The Australian mining company South32 has abandoned plans to expand its Dendrobium metallurgical coalmine in the New South Wales Illawarra region.
In an announcement to the ASX, the mining company said the expected financial returns were not enough to justify the $1bn investment the extension would require.
“Our decision today follows an extensive analysis of the alternatives for Dendrobium together with the anticipated returns from the upfront capital investment which would be required,” its chief executive, Graham Kerr, said.
“Over the past 18 months we have made significant progress actively reshaping our portfolio and this decision increases our capacity to direct capital toward other opportunities.”
The Dendrobium project has been controversial after the NSW government overturned a 2021 decision by the state’s Independent Planning Commission to reject the expansion, which would have extended the mine’s life to 2048 and allowed South32 to extract an extra 78m tonnes of coal from two areas near the Avon and Cordeaux dams.
The IPC found the project could cause irreversible damage to the Sydney and Illawarra drinking water catchments.
In December last year, the deputy premier, Paul Toole, and the former planning minister Rob Stokes declared the expansion “state significant infrastructure” due to the mine’s role providing coal for the Port Kembla steelworks.
The declaration would have allowed South32 to submit a new environmental impact statement for a scaled down proposal to the state’s planning department.
The decision to overrule the IPC was strongly criticised by environment and climate groups, which accused the NSW government of being captured by the coal industry.
The secretary of the Illawarra- and Sydney-based environmental group Protect Our Water Catchment Incorporated, Deidre Stuart, said the project was “never in the public interest” and South32’s decision to walk away was a terrific result for communities who had worked to oppose it.
“The state significant infrastructure declaration was an assault on good governance and on communities,” she said.
“It’s a great shame that many politicians were lining up across the political spectrum to undermine the original planning commission ruling. Thank goodness common sense has prevailed.”
Cate Faehrmann, a Greens MLC said it was “unthinkable” that the expansion could have ever been approved because it would have put catchments at risk at a time of greater threat to water security due to the climate crisis.
Nic Clyde, a spokesperson for the Lock the Gate Alliance, called on South32 to focus on rehabilitating the land at Dendrobium as the mine reached the end of its life.
“Gradual rehabilitation once the mine closes will give workers ongoing employment, and it will protect the water catchment area from further degradation,” he said.
He also called on the state government to legislate to protect Sydney’s catchment by ruling out any other new or expanded mining projects.
