The state government has moved to provide greater security surrounding the future of Latrobe Valley mines by announcing on Friday it was raising the rehabilitation bonds paid by the mine operators.
Mine rehabilitation bonds serve as a security deposit paid by mine operators to the state government to ensure they meet the cost of rehabilitating the site once the mine becomes disused.
On Friday, acting Resources Minister Jacinta Allan announced ENGIE’s bond for the Hazelwood mine would be increased to $289 million, while AGL’s bond for Loy Yang would increase to $154 million and EnergyAustralia’s for Yallourn would go up to $148 million.
The increases are in line with the recommendations of the reopened 2015/16 Hazelwood Mine Fire Inquiry, which recommended that the mine operators’ rehabilitation liabilities be assessed and the bonds increased if they were deemed to be insufficient.
Ms Allan said in a statement that the government’s action was in line with its commitment to implement every recommendation from the inquiry.
“Taxpayers shouldn’t have to bear the financial burden of rehabilitating coal mines, so we have increased these security bonds to give local communities greater certainty,” she said.
“Latrobe Valley communities can be confident that we are taking the action we need to make sure mines are safe and rehabilitated appropriately.”
In 2015, EnergyAustralia’s bond at the time was $11.46 million with an estimated rehabilitation cost of $46 million-$91 million, while the AGL’s bond for the Loy Yang mine was $15 million with an estimated rehabilitation liability of $53.7 million.
ENGIE’s bond in 2015 was $15 million and the estimated works cost was $73.5 million.
In January ENGIE announced it expected the rehabilitation of Hazelwood mine would cost $439 million and estimated the cost of rehabilitating the power station would cost $304 million.
On Friday, all three Latrobe Valley mine operators reiterated their commitment to rehabilitate their mines once they became disused.
An ENGIE in Australia spokesperson said the company was committed “to meet all rehabilitation obligations relating to the closure of Hazelwood”.
EnergyAustralia said it was working to “ongoing and progressive” rehabilitation and had covered “more than 85 per cent of the area once disturbed by mining – around 2,744 hectares”, meaning it now rehabilitated more land than it disturbed.
An AGL spokesperson said the company had increased the funds it allocated to rehabilitation following an independent review, “ensuring the appropriate funding is set aside”.
The decision was welcomed by Latrobe City mayor Kellie O’Callaghan who said council supported the increase.
“The bonds give due recognition to the fact that these mining operations leave a legacy deficit to be remediated,” Cr O’Callaghan said.
“Most recently council has also noted that the legacy is more than just a physical site remediation but also a social and economic one.”
She said this is why council had argued for a Brown Coal Royalties Fund to be established which would set aside part of royalties paid to the state government for future economic development within the municipality.
Environment Victoria acting campaigns manager Nick Aberle said the decision was exciting because “increasing the bonds to this type of level is the best way to ensuring a good rehabilitation outcome”.
“Once the money is on the table from the mine operators they have an incentive to do the right thing,” Dr Aberle said.