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Collie’s transition from coal mining: Ideas, opinions and options.

By Nicholas Wilson for the Office of Robin Chapple MLC: W.A Greens Member for Mining and Pastoral Region.

Contents by page Number:

1. Cover page. 2. Introduction. 2. Location. 2. Current Situation. 4. Views of Elected officials. 5. Options for transition. 8. Difficulties with transition options. 11. Conclusion. 12. References

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Introduction: The following documents is a gathering of options for interested parties in providing for the Town and Shire of Collie’s long term economic future for when coal mining resides and, or collapses.

A background into why it is necessary for Collie to undertake a transition is provided, as well as opinions of relevant elected members of Local, State and Federal Government. Potential issues with the options proposed in this paper are noted, as well as other surrounding factors which may affect their success.

Some options have already been proposed by organisations such as the WA Greens but some proposals are those of the author, based on research on proposals in other places.

Location: Collie Shire is located 200km south east of Perth, 60 km inland and 170-200 m above sea level at a break in the darling escarpment known as the Collie River Valley (Wheaton, 2009 cited in Dortch 2010, 25).

Seventy five percent of the Shire is state forest with remaining land occupied by industry, farming and human settlement (Dortch 2010, 25).

Current economic situation:

Collie’s most prominent industry is coal mining which supplies coal to the State’s coal fired power stations. There are two coal mine operators in the Collie area, Griffin Coal owned by an Indian conglomerate, Lanco Infratech, and Premier coal owned by a Chinese Company Yancoal.

There are three coal fired power stations in the Collie area, Muja, Collie and Bluewaters with a combined capacity of 1850 megawatts (Synergy, 2015, Bluewater 2011). Muja and Collie power stations are operated by the State owned electricity provider Synergy with Bluewaters privately operated (Synergy, 2015, Bluewater 2011).

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The coal mines employ 15.3 percent of Collies workforce making it the town’s second largest employer behind construction (15.6 %) (ABS, 2011). Other major sectors include manufacturing, retail trade, electricity, gas water and waste services, accommodation & food services, healthcare and social assistance as well as education and training (ABS 2011).

The unemployment rate of Collie at the last Census was at the State average but concerns have been raised recently about the lack of training and job opportunities for school leavers and those outside the mining sector (ABS 2011, Census Quick Stats) (Frykberg, 2014).

There are several reasons why Collie must transition away from coal as its economic base apart from the finite quantity of the resource. These include, plans by Indian parent company of Griffin Coal Lanco-Infratech to export more than 15 million tons of coal a year from Bunbury port (Paddenburg, 2014). Figures suggest that with the expansion of Muja and Bluewaters power stations, increased coal exports and a proposed new fertilizer plant would give Collie coal mines a lifespan of 25-50 years (Dortch 2010, 65). Figures when taking into account carbon pricing, increased renewable energy and increased oil prices (required for coal extraction) would give the mines a future lifespan of 10-15 years (Dortch 2010,68).

Collie coal is of a low energy content compared with coal from other regions. For Griffin coal operations to break even, the price of benchmark thermal coal would have to rise over 20%, which would mean coal mining would need to expand on a massive scale for coal mining to be profitable (Buckley 2011, 16). Such expansions, whilst providing economic growth in the short term, would further reduce the lifespan of coal mining in Collie.

Although coal mining is one of the biggest employers in the region, it should be noted that many of those employed by coal in the region live outside Collie, limiting the potential economic effects on the

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Collie area (Dortch 2010, 69-70). There has also been job losses and financial uncertainty surrounding both Premier and Griffin Coal in recent years (Wearne 2014).

Views of elected officials.

Greens Senator, Scott Ludlam and WA energy spokesperson Robin Chapple MLC have both cited Collie as a potential future renewable energy generating hub, placing the town in its Energy 2029 electricity plan as one of five regional renewable energy zones. The two scenarios for Collie put forward involve one dominated by biomass generation and the other by Solar PV and Wind power on the escarpment east of Collie (Dortch and Caruso et al, 2013).

Robin Chapple MLC has also cited renewable energy as a way of protecting Collie from the boom bust cycle of the mining industry, providing a more sustainable economic base for Collie (WA Hansard, 2). The main asset of Collie cited by the Greens is the electricity infrastructure present in the town, as well as the skilled workforce needed for its operation (WA Hansard, 2). This view is also held by Collie Shire President, Wayne Stanford (Paddenburg 2014).

Views of the major parties remain in support of Collie as a coal mining centre.

Mick Murray MLA, member for Collie-Preston (ALP) has stated that “The resource won’t last forever, of course, but the town itself will survive,” Mr. Murray said, adding Collie would become more of a satellite city linked to the growth of Bunbury, 50km to the west (Paddenburg 2014). Murray remains pro-coal mining stating “it’s our base industry, it is the industry that Collie relies on and we’ve got to look after it” (Taylor, 2014).

