A resources analyst has predicted Shenhua will drop its controversial proposal for the 10-million tonne Watermark coal mine on the NSW Liverpool Plains.
- Shenhua Energy has sought an extension for the first $200m instalment of its lease
- China has committed to achieving net zero carbon emissions by 2060
- John Barilaro says the environment in relation to mining “has changed a little bit”
The forecast cames after NSW Deputy Premier and Industry Minister John Barilaro revealed the company had received an extension to pay the first $200 million instalment of its lease.
The Chinese state-owned Shenhua Energy made an eleventh hour application for a mining licence to the NSW Government in June 2020, which remains under review.
Earlier this week Mr Barilaro said the financial landscape for the mine was different to when it was first proposed more than a decade ago.
“The environment in relation to mining has changed a little bit,” he said.
“The investment out of China has changed, so we’re having some negotiations to see what the future of that particular mining lease looks like.”
A decision to scrap the mine would satisfy many local landholders, as well as the Gomeroi Traditional Custodians, who have argued that the project would threaten significant cultural sites.
The Liverpool Plains was also identified in the NSW Parliament’s koala inquiry as an important region for the species due to its fertile soils.
‘Graceful exit’ tipped
Tim Buckley, from the pro-renewables Institute for Energy Economics and Financial Analysis, said the likelihood of the Watermark mine going ahead was slim.
“China Shenhua has been going slow very deliberately, because they realised I think five or six years ago that they’d bought a stranded asset,” he said.
“It’s in fact entirely misaligned with the Chinese government’s direction.
China has set a target of net-zero carbon emissions by 2060, which the mining consultancy group Wood Mackenzie argues will almost eliminate the need for coal in China’s energy mix.
“Coal’s share in total primary energy mix will drop from 60 per cent in 2020 to less than 5 per cent by 2060,” it said in a webinar late last year.
Mr Buckley said the Deputy Premier’s comments indicated a shift within the State Government on the state’s dependence on fossil fuels for prosperity.
“John Barilaro is actually showing that he is willing to change as the facts change, and they couldn’t have changed faster and harder in the last three months,” he said.
Shenhua said in a statement it was continuing to progress its management plans, but did not respond to questions about the changing financial landscape for coal.