Blog | 19th Jun, 2014

How easy coal blind-sided both sides at Hazelwood

After weeks of community consultation sessions, public hearings, cross-examination of witnesses and closing statements by barristers, the board of the Hazelwood Mine Fire Inquiry retires from the public gaze, with two months to prepare its report to Cabinet.

Through the public hearings, the inquiry heard of difficulties in the fire-fight, a bungled public health response and stories of suffering from Morwell residents. Each chapter considered how it could be done better next time, but the final week of hearings, to which Environment Victoria was a party, dealt with the even bigger question: how do we ensure this never happens again?

Part of this is cost-cutting. GDF Suez, the owner of the mine and power station, said they removed fire-preventing sprinkler pipes because they had corroded and started to leak. When asked why the removed pipes weren’t replaced, GDF Suez effectively said: because we didn’t have to. They instead pointed to a 1984 fire policy, noting that if the government wasn’t going to force them to do it, then it wouldn’t happen. The risk to the community of a major mine fire was ignored.

Under questioning from Environment Victoria’s barristers, a witness from the Victorian WorkCover Authority said that it’s up to GDF Suez to balance the costs to the community of a mine fire against the costs to the company of doing something to prevent it. This doesn’t seem like a great regulatory structure, and no doubt the people of Morwell would have a different perspective to GDF Suez on whether money should be spent on fire prevention works.

Fingers were also pointed between regulators. The Department of State Development, Business and Innovation, who regulate all aspects of mine management other than OHS issues, says it has no responsibility for public safety from fires. WorkCover appears to claim their responsibility for fires doesn’t extend beyond the workplace unless people are likely to die.

For all the talk about sprinkler pipes and gaps in regulation, the big ticket item for fire prevention is mine rehabilitation. This involves flattening out the walls of the mine from their current steep angles, covering this with earth and clay and ultimately re-vegetating the area. If air can’t get to the coal, it can’t catch on fire, and all witnesses agreed this was the most effective prevention option. The question is how and when it should be done.

In terms of the timing of rehabilitation work, a serious communication breakdown has occurred between DSDBI and GDF Suez. The government regulator thinks the dates in the Work Plan are when rehabilitation of certain sections should be finished. GDF Suez thinks this is when rehabilitation should start. Since this rehabilitation needs to be completed at some stage anyway, the timelines for this work need to be brought forward to provide the greatest safety to the community.

GDF Suez has benefited for decades from easy-to-access coal, banking the profits of only needing to remove a small amount of overburden. This overburden is then used in rehabilitation works, but now the lack of overburden might mean needing to truck in soil from elsewhere. This would increase rehabilitation costs, so GDF Suez is delaying the work that can best prevent fires in the mine. With a rehabilitation bond that is many times smaller than the likely costs, they have little financial incentive to do anything.

Set in 1994, the $15 million bond has not been indexed for inflation, nor was it reviewed when a major mine expansion was approved in 2009. GDF Suez asset manager George Graham said their estimated rehabilitation costs are now $81 million, though these may be potentially much higher. Environment Victoria has recommended that the Auditor-General be involved in a re-assessment of rehabilitation bonds, since it is ultimately the taxpayer who needs to foot the bill if GDF Suez does not fulfill its obligations.

Ultimately, this whole episode has demonstrated the real cost of coal. It is not the cheap fuel source that it is routinely portrayed as, because there are costs being borne by the community. The cost to government agencies of this fire alone was $40 million, but even that is not the full tally. There’s still the cost to the people of Morwell of being covered in toxic clouds of ash for six weeks and exposed to ongoing air pollution from fine particulate matter; the costs of returning a disused mine to a safe condition; and the cost to our climate of more greenhouse gas emissions.

In an environment where we now have 9000 MW of oversupply in the electricity market, a power station well past its intended use-by date, a coal mine too big and complex to be safe, and ready-to-go clean energy alternatives, it is time to ask whether the costs of coal are still worth bearing.

This article first appeared in Business Spectator