Former Energy Minister Mike Nahan MLA (LIB) has stated that there was a growing move towards solar generations in the SWIS stating "We will soon see that solar is the largest single supplier of electricity

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of the metro area. “It's not a lot now, it's about 40 megawatts so about 6 per cent, but growing at 20 per cent, it will be larger than the Collie coalfields in a matter of years" (Paddenburg 2014). Despite citing this growth in renewable energy, Mr. Nahan has stated that “Collie has a long fruitful future in coal it just needs an operator that’s efficient, pays its bills and will run the mine effectively” (Wearne, 2014).

Federal Member for the Forrest electorate which includes Collie, Nola Marino (LIB) has strongly opposed the Green’s proposal for renewable electricity generation, “The fact the Greens want to do away with more than 1000 jobs in Greater Bunbury to plunge us into a localised recession – along with wrecking the State’s energy security – shows they are nothing but economic vandals who should not be entertained any longer” (Bikerton 2013).

Options for transition:

There are several options to change Collie’s economy to being less dependent on coal, whilst maintaining its role as a major electricity generator, as well as using and adding to its existing industrial capacity. There is also room for diversification in Collie’s economy using its extensive natural surroundings to develop nature tourism.

There have been various propositions to use Collie’s existing and significant electricity generating infrastructure, with use from renewable resources such as solar, wind and biomass. Senator Scott Ludlam has stated that the installation of 800 MW of biomass would create 1200 ongoing jobs in the Collie area (Ludlam 2013, Collie- a renewable energy zone, 2).

One company using biomass plants for electricity generation Westgen, said that they would “potentially” be interested in using the Collie electricity infrastructure for a biomass plant, although they cited the uncertainty over the Renewable energy target as well as transportation costs (the fuel must be from a 150km radius of the

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plant) as the main hurdles to be overcome for a feasible plant to operate (Kyle, 2015).

There is Mallee biomass in the Wheat belt, 100 km to the east of Collie which would be feasible for use in electricity generation. According to the WA not for profit Sustainable Energy Now, WA has a biomass generating potential of 280 MW with 80MW that could be used to co-fire existing power plants in Collie (SEN 2010, 18).

Biomass burned as wood chips has issues with its high moisture content and low energy density making use for electricity generation in the case of co-firing with coal (Wu et al 2010, 5652).For biomass to be sourced from a wide region to be cost effective and to have an energy density suitable for co-firing with coal , conversion from wood chip biomass to bio slurry (a combination of bio-char and bio oil) may be necessary to offset transport costs ,with the higher energy density achieved with this conversion (Wu et al 2010, 5652).

Further uses for the Collie economy using biomass include using Collie as a location for a “first of type” commercial aviation biofuel plant (Goss 2014, 7). A report published by The Future Farm Industries Cooperative Centre with the support of Airbus, Dynamotive Energy systems and Virgin Australia, proposed using blue gum plantation waste material from surrounding regions for certainty of supply, whilst developing knowledge of how to exploit Mallee biomass as a source of jet fuel. This is in order to provide business certainty for the development of larger plants in other regions (Goss 2014). Such biomass fuels have been estimated to have 40% less CO2 emissions than conventional aviation fuels (Goss 2014, 34). The proposed start date for this project is 2021 (Goss 2014, 7).

There are currently 15 pit lakes in former coal mines, ranging from one to ten ha (McCullough& Lund 2010, 4, 30). Only two of which are currently used for recreational purposes (Hinwood et al 2012, 1062) and a further two are being re-mined (McCullough& Lund. 2010, 4).

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Many lakes require extensive investment and resources to be fit for recreational purposes due to water quality issues and metal concentrations, as well as lack of amenities and facilities (Hinwood et al 2012, 1062). There are expected to be more lakes as mines close, many of which will be much larger than existing lakes (McCullough& Lund, 2010, 4).

One option for use of the pit lakes is using them for PV panels, using platforms to float the solar panels on the lakes. This has been implemented on dams, tailing ponds , wastewater treatment plants and lakes in South Australia (Pittaway, 2015) as well as India, Japan, South Korea, U.S.A and Brazil (Upadhyay, 2015). Such installations utilize the cooling effect of a body of water to increase efficiency of the solar panels by 57%, compared with a land installation (Infratech 2015). Infratech, a company involved in floating solar, asserts that the output of such systems can be three times that of land installations of the same size (Infratech 2015).

Further advantages of using former pit lakes and floating solar include minimal disturbance of visual amenity and reduction of evaporation (Infratech 2015), a feature particularly useful in the South West’s drying climate and very useful if installations were also to be made on the Wellington and Harris Dams in the Collie area.

A proposed Australian Greens initiative, creating a prefabricated housing industry to address a housing affordability crisis using sustainable plantation timber in South West WA could use Collie as its manufacturing base. The plan involves building 75,000 prefabricated dwellings nationally to address housing affordability and homelessness (Ludlam, 2013). Factors favourable to Collie as a base include its proximity to sustainable timber plantations and sawmills in the south west of WA (especially Dardanup), established industrial capacity and infrastructure such as rail that could be utilized in this industry for transport of materials and finished

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products, without congesting roads such as the South West and Forrest Highways.

