Delegates, here is the May 2019 MERC Newsletter.This newsletter has a lot of important information in it for you to read, please circulate this to your fellow Councillors and senior staff, so they can appreciate and understand the excellent work the Association and you are doing on behalf of your Council and community, with regard to mining and energy related matters.
Update on the Voluntary Planning Agreement Steering Committee
Another meeting of the Steering Committee was held 2nd May 2019 to consider the position papers by NSWMC (on the implications of autonomous mining for VPAs) and MERC (to review Umwelt’s Worker Domicile Model and to, identify any impacts which are not included in that model which MERC considers should be the subject of financial contributions through VPAs, plus the methodologies for their calculation).
The meeting was realistic in that where there was general agreement that while neither organisation was likely to be able to mandate use of a particular methodology by their members, there was a reasonable prospect of the Committee identifying a mix of methodologies that could be used in combination to address the concerns of members. This could be recommended by both organisations to their respective members and would have some utility in streamlining future VPA negotiations. It was also highlighted that this approach may have greater utility for application to smaller, non-coal operations.
NSWMC members reiterated that they were open to such an approach, but that their membership would not agree to any mixed methodology that did not involve some proportion calculated via the Worker Domicile Model. NSWMC will also need to have a clear rationale to support further costs which are outside this model, but noted that a generalised, ‘black box’ figure on top of that calculated through the Worker Domicile Model could potentially be justified as a consideration to impacted communities if reasonable. Certainty and predictability of costs is a key concern of their members.
The Committee agreed to work together to develop a VPA framework agreement (including scope and calculation methodologies) for consideration at the next Committee meeting to be held on 23rd August 2019 in Sydney. Both parties agreed that the future of the Committee should be considered if no substantive progress was made at the next meeting.
On 10th May 2019 MERC members agreed that they would support such a mixed contributions model approach consisting of any of the following:
- A model utilizing a % of Capital Expenditure and/or a cents per Cents per Production cost;
- A combination of % Capital Expenditure and/or Cents per Production cost of 70% and a Worker Domicile Model of 30%;
- A worker Domicile Model based upon a sliding scale which recognises the economic befit for the host Council;
- Each Council has the opportunity to negotiate their own VPA models irrespective of the aforementioned models.
MERC is to submit a paper on the VPA framework agreement including the scope and methodologies for these mixed contributions models. As well, MERC is to develop a Statement in conjunction with the NSW Minerals Council and the VPA Steering Committee that outlined the foregoing.
Despite this, it was further agreed that if these methodologies are not agreed to or substantive progress can’t be made during the negotiations, then the Chair of the VPA Steering Committee is to be advised that negotiations will cease and MERC will withdraw from the Committee.
Next meeting is to be in Sydney on 23rd August 2019. Meanwhile, Glenn Wilcox (Life Member, Warren Shire Council) has provided his “Mining Calculator” to the VPA working party to trial as another option and comments will be provided to delegates about this model in due course.
Resources for Regions (R4R) versus a Royalties for Regions – Media Release, etc.
MERC will continue to canvass the new NSW Government for changes to the current Resources for Regions program to resemble a Royalties for Regions one. There is widespread support for changing the existing program to a Royalties for Region program with a set percentage being allocated to mining and energy affected Councils for infrastructure, social and economic impact addressing.
Phil Donato (MP for Orange and leader in the Legislative Assembly for the Shooters Fishers & Farmers Party) and Roy Butler (MP for Barwon and from Shooters, Fishers & Farmers party met delegates on Friday 10th May 2019 at Forbes Services Memorial Club. Both indicated that their party would support such a review and a change to a Royalties for Regions program with a set % of royalties returned to Councils in mining affected regions to assist with the infrastructure, social and economic impacts.
Given the need for the government to have support for legislation changes from the minor parties, it is fortuitous that MERC has the support of the Shooters, Fishers & Farmers Party who have requested a submission on the issue so they can pursue it in parliament as part of their “bias for the bush” campaign mantra and would like regular and open dailogue with MERC on this basis. Whilst not in the Coalition parties, hopefully they are able to use their position to create opportunities for the mining affected regions of NSW.
Regional Advisory Forum (RAF)
Given the changes to the Planning and Environment portfolios in Cabinet recently (Hon Rob Stokes, Minister for Planning & Public Places is back in charge of this very important portfolio, Don Harwin has been replaced by Hon Matt Kean, Minister for Energy & Environment), consequently, it is not known if RAF will be retained nor is it likely that a further meeting will be held within the next few months. If it is scrapped, this will mean that a lot of important relevant information that Cr Hasler regularly relayed to MERC, will not occur.
