Current bond ‘insufficient’

The $15 million figure attached to Hazelwood mine’s rehabilitation bond has not been reviewed since 2001, years before the approval of a major mine expansion.

Designed to ensure mine operators create safe and stable mine environments beyond their active lives, the Hazelwood Mine Fire Inquiry has also heard the bond’s current $15 million amount was insufficient.

Established in December 1995 by the State Government, the Inquiry heard the $15 million bond was set despite a then-estimated liability of $20 million.

The bond has been inherited by each subsequent owner of the station since privatisation.

Counsel Assisting the Inquiry Melinda Richards questioned Earth Resources executive director Kylie White, from the Department of State Development, Business and Innovation why usual bond-setting practice had not been adopted.

“(Was it) considered unlikely that the mine would close before its scheduled end of life and that it would not do the progressive rehabilitation required of it?” Counsel Richards asked on Tuesday.

Ms White answered it appeared a “context related discussion had been made” about the decision.

Ms White also told the Inquiry while the bond amount was reviewed in 2001, the figure was not changed.

Pressed about the likely cost of mine rehabilitation, and whether the $15 million guarantee would be adequate, Ms Bond conceded it was insufficient.

“Look, there’s no doubt that a rehabilitation bond should reflect the risk profile and be proportionate to the risks, and $15 million in today’s terms seems to be an underestimate,’ Ms White said.

“Particularly in light of the very large expansion of the mine in recent years?” Counsel Richards asked, to which Ms White replied, “yes”.

However, Ms White said Hazelwood mine operator GDF SUEZ would be required to fulfil its rehabilitation requirements set out in a 2009 Works Plan, regardless of the bond amount.

“The rehabilitation bond that’s held is different to the rehabilitation that GDF SUEZ are required to do as part of their mining licence and part of the work plan… regardless of the bond they are still required to rehabilitate.”

Counsel Richards then asked what would occur if a mine licensee “walks away” from a mining operation without performing rehabilitation obligations.

“(There is a provision) in the legislation that enables the (mining and energy) minister to undertake the rehabilitation and then seek the compensation for that from the mining licence holder,” Ms White said.

Asked whether a licensee ability to pay would be limited by the assets held by a licence holder, Ms White said there were legislated provisions to seek the “full costs of any other rehabilitation that the minister may seek or may say is required”.

While a review into the bond system has been announced only this year, Ms White said the major stability incidents across the Latrobe Valley mine network had delayed the review.

“There was an intent to review rehabilitation bonds and that, as a priority, I can only say that it just went down the list, other matters happened that needed the attention of the regulator, but we are attempting to rectify that now,” Ms White said.