Collie has abundant natural attractions and sporting facilities to appeal to young people and is a two-and-a-half hour drive from Perth (Dotch 2010, 71). Surprisingly, a world-class hiking attraction, the Bibbulmun Track, which runs from Perth to Albany, bypasses Collie by 2.7km, , meaning hikers do not generally stop in Collie (Bibbulmun track 2010 cited in Dotch, 2010, 71/2).

It has been noted by the Conservation Council of Western Australia that the environmental rehabilitation of Collie’s coal mines would also provide significant employment in a transition away from coal. This could be useful whilst new industries in Collie are being established (CCWA 2015).

Difficulties with transition options:

Proposed alternatives for Collie’s role as an energy provider include the grid design and capacity of the South West Interconnected System (SWIS) being modified for a decentralized grid rather than centring around Collie (SEN 2010, 30). This would mean a reduced role for Collie in electricity generation. It should however be taken into account, that the proportion of Collie’s power generation in the SWIS has already reduced .This is because the majority of WA’s power is now provided by gas fired power stations (DomGas Alliance, 2008; Office of Energy, 2006; ECS, 2010 cited in Dortch 2010, 59).

Most analysis of Collie’s future concludes that it relies upon a diversified economy with investment in assets such as Collie’s underdeveloped nature tourism sector. Aside from the adaption necessary in Collie’s local economy for this to occur, the adverse environmental effects of coal mining are major barriers to a healthy environment needed for this sector to grow. There has been significant concern over the health of the Collie River, in particular mercury pollution levels from the coal fired power stations and the

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overdrawing of water from the Collie aquifer (2000% on sustainable levels) by coal miners (CCWA 2010).

The coal industry affects water supplies and water quality in Collie in two ways – firstly through the need to dewater (pump groundwater out of) local aquifers in order to allow open cut mining to occur, and secondly, through the use of water in coal-fired power stations as cooling and steam (DoW, 2009; D’Rosario, 2010). Under various State laws, the first priority for ‘dewater’ is the local power generation industry (DoW, 2009). Leftover dewater is pumped backed into rivers, but residents have complained that it is not enough to prevent severe damage to rivers, including lowered river levels, acidification through the exposure of acid sulphate soils and biodiversity loss (Dotch 2010, 60). This continued overconsumption and pollution undermines nature tourism development, especially with water based activities.

Collie also lacks hostel-style accommodation that is often required for nature based tourism (Collie River Valley Visitors Centre, 2010 cited in Dortch 2010). Although considerable effort has been made to promote tourism since the late 1990s, it appears that there may be opportunities to increase tourism in Collie in a complementary manner with other enterprises (Dortch 2010, 71/2).

In regards to the bio-jet fuel plant, there is mention in the report by Future Farm Industries CRC which proposes using Collie as a pilot plant location about “genetic improvement” (Goss 2014, 46). If this includes genetic modification (GM), this is against Australian Greens policy and could only be supported when there is an assurance not to use GM biomass.

Royalties to the Western Australian Government from Collie’s coal industry were $15–16 million in 2009–10. Although dwarfed by royalties from iron ore mining, even this amount may be hard to give up (Dortch 2010, 90) especially as the State’s finances are in deficit.

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Since royalties are justified on the basis that miners remove publicly owned finite resources, no royalties flow from renewable energy projects, possibly making renewable energy a less popular choice for government than sources based on extracting finite energy resources (Dortch 2010, 90).

The collection of such royalties (which will decline with coal production) should be balanced against the cost of environmental rehabilitation of former mine sites, and if Griffin Coal go into receivership, would need to be paid for by the State government. While this may be viewed as an extreme scenario, the existence of 50,000 disowned and un-remediated mine sites across Australia suggests this outcome has been reached many times before (Buckley 2011, 17).CCWA estimates that the cost of rehabilitating the mines to be over $100 million . The change from environmental bonds to the mining rehabilitation fund, which mining operators will only be required to contribute 10-20% of rehabilitation costs, will further add to costs to government of mine closures (Chapple, 2013).

Beside the technical and policy barriers to Collie transitioning away from coal, the perception remains amongst community members and leaders that the town is solely reliant on the coal industry for its livelihood, despite Collie having a diversified economy in the past (Dotch 2010).

Collie’s super-towns plan, as part of the State government’s Royalties for Regions initiative, whilst promoting economic diversification emphasizes Collie’s coal mining role well into the future with negligible mention of Collie’s renewable energy potential (Department of Regional Development ,2012). This is despite the continual job losses in the coal mining industry in the area.

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Conclusion:

Collie as a town is facing several challenges owing to its economy being structured around coal mining, as well as the negative effects on the environment and resident’s health. There are several options for the town of Collie to restructure and diversify its economic base whilst maintaining its traditional role as an electricity generator.

Implementing many of the options for renewable energy and manufacturing in a technical sense will be feasible when government and industry are willing to provide policy, legislation and financial support but actions and perceptions of the current government and of many community members as to the importance of coal mining to Collie’s economy remain challenges to be overcome in transitioning Collie’s economy.

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