Next Meetings of Association for 2019
The next Executive Committee meeting will be on 8th August 2019 at 2pm and the Ordinary General Meeting next day on 9th August 2019 at 9am, both meetings will be held in the Club York second floor meeting rooms, 99 York St, Sydney, same as for the February meetings.
Mid Coast Council have now confirmed they will host the November meetings in Gloucester on 7/8th November 2019. The meeting cycle for 2020 will be determined at the Annual General Meeting. Dates will be confirmed by the Executive in due course in consultation with the host Councils, but by sticking with the pattern of second Thursday/Friday in the aforementioned months is what MERC is working on for your diaries.
The Association at its May meeting in 2018, adopted a Marketing Policy to ensure membership increases by targeting more renewable energy development affected LGA’s in NSW and to formalise and strengthen the membership campaign. If any delegates have any colleagues in Local Government that may be interested in being part of our voice, please contact the Executive Officer.
Speakers for next meetings of MERC
The Executive Officer has confirmed the following speakers for the meeting in Sydney 9th August 2019:
- Felicity Greenway, DPE (PIE), Acting Executive Director of the Integrity & Ethics Unit to address delegates on the 19 recommendations of the Kaldas Review Report, which the DPE (PIE) have adopted all of them and progress with them;
- Tony Corbett, Port of Newcastle, Trade & Business Development Manager, for an update on mineral movements out of the Port of Newcastle and future changes;
- David Kittoes, Executive Director, Resource Assessments and Business System, DPIE on his role and on any changes proposed with planning assessments;
- Dr Alex King or Kristina Erzikov & Jessica Rossell, DPIE, Resources Planning and Geosciences for an update on their review of monitoring mining processes in NSW.
MERC will be pursuing the following speakers for future meetings when congratulating them on their re election and ministerial appointments:
- Hon Adam Marshall, Minister for Agriculture and Western NSW, National Party;
- Hon Rob Stokes, Minister for Planning & Public Spaces, Liberal Party;
- Hon Matt Kean, Minister for Energy & Environment, Liberal Party;
- Hon Gladys Berijiklian, Premier, Liberal Party;
- Hon John Barilaro, Deputy Premier, Minister for Regional NSW, Investment & Trade
Other relevant Opposition party members and government senior officers will also be pursued for meetings as required when known.
Life Membership Updates – Mitchell, Connor and Cr Brady OAM
Life membership badges, plaques and certificates will be presented to Cr Lilliane Brady OAM and Col Mitchell at the August Ordinary meeting in Sydney with Chris Connor opting for Gloucester in November 2019.
Coal Seam Gas Policy
The amended Coal Seam Gas Policy was adopted with some minor changes. However, a Notice of Motion will be submitted to the August meeting by Cr Mark Hall, Lachlan Shire Council, proposing that further changes be included in relation to the double casing of bores. He will submit a paper on the arguments for it for delegates consideration. Thereafter a copy of the amended policy will be forwarded to delegates for their information and/or consideration.
Research Fellowship Update
Delegates decided to go with the University of Technology Sydney (UTS), (Dr Alexey Voinov and Dr Juan Castilla-Rho) with Peter Dupen as the PhD student to undertake the PhD Research project on participatory modelling of social licensing pathways in view of it being “shovel ready”. This still leaves MERC with the option of undertaking a similar project with the University of Wollongong (UoW) SMART unit on a different topic in due course.
In recent discussions with the PhD student, arrangements are being made to formalise the grant application and the development of a Memorandum of Understanding (MOU) with the UTS which will outline details on insurances, performance measures, exit strategies, roles, finances, etc. However discussions on the projects are yet to occur. The MERC working party will be involved in this and on how the project will work to benefit MERC members in due course. Peter Dupen will address delegates at the August meeting on progress with the project.
NSW Minerals Council CEO has been approached about being part of this PhD project as a sponsor and the CEO requested a submission which has been forwarded to him. It may not lead to anything given our respective positions with the VPA, but worth a shot.
Related Matters of Interest – Mining and Energy Issues
“Australian mining sector to flourish in a little over a decade” Richard Szabo, 10th May 2019, Australian Mining Review writes “ In a little over a decade from now, the Australian mining sector will flourish in a different playing field, a new official document has revealed.
Asia is predicted to produce more than half the world’s economic output, consume 40 per cent of its energy and be home to a middle class of almost 3.5 billion people by the year 2030. If the Australian mining sector can maintain its global share of commodity production, at least 24,000 new direct mining jobs could be created, according to the Federal Government’s National Resources Statement.
