Court deals setback to plans for Rio Tinto mine

April 16, 2013

The New South Wales Land and Environment Court in Australia overturned an approval to expand Rio Tinto’s Mount Thorley Warkworth mining complex, leading the company to review the future of the coal project.

The expansion would have added about 13 years to the life of the mine, but with the setback, Rio Tinto said 1,300 jobs are now at risk, Reuters reported. The setback could also hold implications for any potential sale by Rio Tinto of coal assets in Australia.

The operation yielded 4 Mt (4.4 million st) of thermal coal and 1.6 Mt (2 million st) of semi-soft coking coal in 2012. It is run by Rio Tinto subsidiary Coal & Allied.

The chief judge of the Land and Environment Court, Justice Brian Preston, said in his judgment that the association’s appeal should be upheld due to “the significant, diverse biological adversity, noise and dust and social impacts of the project,” local media reported.

Rio Tinto reportedly has hired Deutsche Bank to help sell some Australian coal assets worth billions of dollars as the company seeks to slash costs and exit non-core and under-performing businesses.

Coal & Allied Acting Managing Director Darren Yeates said it was in the process of reviewing the court judgment.

“We will also undertake a thorough review into the viability of the Mount Thorley Warkworth operation,” Yeates said in a statement. “This will include looking at other development options, however this would require a significant capital investment in an environment where many Australian coal mines are struggling to survive.”

Coal prices have dropped dramatically this year, with demand from Asia waning as steel markets soften and more power suppliers switch to gas. Australian producers have been particularly hard hit due to the high value of the Australian dollar and steep wages.

The decision followed a legal challenge to the mine’s expansion from the Bulga-Milbrodale Progress Association.

The chief judge of the Land and Environment Court, Justice Brian Preston, said in his judgment that the association's appeal should be upheld due to "the significant, diverse biological adversity, noise and dust and social impacts of the project," local media reported.

 

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