South 32’s Dendrobium coal expansion plan knocked back over water fears

The NSW Independent Planning Commission has rejected a $956m extension of an Illawarra coal mine over water supply contamination fears.

The Dendrobium Illawarra Metallurgical Coal. Picture: Supplied

Miner South32 has been left reeling by the decision of the NSW Independent Planning Commission to reject an extension of its Illawarra metallurgical coal mine.

The IPC delivered its decision on Friday, finding the proposed mine design “risks long-term and irreversible damage to Greater Sydney and the Illawarra’s drinking water catchment”.

The decision is a major blow to South32, with the mine’s current life due to run our in 2024.

The IPC said the proposed $956m Dendrobium expansion “the risks of adverse impacts on the environment are high, and that those impacts are not appropriately manageable and are likely to be irreversible”.

“After careful examination of all the evidence and weighing all relevant considerations, the commission has found that the longwall mine design put forward by South32 does not achieve a balance between maximising the recovery of a coal resource of state significance and managing, minimising or mitigating the impacts on the water resources and biodiversity and other environmental values of the Metropolitan Special Area,” the commission’s Statement of Reasons for Decision reads.

The Dendrobium Coal Mine would adversely affect Sydney’s water catchment, the IPC has ruled. Picture: Getty Images

In a statement to the market on Friday, South32 said it was reviewing the IPC’s findings and would consider its options.

“We will continue to engage with key stakeholders including the New South Wales Government and the community in relation to the Dendrobium Mine Extension Project,” a spokesman said.

“As outlined during the IPC public hearings, the Dendrobium Mine Extension Project would provide major economic and social benefits for Wollongong, the Illawarra region and for New South Wales. It would support the continued employment of 400 existing personnel and a further 100 personnel once the project is operational. An additional 200 jobs would be created during the construction and development phase. The project would ensure the continued supply of high-quality metallurgical coal for steelmaking.”

The extension would have taken the mine further beneath Sydney’s water catchment zone and was stiffly opposed by both environmental groups and by the state’s water authority, which submitted a stinging criticism of South32’s proposal to the IPC in mid-December, accusing the company of consistently underestimating the volume of water losses through the catchment due to the operations of the underground mine.

A worker at the Dendrobium Mine, near Wollongong, in 2005. Picture: Supplied

“We understand the sensitivities of working within the Greater Sydney water catchment and the Metropolitan Special Area. We have committed to offset any surface water losses from the Dendrobium Mine Extension Project to ensure the project would be a positive contributor to the metropolitan water supply. The extension project would not mine beneath dams, named watercourses or key stream features and has been designed to have a neutral or beneficial effect on water quality within water catchment areas,” a spokesman for South32 said.

South32 had offered to fund more than $100m in water catchment offsets, to be spent on water conservation measures or capital works to improve Sydney’s overall water supply, but the IPC said in a statement its approval applications did not address concerns previously raised by WaterNSW over the mine design.

“The applicant was aware of concerns raised by WaterNSW and others regarding its mine design and the associated impacts. The applicant has made minor amendments; however, the impacts remain significant,” the IPC said.

“The commission notes the applicant has offered mitigation measures for remediation of selected key stream features, financial offsets for water losses and water quality impacts and an upland swamp offset site; however, a number of these measures have not been considered acceptable by the responsible statutory agencies.”

Environmental groups welcomed the decision on Friday.

South32 shares were down 7c to $2.66 at 1130 AEDT.