The first such statement released in over 20 years outlines how regulatory authorities can effectively attract investment and develop new resources and markets. The strategy also focuses on creating well-paid and secure jobs, investing in new technology to improve environmental outcomes and ensuring local communities receive any flow-on benefits of mining.
In addition to this, the government will continue supporting development of new resource basins, through an existing memorandum of understanding with the Northern Territory on the development of the Beetaloo Basin, and also invest in seismic and aero-magnetic surveys to help discover the next major mineral find through the $100 million Exploring for the Future program.
A new critical minerals work program will separately be established to boost exploration and develop a data strategy to de-risk investment decisions. Funding applications for vital minerals projects will also be prioritised under the $20 million Round 7 of the Cooperative Research Centres Project.
The government believes there is a bright future ahead for the Australian mining sector due to rapid economic growth across the Asia Pacific region.
“Our resources sector makes up 8 per cent of our economy and exports are predicted to reach a record $250 billion in 2018–19. It also employs around 1.1 million people directly and indirectly, and is the largest employer of Aboriginal and Torres Strait Islander people,” Federal Minister for Resources and Northern Australia and Senator Matt Canavan said in a public statement. “Our work starts now … taking action now means a stronger and more robust resources sector into the future. This National Resources Statement will help keep us at the top of our game and pave the way for decades of prosperity for all Australians.”
The statement was released in response to recommendations from the Resources 2030 Taskforce commissioned by the government in 2018.
“Caterpillar secures Koodaideri self – driving trucks” Mining Editor, May 2019, Australian Mining Review “Rio Tinto’s Koodaideri iron ore mine in Western Australia will utilise a fleet of 20 autonomous Caterpillar self- driving trucks (793F mining haul trucks) in addition to four autonomous blast drills to improve safety and productivity.
In a media release today, Rio Tinto confirmed a deal to purchase the self- driving trucks and other autonomous mining equipment had been inked. Caterpillar will also supply a range of other mining equipment for the Koodaideri operation.
“Beyond the autonomous fleet, Caterpillar will also provide loaders, dozers, graders, water carts and diggers for the operation which will be Rio Tinto’s first Pilbara mine to be primarily operated using Caterpillar machinery,” Rio said.
Rio Tinto has previously stated that the first production roles are expected to commence in 2021 and the Koodaideri operations would create over 2000 jobs during construction and 600 permanent roles. Caterpillar self – driving trucks will now feature as core mine haulage.
Rio Tinto Iron Ore chief executive Chris Salisbury previously said that the Koodaideri project would be a significant leap forward for the global mining industry and the company. “We’ve been building mines in the Pilbara for over 50 years, and, subject to final approvals, Koodaideri will incorporate all of that knowledge to enable us to build the smartest, safest and most efficient mine we’ve ever constructed,” Salisbury said. Rio Tinto plans in place to increase its autonomous haulage fleet to more than 140 by the end of 2019.
“CO2 better hydraulic fracking fluid than H20” Industrial Careers, 30th May 2019. Refer www.industrialcareers.com.au. “Chinese scientists say CO2 may make a better hydraulic fracturing fluid than water. The finding could help pave the way for a more eco-friendly form of fracking that would double as a mechanism for storing captured atmospheric CO2.
In normal fracking operations, fluid (usually water mixed with sand, foaming agents, biocides, and other chemicals) is injected into rock, fracturing it to release the resources within. Of the approximately 7-15 million litres of fluid injected, 30 to 50 per cent, remains in the rock formation after extraction ends.
Its high water consumption, environmental risks, and frequent production issues have led to concerns about fracking among both industry experts and environmental advocates.
“Non-aqueous fracturing could be a potential solution to circumvent these issues,” says Professor Nannan Sun, a researcher in the Shanghai Advanced Research Institute at the Chinese Academy of Sciences. “We chose CO2 fracturing from a range of options because the process includes multiple benefits. However, we were still lacking a fundamental understanding of the technology, which is greatly important for its further development and deployment.”
Benefits of CO2 fracturing include eliminating the need for a hefty water supply (which would make fracking viable in arid locations), reducing the risk of damage to reservoirs (as often happens when aqueous solutions create blockages in the rock formation), and providing an underground repository for captured CO2.
“We demonstrated that CO2 has higher mobility than water, and, therefore, the injection pressure can be better delivered into the natural porosity of the formation,” Prof Sun says. “This changes the mechanism by which the fractures are created, generating more complex fracture networks that result in more efficient shale gas production.”
While the researchers believe this hydraulic fracturing technology will be scalable, its large-scale development is currently limited by CO2 availability. The cost of CO2 captured from emission sources is still prohibitively expensive to make CO2 an industry-wide fracking fluid replacement.
