Australian Coal Mine Projects Stall Due to ESG Risks
The ESG challenges faced by proponents of future resources projects in Australia have been highlighted in recent decisions which have halted the development of proposed coal mines.
In February 2023, Australia's federal Environment Minister exercised her powers under the Environmental Protection and Biodiversity Conservation Act 1999 (Cth) ("EPBC Act") to block the development of the proposed 'Central Queensland' coal mine. The Minister concluded that the proposed open-cut mine, located only 10 kilometres from the world's largest coral reef system, the Great Barrier Reef, and upstream from other waterways, posed an unacceptable risk to the reef and freshwater ecosystems in the area. The decision was in line with the recommendation of State decision makers but marked the first time that a federal Minister has exercised these powers to reject such proposals.
The decision follows on the heels of the recent recommendation by the Queensland Land Court in Waratah Coal Pty Ltd v Youth Verdict Ltd (No 6) [2022] QLC 21 that applications made by a proponent for a thermal coal mining lease and an environmental authority in Queensland's Galilee Basin be rejected. As outlined in a previous Climate Report, in making the recommendation, the court identified various anticipated ESG risks, including the risk of unacceptable climate change impacts and human rights repercussions.
With proposed reforms to the EPBC Act underway, including the proposed establishment of an independent federal environmental protection agency, it is anticipated that the approval of new emissions-intensive projects in Australia will become more difficult and costly, and will require a longer lead time. Further, proponents of such projects should expect a strong focus by relevant decision makers on the location and scale of projects and any potential adverse impacts on sensitive environments, flora, and fauna.
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