JOHANNESBURG (miningweekly.com) – Environmental group Lock the Gate Alliance has written to the Queensland government, urging it to block the sale of diversified mining group Rio Tinto’s Blair Athol mine to junior miner Terracom for $1.

The group on Wednesday accused the mining company of putting Queensland taxpayers at risk of having to pay for the rehabilitation of the mine as a result of its attempt to “offload the mothballed mine to a financially distressed junior”.

Lock the Gate said Terracom was in financial distress in 2015 and claimed that the company remained financially distressed.

“Rio operated Blair Athol for 30 years and made huge profit from the operation. When it shut the mine in 2012, Rio gave a public undertaking that it would fulfil its legal obligations and fully rehabilitate the site. This sale shows Rio wants to renege on this commitment and is now trying to sell the site to a junior mining company and avoid the full cost of rehabilitating the mine,” said Lock the Gate’s mine rehabilitation reform campaign coordinator Rick Humphries.

In letters to the State Treasurer Curtis Pitt, Minister for Natural Resources Anthony Lynham and Minister for the Environment Stephen Miles, Lock the Gate cited Terracom’s level of debt, fragile cash flow and total inexperience as grounds to block the sale.

The letters also congratulated the government for blocking Rio Tinto’s previous attempt to sell the mine to now bankrupt Linc Energy in 2013.

“Terracom is in a distressed state financially due to its huge debt and is in a worse financial state than Linc was when the government blocked that sale. In addition, Terracom has no demonstrated experience or capacity to rehabilitate large-scale opencut coal mines such as Blair Athol which is a complex, very high risk site,” Humphries said.

“On these grounds the government should block this sale as they did with Linc given the huge financial risk to the taxpayer.

“Rio has said it will pay Terracom $80-million - an amount equivalent to the rehabilitation financial assurance - to get this liability off its books. We know that $80-milliion is not enough and Rio is prepared to stump up this amount because it knows it will cost a lot more, probably twice this amount, to actually properly rehabilitate the site.

“It’s now up to the Queensland government to protect the state’s taxpayers from being left with the cost of cleaning up after Rio and block this sale from going ahead,” Humphries concluded.