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Dispute about McArthur River Mine’s environmental security bond reaches the Northern Territory Supreme Court

The McArthur River Mine's security bond was reduced by about $120 million in 2020.  (ABC: Jane Bardon)

The Northern Territory Supreme Court has heard a government minister made a "fundamental error" that contradicted advice she was given when she approved the expansion of a major lead and zinc mine two years ago.

Government decision-making over the McArthur River Mine is currently being challenged by environmentalists and traditional owners in a lawsuit that has been described as nationally significant.

At issue is Mining and Industry Minister Nicole Manison's decision to reduce the mine's security bond – a risk-based deposit mine operators pay to governments to cover any unexpected environmental harm – from $520 to $400 million.

The bond was slashed at the same time as the minister approved a management plan allowing the expansion of the Glencore-owned mine's open-cut pit and waste rock dump late in 2020.

Over a two-day hearing, the plaintiffs are seeking to have the bond quashed, arguing it is inadequate compared to the level of environmental risk.

The court heard Nicole Manison's decision to approve the mine's expansion contradicted formal advice.  (ABC News: Michael Franchi)

On day one on Thursday, the court also heard arguments related to how the mine operators intended to deal with a waste product, known as tailings, in the event of an unplanned closure under their newly approved plan.

Representing the plaintiffs, Environmental Defenders Office counsel Oliver Jones told the court that an advisor warned the minister in an October 2020 memo that this part of the mine's plan was inconsistent with earlier recommendations from the environmental watchdog, the NT Environmental Protection Authority (EPA).

Despite that advice, the minister wrote in her statement of reasons that "the proposed activities are consistent" with the EPA's intended outcomes when she approved the expansion a few weeks later.

Mr Jones described this as a "fundamental error" and told the court the non-compliance would have needed to be notified to the EPA and tabled in parliament were it acknowledged.

"Something has gone so seriously wrong with the reasoning process ... as to mean that the minister's determination is legally unreasonable," Mr Jones argued.

The minister declined to comment while the matter is before the courts.

Parts of mine could require hundred of years of monitoring

The environmentalists and residents of Borroloola, a Gulf of Carpentaria community near the mine, are running their case on a further two grounds, firstly arguing the expansion was approved despite the absence of a full closure plan as required by legislation.

Tailings are residual waste materials left over after the extraction of lead and zinc. (ABC News: Michael Franchi)

But the mine has a type of contingency plan in place – known as an unplanned closure plan – for any unscheduled closures, and the government's lawyers have argued that alone meets legislative requirements.

"This is the plan for how to fix the mining site and rehabilitate it in [its current] circumstances. That is required and that is, we say, what was done," Stephen Lloyd SC said.

The plaintiffs secondly argue the mine's security bond was not calculated with reference to the level of environmental disturbance likely to be carried out, telling the court that post-closure plans for some mining infrastructure had not been costed at all.

Parts of the mine site could require maintenance for hundreds of years, but Mr Jones made submissions yesterday that parts of the security bond calculation only factored in ten years of monitoring.

"That's the date that has been selected by the operator in this case. In my submission, it doesn't have a proper basis," he said.

However, Mr Lloyd SC today argued the security bond wasn't intended to be a "be-all and end-all" panacea to any environmental problems, and was lawfully calculated with reference to works the mine can lawfully carry out under its current authorisations.

"Things that can't be carried out don't have to be factored into the security yet,' he told the court.

Case described as nationally significant

On the steps of the courthouse yesterday, plaintiff and Garrawa elder Jack Green told a gathering of supporters that he feared for the future of the McArthur River, which was diverted as the mine became open cut in 2006.

Jack Green is worried about what the mine could mean for future generations.  (ABC News: Michael Franchi)

"McArthur River [is] important to all Aboriginal people. There's a culture, there's a sacred site around the mine itself," he said.

"You destroy the water, you destroy the land, there'll be nothing for you or your kids in future."

Traditional owners launched a court challenge against the diversion back then, and a series of environmental hazards – like the spontaneous combustion of waste rock– have seen Mr Green, partner Josephine Davey Green and others become outspoken critics in the years since.

The Environment Centre NT told the gathering that the latest lawsuit would bring unprecedented scrutiny to mining security bonds.

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