPC’s shock refusal on Thursday, mining analysts at investment bank UBS have warned stock market investors that the expansion knockback may force South32 to shut both its mines in the Wollongong area.

In a research note to clients, UBS said South32’s options were to redesign the proposal and resubmit, appeal if there was a legal error, or “close Dendrobium when reserves deplete in 2024; this could result in the closure of Appin as well (if uneconomic), which in turn would impact the economics of the BlueScope steel mill,” which takes metallurgical coal from both mines.

Hundreds of jobs are set to be lost after plans to extend the Dendrobium underground mine were denied. Picture: Brook Mitchell/Getty Images

UBS said it did not consider higher cost Appin to be feasible alone.

South32 has said it is considering its options.

Observers of the IPC decision said it was unexpected ­because a similar coal mine ­expansion proposal at nearly Russell Vale was approved in December, and because the commission had only recently asked for another six weeks to finalise its verdict.

In rejecting South32’s plan, the IPC said the risk to Sydney and Wollongong’s drinking water was too great. State-owned WaterNSW campaigned against the proposal.

BlueScope, meanwhile, agitated in favour of the expansion. The company said without it $150m would have to be spent upgrading its ­import facility and that annual production costs would be $50-100m higher.

A BlueScope spokesman said: “Local coal supply ­remains very important to the economics of the Port Kembla Steelworks’ future.”

Unions say the decision is very disappointing. Picture: Brook Mitchell/Getty Images

The CFMEU Mining and Energy division described the IPC decision as “very disappointing”.

“This expansion would ­secure 500 direct mining jobs for decades into the future and support many more jobs ­indirectly throughout the ­region,” the union’s south west district vice-president Bob Timbs said.

The NSW Department of Planning had recommended the IPC approve the proposal.

Labor’s resources spokesman and member for Wollongong Paul Scully said the IPC had created “a great deal of ­uncertainty in the Illawarra”.

Originally published as NSW IPC criticised for shock decision on Dendrobium coal mine extension