The word “bonanza” doesn’t get used enough these days, so it was great to see the Herald Sun declare “Jobs bonanza in new coal rush” today.
A PLAN to export Victoria’s brown coal will deliver 3300 jobs and more than $11 billion in new revenue as the state plots its own mining boom.
Not wanting to get all dismal sciencey on the bonanza, but here are a few Friday afternoon thoughts:
Actually the construction phase will involve 3000 workers, but ongoing production would involve only 300. We’re not told if that’s direct jobs or includes numbers of indirect jobs. As we’re finding out in the Pilbara, mining projects tend not to “deliver” jobs to locals, they tend to reallocate workers from other places. The Valley should have a few miners, so maybe its not so bad, but it might be a bit early to call “bonanza”.
Tata Power executives met state Energy Minister Michael O’Brien and federal Resources Minister Martin Ferguson in October, claiming the coal project could deliver $11 billion in royalties to Victoria’s economy in the next 40 years.
Victoria charges coal royalties depending on the energy content of the coal, at $0.0588 per gigajoule. Victoria’s brown coal has between 5.8 to 11.5 GJ/tonne, so lets call it 8.65Gj/t, or about $0.51 of royalties per tonne. At that rate, its going to require nearly 22bn tonnes of coal to generate $11bn, 2/3 of the economic brown coal in the Latrobe Valley. Digging that up at a steady rate over 40 years and discounting it at a rate of 15% (seems generous as we don’t know anything about the technology or what might happen to CO2 prices in the next 40 years), the royalties are worth about $1.8bn in present value terms.
$1.8bn is nothing to be sneezed at, but the central assumption behind the whole project is that it will be coal for export, according to one party involved’s website, via pipeline and ships through the Port of Hastings. This pipeline and bulk carrier facility doesn’t currently exist. Neither does the commercial scale facility to dewater the coal. If the public is supposed to chip in for any of that, let alone consider environmental costs, it looks like the bonanza could be short lived.
