THE NSW government will not proceed to develop or operate the Cobbora Coal Project but it will try to stimulate the economy of Dubbo and district until the mine can be sold or leased.
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Dubbo MP Troy Grant will head up a transition team of politicians to look at “new projects for our region” that can offer work to businesses and tradespeople who have been banking on the mine going ahead.
The former state Labor government put the project’s wheels in motion, but they came off spectacularly when the current government learned it would cost taxpayers about $1.4 billion to get the mine off the ground.
NSW Treasurer Mike Baird went searching for ways to unwind the “the dud deal of the century... executed in Labor’s dying days in office”.
Yesterday he reported of the sale of a government-owned power station and a billion-dollar burden lifted from the state’s shoulders.
The Treasurer informed taxpayers that Eraring Energy had been sold to Origin Energy, which bought the electricity produced by Eraring in the lead-up to the 2011 state poll.
Mr Baird said the current transaction released the state from a $1.75 billion obligation to supply Eraring with large amounts of cheap coal from the Cobbora mine.
The state government would pay $300 million compensation to Origin for terminating its contract with the Cobbora project.
“Taking into account the residual cash retained by the state, the net cost to the state of the entire transaction is around $75 million,” Mr Baird said.
Origin Energy, Macquarie Generation and Delta Electricity, the operators of major coal-fired power stations in NSW, were to receive up to 9.5 million tonnes of coal from the Cobbora mine per year.
Yesterday Mr Baird revealed that the contracts with Macquarie Generation and Delta Electricity had been terminated because falling prices and excess supply had enabled the state to source an alternative supply for them.
Mr Grant yesterday confirmed that the state-owned Cobbora Holding Company would continue to work towards gaining planning approval for the mine, probably by the middle of 2014.
He said the state government was looking to make the project “shovel-ready” for sale or lease.
Mr Grant acknowledged that there would be community disappointment resulting from the government’s announcement.
“Within Dubbo, for example, engineers, boilermakers, welders, electricians, people who work on roads were looking to the mine being built to find work,” he said.
“The transition team is to look at new projects for our region that can continue to stimulate the economy in the interim and serve as a bit of a buffer until hopefully Cobbora is picked up and opportunity comes back in droves.”
The transition team includes Barwon MP Kevin Humphries and Orange MP Andrew Gee. The Nature Conservation Council of NSW yesterday applauded the terminating of the contracts.
“The decision to terminate the Cobbora coal supply contracts is economically and environmentally responsible,” its chief executive officer Pepe Clarke said.
“Given the poor quality of the coal resource at Cobbora, and the significant environmental impacts of the mine, we call on the NSW government to withdraw its development proposal from the planning process.”
