Hunter coal future hangs in the balance

THE New South Wales government has set itself the lofty target of increasing the value of mining production by 30% by 2020 from its $15 billion export figure in 2012-13.
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Dragline at the Glencore-Yancoal JV's Hunter Valley Operations.

This ambitious goal is expected to be driven by the Hunter region, which is the major contributor to NSW coal exports, which is in turn the state's biggest export.

 

During 2017-18, 28 companies surveyed by the NSW Minerals Council contributed $4.3 billion in direct spending to the Hunter region through 1.6 billion in wages and salaries to 14,045 direct full-time employees including contractors; $2.6 billion in purchases of goods and services from 4168 local businesses; $3.5 million in contributions to 375 community organisations; and $30 million in local government payments.

 

NSW Minerals Council CEO Stephen Galilee said the survey confirmed the Hunter continued to depend on mining activity for local jobs, investment and economic growth.

 

Galilee said supporting the Hunter coal industry to make the most of these opportunities would support tens of thousands of jobs and deliver billions of dollars in royalty and export revenue to NSW.

 

He dismissed criticism that the demand for Hunter Valley coal was likely to diminish in the future as renewable energy took its place.

 

"The independent International Energy Agency has consistently forecast that South East Asia will be the primary growth centre of global coal demand to 2040," Galilee said.

 

"According to the IEA, coal consumption in South East Asia will more than double by 2040, driven by an increase in demand for reliable and affordable electricity, and deployment of more advanced technology coal-fired power stations."

 

However, there are voices calling for the region - famous for its wine, tourism, and horse racing studs - to start thinking carefully about diversifying its skills base now if it wants to avert a major social and economic crisis in the future if the world keeps adopting renewables ahead of coal.

 

State Member for Lake Macquarie Greg Piper said there was a global shift away from coal and that change would have an impact on local mining communities in the state such as the Hunter Valley and Newcastle regions of NSW.

 

The electorate Piper represents contains a significant number of families reliant on coal mining so he has a personal reason to be proactive in helping the local workforce adjust.

 

"Regardless of my views on climate change or anything else, I'm concerned that the global transition away from coal is going to leave a trail of devastated communities and workforces that have traditionally relied on the coal mining sector," he told Australia's Mining Monthly.

 

"If we don't move to aid that transition now, it will be too late."

 

Piper, along with two other independent NSW MPs, wrote a joint letter asking Premier Gladys Berejiklian to commit to a 10-year adjustment strategy for coal mining communities backed by financial resources to affected regions.

 

"By acting decisively now, we can prepare for the imminent change in coal demand, protect the environment and become a leader in job creation and economic gain from the emerging clean energy market," Piper said.

 

Transition

Alex Greenwich, who is the NSW MP for Sydney, also asked the Berejiklian to urgently develop a strong transition policy framework to support workers and diversify economies in coal mining regions.

 

"Across the globe, the demand for thermal coal is reducing and this trend is set to continue as countries work to meet their Paris Agreement targets," he said.

 

"This trend is important in reducing climate change impacts but as state with high coal exports and some communities highly reliant on coal industries, we must prepare to prevent significant disruption."

 

He said the NSW government's projection for continued large-scale coal exports went against the global trend.

 

"Coal exports are already decreasing with our major coal export markets scaling back and closing coal-fired projects," Greenwich said.

 

"The Institute of Energy Economics and Financial Analysis recently reported that the NSW coal industry has begun a period of permanent decline and Australia's largest thermal coal exporter Glencore announced it will cap its coal output, favouring assets resilient to climate change for shareholders."

 

Attempts by the state government to address an expected decline in coal mining investment and employment in the Hunter has been criticised for glossing with global reversion out of coal and into renewables.

 

The Hunter Regional Plan 2036 prepared by the NSW Department of Planning and Environment sets out 27 directions for the greater Hunter region moving forward to the year 2036.

 

The plan sets the agenda for Local Government Authorities with coordination through the Hunter Development Corporation.

 

There is little in the document that provides certainty for new industries or security for the communities that will be affected by a global reduction in coal demand, according to a report by Western Sydney University researchers Neil Perry and Gillian Hewitson.

 

In their report, Weathering the storm: The case for transforming the Hunter Valley, they refer to strategies in the DPE blueprint for the Hunter relating to transforming the productivity of the Upper Hunter.

 

"The ‘actions' under this direction include ‘prepare for' diversification and ‘leverage' off existing advantages, but no concrete policies or programs are cited that could deliver this preparation or leverage," they said in the report.

 

"The plan assumes a strong role for coal mining in the region's economy out to 2036 and future development of coal resources."

 

They say that because the granting of new development consents and mining leases and the management and renewal of existing exploration licenses appears to be a major issue in transitioning the Hunter, the DPE's Regional Plan is not a transition document and fails to prepare Singleton and Muswellbrook for the coal market contraction envisaged by the World Energy Outlook Scenario.

 

The union movement has been aware of the looming changes to workplace employment patterns in the region and is working on plans to promote an orderly transition away from coal.

 

Strategy

In the report, Sharing the challenges and opportunities of a clean energy economy: A Just Transition for coal-fired electricity sector workers and communities, the Australian Council of Trade Unions identified the Hunter Valley was already suffering from a lack of skills diversity and this situation would only deteriorate with the transition away from coal-fired power.

 

"As at July 2015, the Hunter Valley recorded the highest regional youth unemployment rate in the state and the second highest unemployment rate," the report stated.

 

"The Hunter region also has lower levels of post-school qualifications compared to the New South Wales average and lower median incomes than the national average.

 

"Given the economic dependency of these regions on the coal industry, any unplanned closure of these power stations and withdrawal of a major employer from these regions without appropriate policy, planning and support from government, is likely to have devastating consequences.

 

"For local communities and economies, this will result in increased unemployment, lower incomes for local businesses and widening inequality."

The ACTU proposes the creation of independent statutory authority Energy Transition Australia.

 

Under its plan ETA would sit within the Environment and Energy portfolio and be responsible for navigating and managing the Hunter Valley's transition to a clean energy economy.

 

According to the ACTU's report, mapping potential industries to the Hunter region based on competitive and other advantages as well as worker skills should also be a priority.

 

"As part of this mapping exercise, infrastructure gaps should be identified and prioritised," the report stated.

 

Specific industry and environmental policies to attract new investment, the growth of new industries and the creation of quality, secure jobs in affected regions should then be developed and implemented in the Hunter.

 

"Such policies could include additional renewable energy investment incentives, investment tax incentives and the prioritised construction of new infrastructure," it said.