THE DEVELOPMENT of the Cobbora coal mine is “on hold” after expert advice to the state government that it could cost NSW taxpayers about $1.5 billion to take it to production.
Treasurer Mike Baird yesterday reported that the state government was determined to minimise the “significant risks and massive liabilities” created when its predecessor invested in the mine.
The former state government agreed to provide power generators with coal from Cobbora from the start of the 2015/2016 financial year, an “obligation” inherited by the current government.
But the “potential loss” of about $1.5 billion to build and operate the mine has prompted the O’Farrell government to investigate “whether alternative sources of coal are available to satisfy its obligations under existing coal supply agreements”.
Yesterday Mr Baird announced the government would proceed with the sale of the state’s electricity generators and the sale or lease of the Cobbora coal mine development, to free up cash for “transport, school and hospital projects” across NSW.
He said the planning and approvals process for the development of the mine was “on track and would remain a priority unless and until a superior alternative is established”.
Dubbo has looked to the proposed mine as a potential economic boon and job spinner.
About 500 workers would be employed in the mine’s construction phase and about 590 workers when it hit peak production.
Dubbo MP Troy Grant greeted the treasurer’s advice yesterday with a promise to be “open and honest” with the community.
“This is bad news,” he said.
“Dubbo won’t get the added benefits of the mine in the short-term. But the city will survive without Cobbora.”
The MP asked the community to understand that presently the mine project was “totally unviable”, pointing to a number of reasons.
They included the contractual obligation to sell “high volumes” of coal at “low prices”, and a 25 per cent downturn in coal commodity prices “driven by the global market”.
“The timing is just terrible,” he said.
Mr Grant could not envisage current commercial interest in the mine, but insisted the government was “still committed to the project” that he thought could be “on hold” for about five years.
The MP said an injection of $1.5 billion into the mine could come at the cost of essential services such as “police, education and health”.
Mr Grant has offered to host a briefing session for key industry groups at Dubbo.