New information from the NSW Resources Regulator has raised further questions about the gap between the rehabilitation bond held by the NSW Government and the real cost of cleaning up a shuttered coal mine owned by debt-laden mining company Wollongong Coal.
In September this year, the company lodged paperwork with the Department of Planning revealing it would cost $215 million to clean up the Russell Vale coal mine, located beneath the Sydney drinking water catchment area.
However, recent correspondence* from the Resources Regulator to community group Illawarra Residents for Responsible Mining has revealed an updated calculation of the rehabilitation bond for the Russell Vale mining lease, supposedly to meet clean-up costs, of only $12.4 million, just 5% of the true clean up cost estimated by the company.
The Resources Regulator is continuing to investigate the discrepancy.
Contrary to Wollongong Coal’s own valuation of the rehabilitation cost, the Resources Regulator has advised that, “In accordance with that notice a new Rehabilitation Cost Estimate has been received and assessed by the Regulator, which determined that the revised assessed deposit is $12.4M.”
The Regulator said the revised figure came after it issued a “statutory direction to Wollongong Coal requiring the engagement of an independent expert to conduct a review of the security deposit amount for Russell Vale mine.”
Wollongong Coal has a debt of $977 million and in the last six months reported losses of $77M ( $3M per week). Both of its Sydney catchment mining operations are in “care and maintenance” following a stop work order at the Wongawilli mine issued by the Resources Regulator over safety concerns and serious concerns about a proposed expansion of Russell Vale.
Lock the Gate spokesperson Nic Clyde said Wollongong Coal’s precarious financial situation and the mine’s location in Sydney’s drinking water catchment meant there was a higher than usual risk.
“The NSW Government only holds a $7.5 million rehabilitation bond for the Russell Vale mine. If Wollongong Coal declared bankruptcy tomorrow, how would the cleanup of this mine under Sydney’s drinking water catchment, on the edge of suburban Wollongong, be paid for?”
“Taxpayers should be extremely concerned about the financial state of this company and the cost of cleaning up its mess.”
Institute for Energy Economics and Financial Analysis analyst Tim Buckley said, “This company to all external appearances is trading whilst insolvent, with zero capacity to repay its over $1 billion of liabilities. It has no hope of funding the clean up at this site from existing assets. With no viable pathway to funding more than $200M in rehabilitation, the NSW Government has imposed this burden on taxpayers.”
IRRM spokesperson Gavin Workman said, "Wollongong Coal was not specific about what the $12.4m would cover at the last Community Consultation Committee meeting, but just continued to repeat that it was calculated to the regulators requirements.
"Also, the $400,000 security bond still has not been paid to Wollongong Council and Wollongong Coal is still trying to remove an $8m commitment from their previous approval to realign Bellambi Creek".
Lock the Gate has written to the Regulator regarding the apparent shortfall of more than $200M, and has been advised there is “ongoing investigation into the discrepancy between the assessed security amount and the information that the company provided as part of the submission of the EIS documentation.”
Mr Clyde said, “This company is not fit or proper to operate a mine in New South Wales and it is high time the Resources Regulator acted to prevent Wollongong Coal making any more mess in Sydney’s drinking water catchment and ensure the site is cleaned up and paid for.”