The Morrison government has announced a $175m loan to help build a large new metallurgical coalmine in central Queensland, in a move labelled “deeply irresponsible” by conservationists.
Climate campaigners have said the loan from the Northern Australia Infrastructure Facility (Naif) to develop the $900m Olive Downs mine in the Bowen Basin was “a bad idea”. They argued the Pembroke Resources project would increase global carbon emissions by contributing to “dirty” steelmaking and would not need public backing if it was financially viable.
The federal resources minister, Keith Pitt, said on Thursday the loan would support the first stage of a development that would “generate royalties and export income for Queensland and Australia for many years to come”.
It would be spent on rail, transmission lines, water pipelines, roads and a coal handling preparation plant, and support up to 700 jobs during construction and “more than 500 for the region” when fully operational, the minister said.
“Pembroke Resources’ Olive Downs project will create jobs and opportunities for central Queensland and the nearby town of Moranbah,” Pitt said. “Metallurgical coal is crucial for steelmaking and is an important commodity for Australia’s trading partners to help support their economic development.”
The announcement comes two months after Pitt used his veto power to block a $280m Naif loan for a wind farm and related infrastructure south-west of Cairns on the grounds it would not provide “dispatchable” power.
In contrast, Naif said the coalmine loan had “passed the non-veto phase” and been approved by the state government.
Suzanne Harter, from the Australian Conservation Foundation, said the Morrison government was putting public money into coal as investors around the world were getting out of fossil fuels and Australian banks were becoming increasingly unwilling to finance coal.
“It is deeply irresponsible to use public money to support a coal project in 2021,” she said, citing a recent call by the International Energy Agency that stated there should be no new investments in fossil fuels if the world aimed to meet the goals of the Paris climate agreement.
“It seems investment in Olive Downs would not hold up for other investors yet the minister and the Naif board have decided it is an acceptable use of public money.
“Investing public money in coal defies Australia’s own economic regulators, which see climate change as one of the greatest threats to our economic system.”
Naif said Olive Downs had reserves of more than 500m tonnes of coal and at peak production was forecast to produce up to 15m tonnes a year. It would be transported by rail to the Dalrymple Bay coal terminal for export to “key international markets like Japan, South Korea, Vietnam, and India”.
The agency’s chief executive, Chris Wade, said: “We are delighted to support a major job-creating project in one of central Queensland’s key industries.”
Richie Merzian, the climate and energy program director with the Australia Institute, said the loan was a bad idea.
“These mines are capital intensive, they are certainly emissions intensive. At this stage in coal’s development do we really need to be subsidising it further,” he said.
Merzian said while it was expected metallurgical coal for steelmaking would have a longer life than thermal coal used in electricity generation, “we know from experience that most of these mines tend to produce thermal coal as well”.
“Make no mistake, this project will continue to provide more emissions,” he said. “The more we subsidise dirty steelmaking the harder we make it to switch to green steel manufacturing, which is supposedly one of the government’s priorities under its low-emissions technology statement.”
Pembroke Resources said Olive Downs would “truly be a 21st century mine built to 21st century standards which is designed to meet and exceed the most stringent environmental obligations whilst creating local jobs”.
“As a new mine, without legacy issues, Pembroke’s Olive Downs Mine can be the vanguard for others in the industry,” the chief executive, Barry Tudor, said.
The Intergovernmental Panel on Climate Change estimated global emissions would need to fall by about 45% between 2010 and 2030 to keep alive the Paris agreement goal of pursuing efforts to limit global heating to 1.5C above pre-industrial levels.