The team also notes that once CO2 has been injected into the fracture, it acquires a low viscosity that inhibits it from effectively transporting sand to the fractures. Since the sand is intended to prop open the fractures while shale gas is harvested, it is critical that scientists learn to improve the fluid’s viscosity. The team is not yet sure how to do so while keeping costs low and minimizing the environmental footprint.
“SMH 26 Nov 2018:Rio Tinto warns climate inaction poses ‘greatest long-term threat’ 9From Warwick Giblin) Nic Tascano writes. “The new chairman of global mining giant Rio Tinto has described inaction on climate change as “perhaps the greatest long-term threat” facing the business and promised it would be part of the solution rather than the problem.
Speaking at an investor meeting on Monday, Rio Tinto chairman Simon Thompson said society – particularly Millennials – were demanding higher standards from the companies they worked for and invested their money in. He signalled a renewed emphasis from Rio Tinto’s board on environmental, social and governance issues, and on continuing to reshape its portfolio for the transition to a “low-carbon economy”. “Perhaps the greatest long-term threat to Rio Tinto is if business, investors, consumers and especially governments, collectively fail to take action on climate change,” he said.
Rio Tinto is among a number of major mining and resources companies to escalate warnings against political inaction on global warming and call for a price on carbon, despite the Morrison government rejecting the need to overhaul climate policies before the next federal election.
Mr Thompson said the mining industry recognised that it had a profound impact on wider society, both positive and negative. It creates jobs, tax revenue, economic prosperity for remote regions, and the raw materials that are “essential for human progress”, he said.
But it also has negative environmental and social impacts, including land disturbance, significant water consumption and climate change. Sustainability, social responsibility and other so-called ESG (environmental, social, governance) issues are growing focus areas for mining companies in Australia and worldwide in the face of heightened scrutiny from investors and a spate of shareholder resolutions targeting heavy emitters.
The International Council on Mining and Metals told a mining conference in Melbourne earlier last month that there had been a “convergence” of the environmental and social demands of communities in which miners operated and the demands of institutional shareholders.
Mr Thompson said the Rio Tinto board considered investment in ESG issues to be a “source of differentiation”. He said the company’s portfolio was in “very, very good shape” as climate change had “been integrated into our strategic planning for nearly two decades”.
“Many of the global mega trends that we see today do indeed support demand for our products – for example, urbanisation and the growth of the middle class. But others clearly pose a major threat,” he said.
“I hope that the centrality of ESG issues to many of our board discussions is already evident, as we continue to reshape our portfolio for the transition to a low-carbon economy.”
“Salt water tomato farm sells” ABC News, courtesy Steve Loane:
Agriculture business Sundrop Farms has been sold to trans-Tasman infrastructure investment firm, Morrison and Co. for an undisclosed amount. The company runs a world-first facility in Port Augusta that uses thousands of mirrors to capture sunlight, as well as seawater, which it desalinates, to grow tomatoes. Morrison and Co., which owns other renewable energy investments, said the facility would be the fund’s top priority over pilot plants in Tennessee and Portugal.
After a year-long process the company has bought by trans-Tasman infrastructure investment firm, Morrison and Co. for an undisclosed amount. Sundrop Farms opened the only facility of its kind in the world at Port Augusta in South Australia in 2016, and uses sunlight and seawater to grow tomatoes.
The facility uses more than 23,000 mirrors to capture sunlight and direct it to a central receiver at the top of a 127-metre “power” tower. All the water used for irrigating the crops is piped from the Spencer Gulf and converted into fresh water using a thermal desalination unit.
At its peak it produces 39 megawatts of thermal energy, which is used for electricity, heating and making water. The commercial facility cost about $200 million to build, with private equity firm Kohlberg, Kravis and Roberts (KKR) investing $100 million.
The facility produces about 17,000 tonnes of truss tomatoes a year and holds a 10-year supply contract with Coles Australia. The company’s pilot plants in Tennessee and Portugal were sold prior to the Morrison and Co. deal.
“Cumulative impact grounds an increasing challenge for proponents of large-scale wind farms in NSW” By Claire Smith, Emma Whitney and Jessica Lighton, Clayton Utz
The NSW Department of Planning and Environment’s decision highlights the increasing significance of a proposed project’s impact to visual amenity, particularly its cumulative visual impact. As renewable projects increase, so do planning objections, with visual and noise amenity as the two most commonly cited impacts raised by objectors. The NSW Wind Energy Guideline (2016) acknowledges that visual impact is an assessment criterion particularly relevant to wind energy developments, noting that the height, scale and mechanical character of wind turbines creates an unavoidable level of visibility and contrast with the natural environments in which they are situated. Further, multiple wind energy projects in close proximity can cause cumulative impacts on a particular landscape and people’s enjoyment.
