Major mining projects in Queensland and New South Wales have been the subject of recent court decisions highlighting the risks and challenges faced by proponents in securing project approvals.

Environmental approval risk

Environmental assessment is typically a key part of the approval process for mining and petroleum projects in Australia with environmental issues becoming increasingly important as governments respond to community concerns with greater regulation and broader rights of public review and objection.

The risks posed to resource projects from environmental issues is amply demonstrated in two recent court decisions concerning the Alpha Mine project in Queensland and Warkworth Mine project in New South Wales (NSW).

Alpha Mine Project

The Alpha Mine project is a major coal mine proposed to be developed in the Galilee Basin in Central Queensland by Hancock Coal Pty Ltd.  With an estimated capital cost of $3.4 Billion, the project has a proposed mine life of 30 years with peak production of 30 Mta of thermal coal for export.

The proposed mine is part of a larger integrated project, known as the Alpha Coal Project, involving associated rail and port infrastructure. It is one of several proposed integrated projects to open up the Galilee Basin for mining. 

The project has been the subject of comprehensive assessments under the Queensland State Development and Public Works Organisation Act 1971 (SDPWOA) and Commonwealth Environment Protection and Biodiversity and Conservation Act 1999 (EPBCA), which have recommended the approval of the project subject to conditions. 

Further to the Alpha Mine proposal, Hancock had made applications for a mining lease (ML) under the Mineral Resources Act 1989 (MRA) and environmental authority (EA) under the Environmental Protection Act 1994 (EPA).  These were required to be publicly notified and were subject to a number of objections from adjacent land owners and public interest groups.

Land Court

Under the MRA and EPA, the Land Court was required to conduct a hearing into the applications for and objections to the grant of the ML and EA and make recommendations to the Ministers responsible for the MRA and EPA.

Issues

Five major issues were argued before the Land Court being:

  • groundwater
  • climate change
  • economics
  • ecology
  • surface water.

The Land Court hearing ran for more than two weeks and involved a wide array of expert evidence, with the Court delivering a comprehensive judgment running to 149 pages.

The Court noted that “there is a rather complex statutory framework underpinning these matters, which involves the MRA, the EPA, the SDPWOA and the Water Act 2000 (Water Act)”.

Ultimately the Court was satisfied that, having regard to the scope of its jurisdiction under the MRA and EPA, the non-water issues were satisfactorily addressed by Hancock and the draft EA.

Scope of Court’s review

The Water Act and groundwater issues were however another matter.  There was substantial legal argument as to the relevance of the Water Act to the consideration of the ML and EA by the Land Court.  Hancock’s position was that basically water issues under the Water Act were outside of the Land Court’s consideration as it provided a separate statutory regime and did not form part of the assessment required under the MRA and EPA.

In contrast, the other parties generally submitted that, while separate approvals were required under the Water Act to interfere with water, the mining sought to be authorised under the MRA and EPA would itself directly impact on groundwater and therefore the impact of mining activities on groundwater was relevant to the Court’s consideration.

In the end, the Court held it was required to consider the impacts on groundwater that were directly associated with the proposed mining activities under the MRA and EPA.

Groundwater impacts

Having regard to the evidence before the Court, the Member found that the mining activities will cause interference with groundwater in perpetuity over a land area that exceeds the mining lease area but was unable to say on the evidence in the matter, and taking a precautionary approach, just how far that interference in perpetuity will extend.  Nor was the Member able to determine the environmental and agricultural consequences of such impacts.

Court’s recommendation

The Land Court was therefore not satisfied that the applications for the ML and EA were satisfactory and made recommendations that either:

  1. the applications for the ML and EA be refused; or
  2. the ML and EA be granted subject to the condition that Hancock first obtain licences to take, use and interfere with water under the Water Act such that all concerns pursuant to the precautionary principle be resolved.

Some additional conditions in relation to water monitoring and make-good agreements with surrounding landowners were also proposed for the EA.

Under the Queensland regime, the Land Court is only empowered to make recommendations to the respective Ministers.  The Land Court is therefore not the final decision-maker nor are its recommendations binding on the respective Ministers. 

Implications

The objectors to the ML and EA have heralded the outcome a ‘landmark’ decision that recognises the need to resolve groundwater impacts before the project can proceed.  However, the proponent has stated it is pleased with the recommendation to approve the project subject to the proposed conditions.

The Court’s decision is significant in so far that it found that groundwater impacts have not been satisfactorily resolved.  Nevertheless, the Court has proceeded to recommend that the ML and EA be granted subject to conditions requiring concerns be resolved through the Water Act.

Warkworth Mine Project

In a less satisfactory outcome for the proponent, the NSW Court of Appeal has recently refused appeals by Warkworth Mining Limited and the Minister for Planning and Infrastructure against the decision of the NSW Land and Environment Court (LEC) to disallow the proposed expansion of the Warkworth Mine near Bulga in the Hunter Valley.

Warkworth had sought and obtained approval under the Environmental Planning and Assessment Act 1979 (NSW) (EPAA) for a major expansion of the Warkworth Mine.  However, the Bulga Milbrodale Progress Association Inc appealed the approval in the LEC.

Land and Environment Court decision

The LEC disallowed the mine expansion on the basis that the project would have significant and unacceptable impacts on biological diversity, including endangered ecological communities, noise impacts and social impacts.  The LEC also held that the proposed conditions of approval were inadequate in terms of the performance criteria and mitigation strategies to achieve satisfactory levels of impact on the environment, including the residents and community of Bulga.

The LEC accepted that the economic impact and positive social impacts of the proposed expansion were substantial but in balancing all relevant matters nonetheless determined that the preferable decision was that the project be disapproved.

Court of Appeal

Both Warkworth and the Minister appealed the decision of the LEC to the Court of Appeal.  The nature of the appeal was that it was limited to questions of law and to succeed on appeal it was necessary for there to have been legal error in the way the LEC determined the matter.

The appellants alleged a number of legal errors were made by the LEC, including the failure to give sufficient weight to the economic benefits of the project and the Director-General’s report that recommended the approval of the project.

In a lengthy judgment running to 131 pages, the Court of Appeal rejected the submissions and held the LEC’s decision was not subject to any legal error and dismissed the appeals by Warkworth and the Minister with costs.

Conclusion

The Alpha Mine and Warkworth Mine cases highlight the importance of dealing with environment impacts as part of the project assessment and approval process.  In the case of the Alpha Mine, despite findings from the Land Court that groundwater impacts have not been satisfactorily addressed, the project has been recommended for approval subject to conditions requiring the resolution of the groundwater issues. 

For the Warkworth Mine, subject to any further appeal, the original mine expansion proposal has been rejected and will not proceed (although a new proposal has been submitted and is being separately assessed).