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South32 set to benefit from secret NSW Cabinet deal allowing it to drain billions of litres from water catchment unlicensed

The Berejiklian-Barilaro Government has apparently signed off on a secret sweetheart deal so South32 can avoid purchasing a water license and instead pay money to the government directly to “offset” billions of litres of water that would be drained from the Sydney-Illawarra catchment area due to the company’s Dendrobium coal mine extension.

The “new licensing regime… approved by the NSW Cabinet” was revealed in the Planning Department’s recommendation to approve the mining project (p103), overruling strong objection from the agency responsible for the security and protection of Sydney's drinking water - WaterNSW. 

The agency has described the damage and water loss that would be caused by the mining project as “unprecedented,” and has raised concerns over the $103.1 million total “offset” proposed by South32, stating, “the current package that’s being proposed, the compensation package would not be, cannot be sufficient, would have to be recalculated”.

As well, the draft development consent (condition B19) prepared by the department makes reference to some water take being “exempt” from requiring a licence. This is not a provision currently available under the Water Management Act 2000 and appears to have been inserted into the draft approval in anticipation of law changes that have not yet been introduced to, let alone passed by, the Parliament.

The Independent Planning Commission is expected to make its decision on the extension by 22 January.

While South32 estimates that with the extensions, Dendrobium would drain an additional 3.3 billion litres a year from the catchment, WaterNSW believes losses from the extension could be up to double those that have been assessed and be “in the order of 6-7 billion litres each year”.

The Independent Expert Panel for Mining in the Catchment believes existing surface water losses at Dendrobium are approximately 5 million litres a day, or 1.8 billion litres a year. 

Under NSW water law, mines are treated like any other water user and must hold water licences for water taken from surface or groundwater. In the Sydney and Illawarra catchment, most of the surface water licences are held by WaterNSW. 

WaterNSW strongly opposes the project, and in its submission to the IPC stated, “this project is predicted to have the most significant surface water losses in the catchment of any mining project approved under a contemporary development assessment system (i.e. in the last 25 years at least). All previous projects were approved on the basis that there would be negligible impacts on catchment water. In that regard, the water licensing regime was established (through the relevant Water Sharing Plans) on the basis that mining companies would not require any surface water entitlements.” 

WaterNSW also expressed its frustration that South32 had been unwilling to entertain alternatives to the destructive longwall mining method, such as “bord and pillar” mining used by other companies active beneath Sydney’s drinking water catchment, and told the IPC:

While some of these other mines are generally seeking to amend their operations to reduce the catchment impacts, we see South32 as essentially seeking to do more of the same or even, arguably, more than before. And that’s in spite of what is a better understanding of the level of impacts from the existing mine. So I would say that generally bullish approach from South32 has continued throughout the assessment process, with very little compromise.

South32 has already been taking catchment water without a water license for many years. While other mines, such as Whitehaven’s Maules Creek coal mine, face legal repercussions for this type of behaviour because it is unlawful under the Water Management Act 2000, South32 appears to have escaped without facing prosecution.

Bizarrely, the contractor appointed by the department to finalise the assessment, former departmental senior employee, Howard Reed, argued the IPC should pay little attention to WaterNSW’s submission because the water authority “calls for negligible impact from mining (in the catchment) and that really cannot be achieved when you get down to it”.

Lock the Gate Alliance NSW spokesperson Georgina Woods said, “The Berejiklian-Barilaro Government appears to have offered South32 a secret sweetheart deal so the company can bypass water law. 

“The impact of that will be reduced water security for Sydney and the Illawarra," she said.

“We are shocked that the Planning Department has ignored strong objection to this mining project by the agency responsible for protecting Sydney’s water, and in spite of mounting evidence that the damage inflicted on the catchment by Dendrobium mine has been far greater than was anticipated. 

“Water licencing and water sharing plans were introduced to ensure there was sustainable management of this most precious resource. Special rules for the coal mining industry will hurt Sydney and the Illawarra in the long-run and undermines the whole system.

“The greater Sydney region is the only major city in the world that allows coal mining beneath its water catchment and now, instead of prosecuting this mine for taking water without a licence, the Berejiklian Government has apparently decided to change the rules so they no longer apply.

"South32's Dendrobium extension is reckless and must not go ahead.”

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