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Wild Rivers (Environmental Management) Bill 2010 [No. 2]

CHAIR —Welcome. Dr Messenger, I understand that you were going to give us evidence in camera, but this is now public evidence.

Dr Messenger —Yes.

CHAIR —Your submission to us now will also become a public submission. We all have your submission. Do not panic; it has been printed on yellow paper, but it will become white soon. That is just an indication to us that it was going to be confidential. Would you like to make a short opening statement and then we will go to questions?

Dr Messenger —Cape Alumina is a bauxite exploration and development company. We are listed on the Australian Stock Exchange and we are focused on the western Cape York Weipa Bauxite Province, which is one of the world’s premier bauxite provinces. It is our primary area of interest. We have 2,100 square kilometres of exploration tenure in western Cape York. We have seven priority exploration areas, of which we have as yet drilled only one—and that is the Pisolite Hills deposit. Pisolite Hills is one of the largest undeveloped bauxite resources in the country. Its current resource is 130 million-odd tonnes and we are planning to develop it at a rate of seven million tonnes per annum.

We are here today because we clearly have a vested interest in the wild rivers legislation. In particular, our premier project, Pisolite Hills, is at risk of being adversely impacted by the declaration of the Wenlock River as a wild river. In December 2008, the state government proposed that the Wenlock be declared a wild river. They have had 16 months to consider that nomination and have sought public submission on the proposal. We have provided two submissions to the state on that proposal. The proposal, in its form in December 2008, included a number of arbitrary boundaries around minor tributaries and a number of springs in the vicinity of Pisolite Hills; they were based upon an arbitrary buffer size without any environmental studies in support of that. Through our submissions, we have provided the government with detailed environmental reports and we have given them the science to justify appropriate buffers around those features.

Our position is that the state’s proposal for the Wenlock is flawed and needs to be amended. If it is not amended, the impact will be adverse on the Pisolite Hills project, with a very real prospect that it will render that project unviable. So, although it has been claimed by the minister, Minister Robertson, that no-one has been able to point to a project or a development proposal that has been killed by ‘wild rivers’, we appear to be facing a very real prospect of that with Pisolite Hills. There are two reasons for that. One is that the current high-preservation areas around the minor tributaries and springs in the vicinity of Pisolite Hills, based on arbitrary boundaries without any scientific basis, will effectively render approximately 30 per cent of the resource sterilised, and that will jeopardise the project. The other aspect of the issue which poses a risk to the project is the delay. The Queensland government have been deliberating on this particular proposal for 16 months. They have had sufficient time and now have sufficient information to make a decision, yet it is still delayed. My concern with this inquiry is that it may cause further delays, which would be bad for our business and would risk that project. Today we released the findings of an economic impact assessment which has been done as part of the environmental impact study for the project. That report indicates that the boost to gross domestic product, in net present value terms, from the Pisolite Hills project is $1.2 billion—

Senator BOSWELL —Over, what, a year or—

Dr Messenger —Over the life of the operation, the 15-year life of the mine. In addition, over that life of mine, 1700 direct and indirect jobs will be generated; they will be created or sustained over the life of that operation. Our position is that that is at risk with further delays in the declaration proposal and it is at risk if the current proposal for the Wenlock is not amended.

Senator BOSWELL —Out of that 1,700, how many would be Indigenous jobs or Aboriginal people that you would employ?

Dr Messenger —The 1,700 are direct and indirect. That number includes the workforce of approximately 350 people and it includes indirect jobs. So it would be people running small business in support of the operation: people growing vegetables and providing food, including bread; and people providing goods and services, including laundry services. Much of that small business will be done in Mapoon; there are certainly opportunities for that. We also have a target in the workforce itself; we have an employment target which will be a new benchmark target for Indigenous participation in a mining project workforce. So the answer to your question is that there will be a lot.

Senator FEENEY —You have just said ‘350 jobs’, but your letter says 250. Can you explain that?

Dr Messenger —I apologise. I may have got that wrong. I will take that 350 back and leave it at 250. I apologise for that.

CHAIR —I want to start with some questions. At this stage, does Cape Alumina have any mines operating or is it purely an exploration company?

