Whitehaven mine hit by drought
Whitehaven Coal has joined the list of major miners warning that the severe drought in NSW could hit operations.
Whitehaven Coal has joined the list of major miners warning that the severe drought in NSW could hit operations, with its flagship Maules Creek coal mine at risk if the drought doesn’t break.
Whitehaven managing director Paul Flynn told shareholders at the company’s annual meeting on Thursday that Maules Creek’s primary water source — a licence to draw from the Namoi River — was “severely impacted” by the savage drought across the Murray Darling basin.
Mr Flynn said the company had recently acquired additional long-term groundwater sources for Maules Creek, but still needed regulatory tick-offs from the NSW government to secure access.
The severe drought has devastated the NSW agricultural sector and threatened major mining operations.
While the Whitehaven boss said he did not expect any water-related interruption to Maules Creek before the middle of 2020, but said the company was monitoring the situation closely and regulatory delays in securing new water sources could cause problems.
“Maules Creek production could be impacted in the future if unanticipated delays arise in the context of those processes,” he said.
“Whitehaven will have a clearer picture in the coming months as to whether there are likely to be any delays, and any resulting impact to production at the mine.”
Maules Creek recycles about 60 per cent of the water it uses, but still makes up the majority of the 6826 megalitres of water used by the company’s coal mines last financial year.
In its inaugural sustainability report, issued in September, Whitehaven said it had used 68 per cent of its total water allocation from bores, groundwater and river supplies last financial year. That was up from 53 per cent in the previous year and 37 per cent in the 2016-17 financial year.
The company attributed the rising drawdown on its allocation to increased production as well as “deteriorating rainfall conditions in our region”.
Mr Flynn told shareholders on Thursday the water supply at its Narrabri underground mine and Gunnedah open pit mines, also in NSW, were not seen as being at high risk from the drought.
Maules Creek sits in the northwest of NSW, a region badly hit by the drought. While operations in the Hunter Valley — including BHP’s Mt Arthur mine, and those run by Yancoal — are also closely watching the drought, neither company has flagged major water issues for their operations.
A spokesman for BHP said the company was closely monitoring its water take at Mt Arthur and “has put additional measures in place to reduce water usage while maintaining operations”.
Mr Flynn’s comments come as the NSW government looks to new emergency powers to keep towns hit by the drought from running out of water, introducing legislation into state parliament on Thursday to abandon environmental approval processes for new dams and pipeline projects, and allowing towns to draw additional river allocations, previously exempted to keep water flowing for environmental reasons.
Maules Creek joins a raft of major NSW mines that face problems from the drought, including Newcrest Mining’s giant Cadia gold mine, and the Cowal mine run by Evolution Mining.
Evolution chief operating officer Bob Fulker told analysts on Tuesday that a dry summer could threaten Cowal operations, saying it could face restrictions next financial year if the drought did not break and other mitigation strategies planned by the company — including accessing saline bores not suitable for drinking water — did not pan out.
Newcrest also faces issues at Cadia towards the end of 2020, despite the fact the mine now recycles about 85 per cent of its water. The Northparkes copper mine, like Evolution’s Cowal, draws water from the hard-hit Lachlan River and faces similar issues, as does Glencore’s Cobar operations. Whitehaven shares fell 1c to $3.17 on Thursday.