China’s biggest coalmining company, Shenhua Group Corporation Ltd, has booked itself a profitable place with the Iemma Government.
It is the front-runner to take the gold medal in two contests:

  • Purchase of the State’s power industry
  • Exploration and mining rights for a major coalmine in the Gunnedah Basin in north-west NSW.

Highly secretive negotiations over the two projects have been conducted by Premier Morris Iemma and Primary Industries, Energy and Mineral Resources Minister Ian Macdonald.

The other player is Chinese entrepreneur, Mr Alan Fang, a friend of Macdonald who attended the minister’s wedding earlier this year. (See Crikey July 3, NSW “Mining Minister and the mysterious Mr Fang“, and July 4, “The adventures of Mr Fang and Minister Macdonald“).

Crikey reported that Fang’s Tianda Resources website carried this statement:

In Australia, the exploration licences granted to Tianda Resources in Western Australia, South Australia and Northern Territory cover more than 6,000 square kilometers, presenting an extensive tenement package highly prospective for uranium, base metals and iron ore.

Moreover, the company also owns many coal mines and other minerals exploration projects in NSW.

The reference to Tianda Resources owning “many coal mines and other minerals exploration projects in NSW” is no longer on the company’s website. It has been dropped.

Macdonald’s spokeswoman said the government had made no decision on whether the state-owned Shenhua group would be the successful applicant for the exploration rights at Gunnedah.

She said the “half dozen” expressions of interest were currently being considered by an independent probity panel but said the names of the panelists were not for publication.

Meanwhile upper house Greens MP Lee Rhiannon has called on the NSW Government to reject Shenhua’s bid on environmental grounds.

“First Premier Iemma tried to flog China Shenhua the state’s electricity network, now it is offering the company the chance to dig up
the most fertile and productive farming region in NSW,” Ms Rhiannon said.

Under new ground rules for mining exploration in NSW, big miners are obliged to pay up-front fees to conduct drilling and geological investigations.

Rhiannon claimed that Shenhua had offered $600 million for the right to explore the rich coal seams of the Gunnedah Basin, but the Minister’s spokeswoman said Rhiannon was merely “headline grabbing again”.

But Rhiannon remains convinced that a $600 million deal has been done with Shenhua and that it will be announced shortly. She said:

In 2006 the Government struck a secret deal with BHP Billiton, accepting up to $250 million in upfront fees and inducements to explore for coal in the Gunnedah Basin.

This $600 million Shenhua bid eclipses the BHP Billiton deal, allowing the government to pocket a combined amount of $850 million for the two adjoining exploration leases.

The Iemma government needs to reconcile its appetite for coal money with its climate change obligations.

Under Premier Iemma’s new policy of accepting large up front payments for coal exploration, community and environmental concerns will
be hung out to dry.

With many Gunnedah farmers already up in arms about the destruction of farmlands in the area due to the aggressive search for coal deposits, the National Party’s credibility is also on the line.

Will it stay loyal to its traditional farmer base or betray them to the mercy of the mining giants?