Coal brings cold comfort on the farm PAUL MYERS April 17, 2010...

Coal brings cold comfort on the farm PAUL MYERS
April 17, 2010

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IT'S a country community's impossible dream but, for some, its worst nightmare.

An overseas buyer acquires more than 20 rural properties at well above market value, turning the sellers into instant multi-millionaires. It offers to buy more land and promises to bring hundreds of new jobs to the district.

But when the buyer is China's - and the world's - biggest coal company and local farmers believe the 10 million tonnes-a-year mine it wants to build will adversely affect aquifers and food production, the community is split.

This is the dilemma facing Gunnedah, the service centre for the Liverpool Plains, arguably the richest agricultural region in the state and keeper of more than a billion tonnes of untapped steaming coal, plus huge quantities of coal seam methane gas.

The response from the Chinese government's majority-owned China Shenhua Energy Company? Spend an estimated $90 million - so far - buying 11,500 hectares of farmland from 22 owners in the Watermark area near Breeza, 30 kilometres south of Gunnedah and remove the farmers' objections.

While the sales have enriched longstanding farm families who could only have dreamed of such wealth, they have alienated others - including their neighbours - who oppose mining at any price.

Although Shenhua's Australian subsidiary, Shenhua Watermark Coal, and its sellers will not discuss the prices paid, one family - John and Charmian


Bailey and their son Peter, whose 2250-hectare property comprising several titles settled last week - is understood to have received more than $20 million.

According to RP Data, eight sales totalling 3494 hectares in the Breeza district in 2009 averaged $8113 per hectare. As farms the properties would be worth $3500-$4000 per hectare.

Despite their instant wealth, the Baileys are not happy.

"We felt we had no choice," said John, 80. "We're surrounded by neighbours who have sold. We didn't want to be left on a property next to an open-cut coalmine. It's the state government that caused this by selling the mining leases."

Mrs Bailey, 79, says she is "heartbroken" to be leaving the farm the couple bought two years after they were married in 1950, and the district where her great-grandfather settled in the mid-1800s. "The money means nothing. It is tainted money. It will never bring us joy," she said.

Shenhua's property acquisitions on its 19,500-hectare mining exploration lease, for which it has so far paid the government $300 million with another $200 million owing if mining proceeds, contrasts with the tactics used by BHP Billiton, which in January was blocked by the NSW Supreme Court from further exploring land on an adjoining lease for which it paid $100 million.

Whereas Shenhua has secured pastoral and mining rights by buying farmland, BHP Billiton used a section of the Mining Act, which allows exploration on private land, to justify its actions. But the Supreme Court ruled that BHP Billiton's licence was invalid because it had not consulted mortgagors.

BHP Billiton is now also buying farms in the area and is understood to be negotiating to buy Swift Australia's Caroona feedlot, which employs 50 people.

Last July, Shenhua received Foreign Investment Review Board approval for its first six purchases and last week secured blanket approval - in advance - for all remaining acquisitions within its lease during the next year. When the first approvals were granted last July, the then opposition spokesman on regional development, Senator Barnaby Joyce, described the decision as "pathetic".

It was also strongly criticised by the Greens senator Bob Brown and the NSW Greens MP Lee Rhiannon.

"It's a double-edged sword," said Gunnedah Shire Council's mayor, Adam Marshall. "Mining isn't new to Gunnedah and it has been good for the district. We still want mining, but not at the risk of prime agricultural land."

He is critical of BHP Billiton's aggressive approach towards landholders and the NSW government's refusal to return a share of lease fees and - if mining proceeds - royalties to the shire.

He says the opposition spokesman on industry, Duncan Gay, promised the council ast week that, if elected in March, the opposition would return a percentage of mining royalties to the shire. The council will seek such a commitment from all candidates in the seat of Tamworth at next year's state election.

If Shenhua gains a mining licence and extracts its projected 10 million tonnes of steaming coal a year at the current price of $90 a tonne, the NSW government will reap $63 million a year in royalties.

But apart from $175 million for a new rail crossing through the Liverpool Ranges - to be paid by Shenhua on top of its $500 million in licence fees - no benefits have been promised for the region.

This is only one aspect of the project that is angering some locals. The threat to local food production is another.

"If this mine goes ahead it will be the end of agriculture here," warned the Caroona Coal Action Group's spokesman, Tim Duddy, whose 2900-hectare Rossmar Park at Caroona adjoins both the Shenhua and BHP Billion leases.

With several neighbours having already sold, the property, which has been in the Duddy family since 1934, could be worth more than $30 million. But they are not selling. "If you've been here this long you want to stay, and anyway the nation's food is worth a lot more than coal," Mr Duddy said.

An independent water study, which will take about 18 months to complete, is about to go to tender, but Mr Duddy says Shenhua and other mining companies won't necessarily be bound by its findings.

"They're going to destroy the water. The damage will be huge and it will never be able to be fixed," he said.

The aquifers in the Liverpool Plains are a huge, pristine source of water for livestock, crops, homes and towns in the region. Coalmining opponents say the 12,000-square-kilometre area produces, on average, crop yields 40 per cent above the national average. They argue that bringing heavy metals, salts and other pollutants to the surface through open-cut (proposed by Shenhua) or long-wall (proposed by BHP Billiton) coalmining will jeopardise the underground water purity, while water used by the mines will permanently deplete the aquifers themselves.

Numerous habitats of koalas and other native animals and birds are within the Shenhua exploration lease. In its April 2009 report of environmental considerations, GHD - a consultancy firm engaged by Shenhua to provide a range of services related to the project - says four threatened species were detected during field surveys: koalas, yellow-bellied sheathtail bats, barking owls and grey-crowned babblers. The report further noted that 23 threatened fauna species "are known or are highly likely to occur as permanent local populations" within the lease.

The report said "there is the potential for direct impacts on three [species]" and "these species are not likely to significantly impacted (sic) by the proposed drilling".

For the past 18 months, Shenhua Watermark Coal has been playing down community concerns, holding more than 200 meetings with farmers and other parties. Its project manager, Joe Clayton, says the company is not pressuring farmers to sell their land. It has hired an independent negotiator. So far 63 per cent of the 18,200 hectares of private land (there is another 1300 hectares of state forest) has been acquired and Mr Clayton is confident of securing the rest.

He has given an assurance that there will be no mining on the region's rich black soil plains, nor any damage to aquifers.

"We're going to be farming the land as well as mining it," he said of farmland bought by Shenhua. "We don't want to harm the land any more than other farmers. Anyway, only 500 hectares of land will be disturbed at any one time when the mine is operating."

Mr Clayton says the mine will cost $750 million to $1 billion to build and will employ 300 people. "With a multiplier effect of five support jobs per employee, that's 1500 pay packets.''

Despite the opposition, most people, including Gunnedah's mayor and reluctant sellers John and Charmian Bailey, applaud the way Shenhua has conducted its negotiations. "They've done the right thing," Charmian Bailey said. "They've paid good money. We don't blame them. We blame the government for selling mining leases on good farmland."


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