Dr Messenger —We do not have any mines operating, no. We have an advance project at Pisolite Hills and, collectively, the management and board have approximately 300 years of relevant industry experience.

CHAIR —But this company itself does not have an operating mine or any mining experience?

Dr Messenger —The people have 300 years of industry experience. I am not sure what the relevance of your question is; but currently the company does not have any operating mines, no.

CHAIR —I am just trying to ascertain where in the development you are at. So it is an exploration company; is that right? Also, it is owned predominantly by the Chinese; is that correct?

Dr Messenger —No, that is not correct.

CHAIR —Who then are the predominant shareholders in Cape Alumina?

Dr Messenger —The largest shareholder is a Brisbane based company called Metallica Minerals; they have 30 per cent of the company. It is publicly listed. There are 450 shareholders and a third of those are in Far North Queensland. Resource Capital Fund is another major shareholder. There are two Chinese companies: one, which is called Xinfa, has 18.6 per cent; and a second company has 7.5 per cent, which is a Chinese company also.

CHAIR —How many square kilometres is the total area that you have exploration interests in?

Dr Messenger —It is 2,100 square kilometres of western Cape York.

CHAIR —How much of that area would be impacted by the wild rivers declaration?

Dr Messenger —At the moment the main project, which is Pisolite Hills, is being impacted; however, we have seen preliminary maps for rivers to the north of Wenlock and they suggest that all of our project areas north of the Ducie River will be impacted by that.

CHAIR —What percentage of that 2,100 square kilometres is that, though? Are we talking about five per cent, 70 per cent?

Dr Messenger —It is the majority of it.

CHAIR —In terms of?

Dr Messenger —More than half of the areas north of the Wenlock and Ducie rivers—I cannot give you the exact breakdown—would be impacted by wild rivers legislation. Areas to the south I have not looked at, in terms of their being impacted by wild rivers, but certainly to the north it is almost all of the land tenure that is up there. But, more importantly, the Pisolite Hills project, which is our most advanced project and which we have spent well over $16 million of investors’ money developing, risks being rendered unviable through the Wenlock proposal.

CHAIR —Let us just set aside the Pisolite Hills area. Excluding the north—because you are still only exploring up there, aren’t you, and you do not have advanced projects in that area—

Dr Messenger —That is correct.

CHAIR —how much of your 2,100 square kilometres, as a percentage, is the Pisolite Hills area?

Dr Messenger —Pisolite Hills is approximately 20,000 hectares and that is the three main mining lease areas, so it is a relatively small part of that total area.

CHAIR —So, at this point in time, you have exploration in the north, but would the Pisolite Hills area be 10 per cent of your 2,100 square kilometres?

Dr Messenger —Look, I am not good at maths. So I am sorry, but I would have to look at the maps to give you a proper answer to that.

CHAIR —But is it a relatively small area in relation to the area you have for exploration?

Dr Messenger —It represents about four of our exploration tenements. We have about 18, I think, in total; they are all different sizes though.

CHAIR —So does the problem relate to the area that you would need to be clear of in order to mine? Is that your problem—that you would need to be the two kilometres or the 100 meters away from these waterways before you could establish your operation?

Dr Messenger —Let me just go back. The Wenlock is the first river that has been proposed that has an impact on our operations. Much of our tenement area is north of the Wenlock.

CHAIR —You say that it has an impact, and that is what I am trying to get at. What is the impact that you say it would have?

Dr Messenger —The direct impact on the Pisolite Hills project arises from the size of the high-preservation areas, which have been set in an arbitrary manner and without any reference to scientific data. Those high-preservation areas will preclude mining and their effect will sterilise approximately 30 per cent of our resource. Taking 30 per cent out of the resource of a mining project of this nature risks rendering the entire project unviable.

CHAIR —So what are you actually suggesting here: there should be an exemption for mining companies or they should be excluded or not have to comply with the conservation principles of the act?