Under the Framework, consent authorities must consider the acceptability of visual impacts on landscape values and the amenity of landholders and communities, as well as the adequacy of measures in development proposals to avoid, reduce or manage these impacts. Those impacts are assessed in accordance with the NSW Wind Energy: Visual Assessment Bulletin (2016) which covers appropriate site-selection and environmental assessment.
How all of this is playing out in practice is becoming clearer, with cumulative impacts playing a major role in the NSW Government’s recommendation that a large-scale wind farm in the Southern Highlands be refused on the grounds that the location was fundamentally not suitable because of the cumulative visual and landscape impacts of multiple wind turbines in the locality.
The cumulative impacts of another wind farm in Crookwell
Crookwell, a town in the Southern Highlands, and its surrounds are home to five wind farms, which between them have 195 turbines. Under the Crookwell 3 wind farm proposal, 23 turbines up to 157 metres in height, with a capacity of up to 96MW, would be constructed around five km from the town in two clusters either side of the existing 32-turbine Crookwell 2 Wind Farm which is operated by the same proponent, Crookwell Development Pty Ltd (CDPL) (a subsidiary of Global Power Generation Pty Ltd). Seventeen of the proposed 23 turbines would be less than 2.1 km from residences, with some as close as 1.1 km.
The NSW Department of Planning and Environment recommended that the State significant development application for the Project be refused because of its significant cumulative visual impacts on the surrounding landscape and residents.
The application has now be referred to the Independent Planning Commission (IPC) for final determination – the second time the Project has been sent to the IPC. In 2015, the Department sent an earlier version of the Project (which proposed 29 turbines) to the IPC, recommending that approval be granted. However, the IPC expressed concerns about the Project and sent it back to the Department. This triggered CDPL to amend the proposal (including reducing the number of turbines to 23) which it resubmitted to the Department for assessment.
Despite this reduction in number the Department found the amended Project unacceptable because: the Project would result in unacceptable direct and cumulative visual impacts on residences, public viewpoints and the surrounding landscape; the Project would result in unacceptable impacts on the landscape character and significant landscape features; the majority of submissions from residences in the local area object to the Project and Upper Lachlan Shire Council maintains residual concerns about the impacts of the Project; the Project is not consistent with the current land use “environmental management” zoning provisions; and the Project is not in the public interest.
In assessing the public interest, the Department concluded the potential impacts of the proposed wind farm outweigh its predicted benefits. While the Department acknowledged the amendments made to the proposal to reduce impacts, and that CDPL had reached an agreement with multiple landowners, it considered the local landscape currently has a limited capacity to absorb further changes from wind farm development, and the specific location and scale of the project would result in material impacts on local landscape values and features.
Handling the visual impacts of future wind farm proposals
This is not the first time the Department has rejected a large-scale wind farm proposal. The proposed Jupiter Wind Farm located in Tarago in the Southern Tablelands was recommended for refusal by the Department twice (in October 2015 and February 2018) on grounds that the proposal would have unacceptable visual impacts on the surrounding landscape. The October 2015 refusal also cited a failure by the proponents to adequately address the noise impacts and properly consult with the local community. The Jupiter project originally included 100 turbines with a capacity of up to 350MW but was decreased to 54 turbines following initial discussions with the Department. In its reasons for refusal, the Department stated that the proposal was inconsistent with local land use “environmental management” zoning provisions and the site was fundamentally unsuitable for the project. The proposal was referred to the IPC for determination following the Department’s February 2018 recommendation but the application was withdrawn in March 2018.
There are clear similarities between both the proposed Jupiter and Crookwell 3 wind farms as well as the reasons cited by the Department for its refusal in each case despite the fact the Crookwell 3 project is approximately half the scale of the revised Jupiter proposal. These similarities indicate impacts on visual amenity, especially when combined with community resistance and cumulative impacts of existing project’s, will continue to feature more prominently within the Department’s assessment of any proposed wind farm project.
The Department’s decision highlights the increasing significance placed on the impact to visual amenity by a proposed project, particularly in locations with existing major wind farm projects, where the cumulative visual impact may become a prominent consideration. Proponents should therefore give due consideration to strategies or designs to reduce the impact of a proposed project on the visual amenity of the surrounding landscape, as well as clearly and effectively consulting with the local community to address concerns. (16/5/19)