Study finds benefits of coal mining are routinely exaggerated

A study of the costs of the proposed Cobbora Coal mine has found that the project will cost NSW $1 billion, rather than the $2 billion benefit to the state predicted by Cobbora Holding Company (CHC).

The Cobbora Coal mine is among seven mining and coal seam gas developments analysed by Economists at Large and the Australia Institute in a report commissioned by the Nature Conservation Council (NCC) of NSW.

The study found economic assessments commissioned by project developers “routinely inflate the estimates of benefits”, and exaggerate the number of jobs created, while downplaying the effect on the environment, costs of greenhouse gas emissions, residents’ health and the impact on other industries. 

It claims the economic assessment of the state-owned Cobbora Coal project “significantly overstates the benefits of the project while understating the costs”. 

The study argues that Cobbora Coal Holdings’ estimate of $2 billion net present value understates the cost of greenhouse gas emissions by $4 billion, overstates the social value of employment, does not adequately assess the impact of noise dust and vibration, fails to take into account the impact of mines on rural communities.

The report also questions the value of the practice of buying land to be protected in other areas to “offset” the loss of habitat and vegetation in mining projects, arguing that offset areas may not replace “like with like” and may not be suitable habitat for endangered species. 

In the case of the Cobbora Coal mine, which will destroy 2843 hectares of native vegetation, the study found “the assumption that offsets will perfectly substitute for impacts on ecology and water quality is unrealistic and contested by experts in these fields”. 

Nature Conservation Council executive officer Pepe Clarke, visiting The Drip on Saturday as part of a tour of environmentally sensitive areas threatened by mining and coal seam gas extraction, said the entire costs and consequences to the community needed to be considered as well as economic benefits when projects are being assessed. 

“Most people expect that companies will bend the truth to justify mining projects, but what alarmed us is the scale of deception:  In some cases we found the net benefit was exaggerated by hundreds of millions of dollars,” he said.  

“We are not arguing that mines are without economic benefit but we need to examine claims made by mines which many times don’t stand up.”

Mr Clarke said the Cobbora Coal Project would impose enormous costs and liabilities on NSW taxpayers.   

“In our view the current government must act to put an end to the Cobbora Coal Project,” he said.

“It is irrational to have a loss-making state-controlled mine that will subsidise coal-fired power production and be a disincentive for other forms of energy generation.

“It does not make economic sense and it does not make environmental sense.” 

Mr Clarke said as well as the effect of mining and coal seam gas projects on their local areas, the overall effect on the national economy should be taken into account.

For instance, the high Australian dollar, driven by the mining boom, had resulted in job losses in other sectors such as manufacturing, agriculture and tourism, he said.

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