Dr Messenger —Not at all. All I am suggesting is that the state government should make a decision on the nomination of the Wenlock River today, based on the information at hand and based on the science. If they do that, I think we can demonstrate that ‘wild rivers’ can achieve its objectives of protecting the rivers and at the same time not destroying jobs and economic development. My concern is that this inquiry may, in fact, cause further delays, and any further delays for our project are bad for our business.

CHAIR —So you do not have any demonstrable evidence per se that the Wild Rivers Act is holding up or delaying your production; you are waiting for the minister to make a decision under that act. Is that correct?

Dr Messenger —If the current proposal for the Wenlock is not amended, it will kill our project.

CHAIR —And there is capacity to actually amend that and to proceed under the Wild Rivers Act?

Dr Messenger —I believe so, yes.

CHAIR —We are looking at legislation that essentially would overturn the Wild Rivers Act. What situation does that then place your company in?

Senator BOSWELL —Full of joy.

CHAIR —Senator Boswell, I do not think you are employed by Alumina, so perhaps Dr Messenger could answer that for us.

Dr Messenger —There is no doubt that the rivers legislation has added substantial cost to our business or our operations; it has added substantial risk and uncertainty to our business. We have a neutral view on ‘wild rivers’ because we believe that we can work within its framework. But there is no question that it adds cost and uncertainty to our business, and that is bad for our business.

CHAIR —Conservationists would probably say that it adds certainty though to the environment and the outcomes of the environment. So isn’t what we are trying to achieve here a balance—you are an exploration company at the moment and not a mining company—between your objectives and the objectives of environmental preservation?

Dr Messenger —I believe that balance can be found with or without wild rivers. There is abundant legislation in place to protect the environment. Wild rivers will not improve the regulation of our operation. Our project will be regulated and approved though the environmental impact statement process. That is a very robust process; it is very effective and very comprehensive, and we are committed to it. But I do not believe that wild rivers will add any additional protection to the environmental features, unless it kills the project.

Senator McLUCAS —Thank you, Dr Messenger. Unfortunately, I did not get to read your submission until right now, so I have not read it fully. I think it would be useful for the committee for you to explain how bauxite is mined. I have been to Weipa, but I do not know whether most of our committee has. Then perhaps you could also give me an explanation of why you say, I think, that a 100-metre setback from the river is all that is required in order to preserve the integrity of that river. Can you give me an understanding of how you come to that view; and can you also explain the melon holes, please?

Dr Messenger —Sure. Firstly, I will correct you: we are not proposing a reduction to 100 metres of any setback around the river.

Senator McLUCAS —Sorry.

Dr Messenger —Our operation is between 2.8 and 15 kilometres from the Wenlock River. We are well away from the Wenlock River. We are well outside the existing proposed high-preservation area, which extends a kilometre either side of the Wenlock River. We do not have a problem with that. The issue that we have concerns a number of minor tributaries and springs in the vicinity of Pisolite Hills around which there is an arbitrary buffer—a high-preservation area buffer. That buffer is effectively a buffer on a buffer. The minor tributaries are quite small and the width of the riparian zones around those average five to 10 meters. However, the features that have been defined have been defined on the basis of a central line down the creek, off a map, and a 50-metre buffer each side of that. So that gives you a 100-metre wide feature on a five- to 10-metre-wide creek, and then they put a 500-metre-wide buffer on the outside of that. So you have a very large buffer around a fairly small creek. I am not denying the importance of those features; we recognise that they warrant protection and we will protect them. However, we do not believe that it is appropriate to set those high-preservation areas in an arbitrary manner, using buffers on buffers, without any reference to environmental studies. We have provided those environmental studies and, on the basis of the science, we recommend a reduced size to those high-preservation areas around those particular features. If the Wenlock is proposed as a wild river with the recommended reductions in high-preservation areas around those features that we recommend, then we believe the project can proceed and we can still protect the environmental features that have been identified.

Senator McLUCAS —I look forward to giving your submission a better read. I apologise; I just did not get it until now.

Dr Messenger —I apologise for that and hope that explanation helps.

Senator McLUCAS —That helps.

