The Lock the Gate Alliance has accused Rio Tinto of knowingly putting the Queensland taxpayer at risk of having to pay for the rehabilitation of the Blair Athol coal mine as a result of the company’s attempt to off load the mothballed mine to a financially distressed junior mining company.
The Alliance has written to three State Ministers calling on them to block the sale of Rio’s Blair Athol Mine to junior mining company TerraCom Ltd, for just $1, following a similar attempt by Rio Tinto to sell Blair Athol to the now bankrupt Linc Energy in 2013.
Terracom was in financial distress in 2015 and remains in the position this year, following a debt restructure, due to the extent of its leverage combined with depressed coal markets, according to analysts IEEFA.
“Rio operated Blair Athol for 30 years and made huge profit from the operation. When it shut the mine in 2012, Rio gave a public undertaking that it would fulfill its legal obligations and fully rehabilitate the site. This sale shows Rio wants to renege on this commitment and is now trying to sell the site to a junior mining company and avoid the full cost of rehabilitating the mine,” said Lock the Gate’s Mine Rehabilitation Reform Campaign Coordinator Rick Humphries.
In letters to the State Treasurer Curtis Pitt, Minister for Natural Resources Anthony Lynham and Minister for The Environment Stephen Miles, Lock the Gate cited TerraCom’s level of debt, fragile cash flow and total inexperience as grounds to block the sale. The letters also congratulated the Government for blocking the Linc Energy transaction on similar grounds.
“TerraCom is in a distressed state financially due to its huge debt and is in a worse financial state than Linc was when the Government blocked that sale. In addition Terracom has no demonstrated experience or capacity to rehabilitate large scale open cut coal mines such as Blair Athol which is a complex, very high risk site,” Mr Humphries said.
“On these grounds the Government should block this sale as they did with Linc given the huge financial risk to the taxpayer.
“Rio has said it will pay TerraCom $80 million - an amount equivalent to the rehabilitation financial assurance - to get this liability off its books. We know that $80m is not enough and Rio is prepared to stump up this amount because it knows it will cost a lot more, probably twice this amount, to actually properly rehabilitate the site.
“It’s now up to the Queensland Government to protect the state’s taxpayers from being left with the cost of cleaning up after Rio and block this sale from going ahead. If big multinational mining companies like Rio are not prepared to respect Queenslanders and do the right thing then the Government must, as they did with Linc Energy, step in and protect our interests. Further the Government should enforce the existing Environmental Authority over the Blair Athol site and force Rio Tinto to immediately start the full rehabilitation of the mine,” Mr Humphries concluded.
