Hazelwood mine rehab cost blowout

The real cost to rehabilitate the Hazelwood coal mine has come in six times the figure estimated by its owners at a State Government inquiry only a year ago.

Energy giant Engie and owners of the brown coal pit have reported a $743 million bill to the Australian Securities and Investments Commission to decommission the power station, rehabilitate the mine and site remediation.

The $439 million mine rehabilitation estimate is a far cry from the owner’s initial costing of $73 million reported at the reopened Hazelwood Mine Fire Inquiry in late 2015.

It is also well above an independent assessment by American services company AECOM.

Its report commissioned by the inquiry, said conservative estimates of the liability cost of closing the mine was $251 million for Hazelwood, $196 million for Loy Yang and $170 million for Yallourn.

The State Government will undertake its own estimate of the rehabilitation cost and announce its assessments at the end of March.

Engie spokesperson Trevor Rowe acknowledged it was a “big number”, but the company was committed to meeting its obligation to rehabilitate the asset.

In a statement, the company said it was the first mine in Australia of this type and size to be rehabilitated and specialist external consultants would continue to advise on geotechnical, environmental and hydrogeological matters.

In response to the disparity of the two estimates, Mr Rowe said the numbers became clearer since the announcement that Hazelwood would close on 31 March.

“As you get closer to actually doing it and consider the detailed work that needs to be carried out, the numbers become clearer,” Mr Rowe said.

Environment Victoria campaigns manager Nick Aberle said in the lead up to the inquiry Engie estimated the cost was $73 million and had been vehemently critical of higher estimates heard at the inquiry.

“Now it turns out it’s even more than those independent estimates and casts doubt on every mine’s assessment of their own liability,” Dr Aberle said.

He said the new figure dispelled once and for all coal was a cheap source of electricity and stressed the hidden costs of the industry.

“Nobody has paid attention to it because it comes at the end of the process, but it’s an enormous cost built into producing electricity,” Dr Aberle said.

It remains unclear how Engie will rehabilitate the Hazelwood mine, but an artist impression issued by the company shows a proposed lake filled by flooding the coal pit and sloping back the upper parts of the batters and capping it with clay.

Construction, Forestry, Mining and Energy Union Victoria mining and energy division secretary Geoff Dyke said the conflicting estimates were sketchy and inconsistent.

Considering projects such as the river diversion at Yallourn and the rehabilitation of the western side of the mine, he thought the new estimated cost seemed exaggerated.

“If more money is used for local labour and that money stays in the local economy that would be good, but I suspect it’s not going to cost anywhere near what they’re saying,” Mr Dyke said.

It follows the State Government raising rehabilitation bonds to 100 per cent of the mine’s self-assed valued.

Rehabilitation bonds are set as part of licence conditions and had gone unchanged for two decades and were set when the State Electricity Commission was privatised.

The bonds provide the government with sufficient money to rehabilitate a mine if the owner should “walk away”.