Dr Messenger —As far as the mining goes, bauxite is a natural product of weathering and it occurs in the upper part of the regolith. It is quite thin. You have a thin soil horizon that is about 20 centimetres thick. You have an average of 80 centimetres of overburden beneath that. Then there is an average of 2.5 to three metres of bauxite. Under the bauxite is ironstone several metres thick and then a clay horizon, and under the clay is a sand-and-gravel aquifer. What we propose to do is to remove the top soil and stockpile that, then remove the overburden and then remove the bauxite. It is done with a front-end loader. It is all free digging; there is no drilling or blasting. The bauxite is then taken to a wash plant. It is washed with water, no chemicals, through a 1.2 millimetres screen. The coarse fraction is taken on a conveyor to a product stockpile and sold. The fine fraction is taken back into the pit and put as slurry onto the mined-out floor of the pit; it is dried out in a thin layer. When it is dried, it is ripped. The overburden is put back over the top and the top soil is put back over the top of that, and the whole area is reseeded and revegetated.

The area that we are proposing to mine is Darwin stringy bark country. It is open dry woodland. They are not springs that we are mining. There are no rainforests that we are mining. It is the most abundant vegetation type in northern Australia and it is amenable to successful rehabilitation. Our program will involve continuous mining and rehabilitation progressively throughout the life of the mine. We believe, based on the work that has been done in Gove, that the results will be very good. So that is how the bauxite will be mined.

Senator SIEWERT —I also have not had a chance to read the detail of your reports here, although I have just flicked through them. You have given some of the detail around a bit of the science. I am wondering about your claim regarding the 30 per cent loss. I have had a lot to do with the mining industry and I could not tell you how many times I have heard a mining company say, ‘Unless you let us do this, we’re going to have a significant loss.’

Dr Messenger —It is in the report.

Senator SIEWERT —It is in this report?

Dr Messenger —Yes.

Senator SIEWERT —So where does the 30 per cent come in?

Dr Messenger —It is the overlap between our mining resource and the proposed, arbitrary high-preservation area. Wherever those two lines intersect is sterilised bauxite.

Senator SIEWERT —In your letter you refer to ‘independent government assessment’. Who has done that and is that in these reports?

Dr Messenger —The Department of Environment and Resource Management commissioned an independent hydrologist to assess all of the public submissions that were presented to the government. That report was delivered to the key stakeholders in December last year and that is the report I am referring to.

Senator SIEWERT —So, when you talk about the assessment of the economics, is that in these two reports?

Dr Messenger —I am sorry; the economic impact assessment I referred to earlier is not in those reports.

Senator SIEWERT —So where do I find those?

Dr Messenger —That will be released in full with the environmental impact study, which we expect to release in June. However, we have released the findings through a press release today and I can give you a copy of that.

Senator SIEWERT —It would be appreciated, if you could.

CHAIR —Could you table that and make that available to the committee?

Dr Messenger —I can.

CHAIR —Thank you.

Senator SIEWERT —So that is the findings but not the explanation.

Dr Messenger —That is correct.

Senator SIEWERT —And we have to wait until June to get the explanation.

Dr Messenger —That is correct.

Senator SIEWERT —So you are saying that 30 per cent of the resource is in that overlap.

Dr Messenger —I am sorry; there may be some confusion here. The 30 per cent is not in the economic impact assessment that I released today; the 30 per cent is detailed in the submissions that we have made to DERM on the Wenlock proposal. I apologise if there is confusion here, but the sterilisation is set out in that submission that you have in front of you.

Senator SIEWERT —I just want to check on the independent analysis. You have said that there is independent analysis; where can I find that report?

Dr Messenger —That is a report that the Queensland government has, which I understand they have not released to the public.

Senator SIEWERT —But you have seen it.

Dr Messenger —I have seen it, yes.

CHAIR —Senator Trood has a question and then we will go to Senator Boswell.

Senator TROOD —Dr Messenger, you say that it has been 16 months and you have been waiting for a response; is that right?

Dr Messenger —The process has been going for 16 months. In December 2008, the government proposed the declaration of the Wenlock and called for public submissions on 29 May. We complied with that and we have been waiting since then for a resolution.

