Australia’s NSW to ban open-pit mining in South Drayton area

A twice-refused permit to build an open-cut coal mine in Australia’s Hunter Valley became permanent Friday with a New South Wales Government order, though authorities did renew Malabar Coal’s (ASX:MBC) exploration licence, paving the way for the company to potentially build an underground operation in the area.

Minister for Planning and Housing, Anthony Roberts, said the state would amend its mining and planning policies to prohibit open-cut mining in the zone, no matter who owns the land, The Australian reported.

Area is located in the outskirts of Muswellbrook in the Upper Hunter Valley, at a site formerly known as Drayton South that is surrounded by horse studs and wineries.

Located in the outskirts of Muswellbrook in the Upper Hunter Valley, at a site formerly known as Drayton South, the mine gave former owner Anglo American (LON:ALL) quite a few headaches due to the co-existence of profitable horse studs and wineries.

Failing to get the necessary permits for an expansion, Anglo abandoned the project last year and ended up selling it to Malabar last May.

“We are very pleased to be provided with this opportunity to develop a vastly different proposal for a future underground mine on the site,” Malabar said in a statement.

If an underground mine is feasible, the company would build its Maxwell project, which it’s expected to create around 350 new direct jobs, $1.7 billion in royalties over the initial 30-year period, $600m per year in export income for NSW, $55m per year in wages and $100m per year in taxes, according to Malabar.

“We are confident that, by mining underground, we can address concerns about past open-cut proposals,” the company added.

Locals had fought open-pit mining in the area for years claiming it would have had major consequences for both the regional economy and the environment, in the same way Rio Tinto’s Bengalla mine is said to have ruined the wine industry in the 1990s.

Australia’s NSW to ban open-pit mining in South Drayton area

The approximate location of the Spur Hill Underground Coking Coal Project Area. (Image courtesy of Malabar Coal.)