NSW government pays Shenhua $100m to cancel coalmine project

The NSW government will pay Chinese-owned mining company Shenhua $100m to withdraw from its Watermark coalmine project on the Liverpool Plains, ending a 13-year battle with the region’s farmers.

The deputy premier and resources minister, John Barilaro, confirmed the deal on Wednesday that will see Shenhua withdraw its mining lease application and surrender its development consent for the mine.

He said the government would cancel the company’s exploration licence and acquire 6,000ha of land with high conservation value for management by the state’s local land services.

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The decision was welcomed by farmers, traditional owners and environment groups and described as a win for communities that had opposed the project because of the effect it would have had on agricultural land and cultural sites.

The future of the coal industry plays a central role in the 22 May Upper Hunter byelection campaign, with Barilaro previously describing it as a “forever” industry.

On Wednesday, the government announced it would open up other areas of the state for potential new coalmining, including the Wollar region in the central west.

It also announced a $25m per annum “royalties for rejuvenation” fund for parts of the state where the demand for coal has declined, causing economic disruption.

Barilaro said the government remained committed to “making NSW the number one investment destination for mining in Australia”.

“But we need to find a balance, and this decision will deliver certainty to farmers and the Liverpool Plains community, while guaranteeing protection to parcels of land with high value biodiversity,” he said.

The government said the cancellation of the Shenhua project would mean no open cut mining could occur in the area.

The independent MLC, Justin Field, called on the government to rule out issuing any other type of coal exploration licence at the site and to cancel expired petroleum licences over the area.

He said his thoughts were with the community that had been forced to spend more than a decade fighting a project they didn’t want.

“This has been a political disaster caused by both sides of politics and has left the community of Breeza and the Liverpool Plains having to live with the uncertainty about their future for too long,” Field said.

“The Nationals’ announcement, while welcomed, can be seen as political opportunism in the face of a byelection when they have been facing increasing public scrutiny of their unwavering support of coalmining over farming interests.”

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The anti-mining group Lock the Gate Alliance said it hoped the government would now turn its mind to proposed resources projects in other parts of the state that were opposed by communities.

“While we would like to see the Berejiklian government’s sudden desire to protect prime farmland and cultural heritage sites from inappropriate coalmining applied elsewhere in the state where similar battles continue, today is indeed a day for celebration,” the alliance’s NSW spokesperson, Georgina Woods, said.

“It’s crucial that the government now works with the local community on a process for returning the land owned by Shenhua, including providing ownership of cultural sites to Gomeroi traditional owners and facilitating a shift back from mining to farming.”

The Environmental Defenders Office (EDO), which represented Gomeroi traditional owners opposed to the mine, said the buy back was a win for the community and for future generations concerned about a safe climate.

“EDO has challenged this mine throughout its approval process and represented a wide variety of clients in this matter – demonstrating the extent to which this was the wrong proposal, in the wrong place, at the wrong time,” managing lawyer Rana Koroglu said.

Shenhua confirmed the agreement in a statement and said the decision reflected shifting economic and social circumstances since the project began in 2008.

“We appreciate the NSW government’s willingness to work with Shenhua to reach an acceptable financial outcome,” the company said.

“We would like to express our sincere gratitude to the local community for working closely with Shenhua during the project’s consultation process.”