Senator TROOD —You say that you think you could work in with the general design of the Queensland Wild Rivers legislation; but the reality is that the declaration of the Wenlock, under this piece of legislation, is impeding your commercial activity. Is that right?

Dr Messenger —Look, there is no question that extra legislation creates an extra burden on a company such as ours in trying to establish a resource project; however, the main issue here is the uncertainty around the fact that the decision has not been made.

Senator TROOD —I understand that. But I also understand that, were this piece of legislation not in existence and there being no declaration of the Wenlock under it, you would not have this problem.

Dr Messenger —Of course.

Senator TROOD —You would have to meet all sorts of environmental criteria et cetera, but you would not have this problem, would you?

Dr Messenger —No. That is correct.

Senator TROOD —Do I also understand that, in fact, if the decision of the Queensland government goes against you, you have no capacity to appeal it?

Dr Messenger —I do not know. We have not investigated what our options may be in that eventuality. We are relying on good sense—that the government will follow the science and the recommendations of their expert—and we are expecting a favourable decision.

Senator TROOD —I am not sure that is good sense; nevertheless. The problem that you have, as I understand it—you allude to this in your letter at the bottom of what I guess to be page 3; the pages are not numbered—is that there is no attempt to quantify these values. So you do not know what criteria are being used to judge your application, do you?

Dr Messenger —I think the reference is to the fact that the wild rivers nominations are being made without any cost benefit analysis.

Senator TROOD —But there are a couple of issues, aren’t there? One is that they are general declarations in relation to any particular river, so they are all the same; in other words, there is no discretion or no discrete decisions are being made about particular rivers and the particular geographic circumstances that apply to them. Is that right?

Dr Messenger —That appears to be the case, that—

Senator TROOD —That is right. So they are just clamping a system on top of all of these rivers—which is the same, no matter where these rivers happen to be—and you are caught up in relation to that, as I understand it. But you also have a problem, do you not—I am just trying to understand how this legislation works—that you are not clear about what criteria is being used to judge your application. You hope, I gather, that sensible decisions are being made in relation to environmental questions, but can you be confident about that?

Dr Messenger —The criteria that we understand—

Senator TROOD —No; hang on. You understand their criteria, but is it clear that there are criteria in the legislation against which your application is being judged?

Dr Messenger —There is no application in this particular case; it is a submission that we have made to amend the proposal. In that regard, there are criteria that we understand are relevant. Our understanding of that is that the position of the government is that those features and the criteria that have been proposed must have the effect that there is no impact on those criteria. So, in terms of a cost benefit analysis, there is none. We are assuming that those features must be protected at all costs. We have set out to demonstrate that, with our recommended setbacks, we can meet the criteria that we understand are relevant.

Senator TROOD —These are the criteria—

CHAIR —You might make this the final question, Senator Trood.

Senator TROOD —that you think are relevant. Can I just go to this point, Chair? Dr Messenger, you say:

The Minister’s task in comparing positive and negative impacts without quantification must be highly subjective.

Your saying that suggests that there are not any objective criteria against which judgements are being made. Is that an accurate statement of your understanding?

Dr Messenger —I believe it to be, yes.

Senator BOSWELL —When I looked at your proposals originally, I thought they would not make much difference either way. But I think your submission is the key to this Senate inquiry. What you are offering is work to Indigenous people which is within a reasonable distance of—is it Mapoon?

Dr Messenger —That is right.

Senator BOSWELL —The question comes down to this: if the Queensland government blocks the legislation or the federal government does not assist with this bill, we are consigning those Aboriginal people to welfare for the rest of their lives. It is decisions like yours that are going to get them out of that welfare. That is what this committee is all about; it is whether you want jobs for these Indigenous people or whether you leave them six families to a house and on welfare for the rest of their lives. So I think your coming here has really highlighted what is important in this committee. Some people just want to say, ‘Well, we’ve got 10 rangers; we’re right, mate.’ Others want to say, ‘Well, yeah, you’ve got 10 rangers, but there are 300 or 400 people that don’t have a job.’ I do not suggest that you are going to offer 300 or 400 people a job, but you may be able to offer 30 or 40 Aboriginal people a job.

