Australia's coal mining landscape is witnessing the growth of mega mines, particularly in New South Wales (NSW). After recovering from recent flooding, NSW mines have significantly increased their production, with six mines now selling a million tonnes of coal each month, according to the Institute for Energy Economic and Financial Analysis (IEEFA).

However, this surge raises concerns about the gap between the government's climate change ambitions and the reality.

The combined coal sales from the top six mines in NSW have experienced a remarkable 20% growth from January to August 2023, while the remaining mines in the state faced a 3% decline.

These mega mines now account for approximately 40% of total coal sales in NSW. Although owned by different coal companies, these mines share common characteristics of large open-cut operations primarily focused on producing thermal coal for export markets.

The rise of mega mines is partly ascribed to the increasing difficulty in obtaining new mine approvals. As environmental concerns mount and investor interest in new thermal coal projects dwindles, expanding production at existing sites within the limitations of current approvals becomes a more feasible option.

Moreover, the government's lenient regulation of emissions from open-cut mines may also contribute to this trend, the IEEFA said. A recent review revealed that six out of the top ten coal mines in Australia, all major open-pit operations, have no effective emissions limits under the revamped Safeguard Mechanism introduced by the Commonwealth Government.

Notably, the government's subsidy of open-cut coal miners through the diesel fuel rebate scheme favors the continued use of large diesel mining equipment and discourages the adoption of zero-emissions alternatives.

While underground mining offers environmental and community benefits, the trend in Australia is moving towards open-cut mining. In NSW, open cuts account for 80% of coal production, up from 75% in recent years. Queensland follows a similar pattern, with the top ten producing mines being open-cut.

This shows a stark contrast between Australia and the rest of the world, where production is closer to a 50/50 split between open-cut and underground mining.

Moreover, there is a concerning trend of rising strip ratios, which measure the implicit efficiency of an open-pit mine.

The growing dominance of mega mines and the environmental implications of their expansion pose significant challenges for the industry and investors. Rising strip ratios are likely to exert pressure on the profitability of these mines, potentially impacting their viability.

These developments raise concerns about the government's ability to address emissions reduction targets through the revised Safeguard Mechanism. Instead of curbing emissions, the mechanism unintentionally incentivizes the expansion of existing open-cut mines.

As the United Nations Environment Programme emphasizes, governments must not only focus on reducing emissions but also ensure a rapid decline in fossil fuel production.

In light of these challenges, the responsibility falls on the government to take action and address the growth of mega mines while aligning with climate change goals.

(Writing by Riley Liang  Editing by Emma Yang)
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