PERTH (miningweekly.com) – Environmental group Lock the Gate Alliance has again appealed to the Queensland government to intervene in the $1 sale of the Blair Athol coal mine, saying the deal exposed the Queensland taxpayer to an "unacceptable risk" of having to pay for the mine’s rehabilitation.
Mining major Rio Tinto on Friday executed a binding sale and purchase agreement with ASX-listed TerraCom for $1.
Under the agreement, TerraCom, a subsidiary of Orion Mining, will receive A$80-million from the mining giant to meet rehabilitation costs at the site.
TerraCom said on Friday that the company initially planned to start over 50 ha of the site rehabilitation it assumed, while bringing the mine back into production. Production is being scheduled around a rate of two-million tonnes a year and will restart in the fourth quarter of 2016.
“We maintain that TerraCom is so debt ridden and unprofitable that it exposes the Queensland taxpayer to a high risk of being left to foot the bill for the rehabilitation of this mine,” said Lock the Gate coordinator Rick Humphries.
“TerraCom is carrying a debt of A$141-million, and they posted yet another financial loss in 2016 of A$17.5-million. This follows four years of annual financial losses since 2012.”
Humphries noted that a recent leaked report from the Queensland Department of Environment and Heritage Protection revealed that there were systemic problems with the financial assurance regime for mine rehabilitation in Queensland.
“That report suggested that the current financial assurance of A$80-million for the Blair Athol coal mine was inadequate to cover the cost of rehabilitation, and suggested at least A$100-million would be required. However, Rio Tinto’s own internal estimates of the cost of rehabilitation of the Blair Athol are believed to put it at least A$160-million.”
“The Queensland government needs to step in and block this deal. It has the power to do so, it is now over to them to assess TerraCom’s bid, to review their technical and financial capacity, and then decide whether to approve it or not.”