Dr Messenger —It will be more than that, yes.

Senator BOSWELL —It will be more than that, and I think this is exactly what this project comes down to. So I believe that it deserves support. It is very simple; it is as simple as black and white: you either have jobs and get out of poverty or out of welfare and live a decent life, or we just continue to ramble on in the way that we have done for the last 50 or 60 years, pouring money into an ever-increasing hole and not achieving anything. I would say that any government—whether Labor, National, or Liberal—have tried to buy their way out of this problem. But there is not enough money in this world to get Aboriginal people off welfare and into a meaningful job, and you are offering that. So I certainly support what you are doing. I think it is absolutely courageous and I wish you all the best.

Dr Messenger —Thank you. I might just add that I do agree with those sentiments. My view is that there is a very simple solution that we can have; you just need to find the balance. We are very confident that, through the EIS process, we will find the balance between having responsible and sustainable economic development that will deliver for the people of Mapoon and western Cape York real jobs—sustainable jobs, long-term jobs—that will create opportunities for those people and at the same time protecting the environmental values of western Cape York.

CHAIR —Just before I pass to Senator McLucas for a final question, I have a last matter to put to you. Dr Messenger, I am not sure whether you heard evidence earlier today from Balkanu, which—as I summed it up and they agreed with—was that the Queensland government stands in breach of their own legislation and the declarations that were made last year with respect to the three rivers are now, in terms of their validity, in doubt. Were you aware of that advice or that information and that legal opinion; and do you have a view with respect to the proposed declaration before you in terms of the Wenlock River and its validity?

Dr Messenger —I was not aware of that and I think all I can say is that we are working within the legislative framework that we have been presented with. We are jumping through every hoop that is put in front of us and all we want is to have this issue resolved one way or the other. We believe that we can work within the wild rivers legislation. We do not believe that it is necessarily required to protect the features that we will be operating in the vicinity of; however, we do believe that we can work within it. We simply want to get certainty around our project so that we can get on with the job and deliver jobs and economic prosperity to the people of western Cape York.

CHAIR —In terms of Senator Boswell’s questions, have you consulted and liaised with your local Indigenous community and, if you have, what is their response to your project and the likelihood of jobs and growth and development?

Dr Messenger —We have had a very comprehensive and long-running consultation process with the local community, particularly the people of Mapoon but also the surrounding communities in western Cape York. This has been going on for over five years. We have had literally hundreds of meetings. We have overwhelming support from the local community. Through the social impact assessment, which is currently underway, the preliminary results suggest that over 80 per cent of the local people of Mapoon see the project as delivering positive benefits and are supportive of the project. That consultation process continues. We do have the support of the locals; they can see the benefits. We simply want the opportunity to get on with the job and get this project delivered.

CHAIR —Just reading from your submission—and this is my final question—in terms of the number of jobs, if the project is killed off, you are talking about 500 jobs during construction and another 250 permanent full-time jobs during the 15-year life of the mine. Are they the numbers that we are talking about?

Dr Messenger —That is correct.

Senator McLUCAS —Dr Messenger, our task in this committee is to make a recommendation to the parliament—the Senate, in fact—about whether to recommend that they approve or not the piece of legislation that is in the front of us. I do take your point about certainty and the need to get on with the job. I put to you that, if this legislation were to pass the federal parliament, maybe your need for certainty would be tested yet further because the legislation, in fact, then requires that consent be provided to the declaration of a wild river and an agreement be made. We have had evidence today that says that they are very vague terms and that ‘agreement’ and ‘by whom’ is not clear in the legislation. You might want to take this question on notice, but I wonder whether you would like to think about whether the passing of this legislation in the federal parliament would, in fact, add further to your uncertainty.

Dr Messenger —Without having studied the legislation in detail, it would appear to me that it does risk further delays and uncertainty for our project.

Senator McLUCAS —I think you are right.

CHAIR —Thank you very much, Dr Messenger. We will finish it there. We need to move to the next witnesses. Thank you very much for your evidence today.

Dr Messenger —Thank you.

[5.21 pm]