A RIO Tinto claim that its Mount Thorley Warkworth extension project will benefit NSW to the tune of $1.5 billion has been labelled a ‘‘sham’’, and made with an eye to selling off the controversial coalmine.
An economic assessment of the project for Rio Tinto overstated the coal price, understated operating costs and used a discredited process to overstate community benefits, Australia Institute economist Rod Campbell said.
It was ‘‘widely speculated’’ that Rio Tinto wanted to sell its Coal and Allied assets after international asset sales, he said.
‘‘By assuming a high coal price and low operating costs, BAEconomics [for Rio Tinto] give the impression of a financially strong project with ‘gross operating surplus’ of $2.2billion,’’ Mr Campbell said.
But the plan to extend the mines for 21 years was highly sensitive to changes in the economic assumptions, he said.
In the past year, the Land and Environment Court and the NSW Supreme Court have rejected Mount Thorley Warkworth extension plans because environmental and social impacts were too great.
Rio Tinto lodged fresh applications in June after the NSW government made the economic benefit of a mine the ‘‘primary consideration’’.
Rio Tinto managing director Chris Salisbury said urgent approvals were critical because production could only be maintained until the end of next year.
Mr Campbell said the BAEconomics report used an input/output economic model to assess community benefits, despite it being a key criticism in earlier court decisions.
The report’s view that only 30per cent of Mount Thorley Warkworth’s workforce would be re-employed within a year if the mine closed and 30per cent would leave the labour force permanently, was not supported by evidence, he said.
Australian Bureau of Statistics data showed that coal sector employment remained at close to record levels and mining had the lowest level of underemployment of all industries, he said.
The report also understated the impact of the mine on the environment and local communities, he said.
BAEconomics’ Dr Brian Fisher rejected the criticism from the ‘‘anti-mining activists at the Australia Institute’’ as ‘‘predictable’’.
‘‘My work is highly conservative and I believe the actual economic benefits for the Hunter Valley and NSW could well be greater,’’ Dr Fisher said.
Measures to mitigate the social and environmental impacts ‘‘carry a significant economic cost for the mine’’, which were factored into the economic assessment, he said.
NSW Minerals Council chief executive Stephen Galilee described the Australia Institute as an ‘‘anti-mining outfit masquerading as a think tank’’.