Federal HVO Extension Decision Looms After State Approval

After a protracted six-year process, New South Wales’ Independent Planning Commission has issued an approval to the Hunter Valley Operations’ Continuation Project. 

Following the state level approval, the decision will require approval from the Federal government before it can proceed. 

Once this approval is awarded, it will allow HVO to proceed with a worldscale brownfield coal mining capacity expansion next to the company’s existing Hunter Valley thermal and semi-soft metallurgical coal mine.

The decision was welcomed by both Yancoal and Glencore. Yancoal holds a 51% share in HVO, while Switzerland-based miner and commodity trading house Glencore owns the remaining 49%.

Production deadline for Federal approval

Both the ultimate owners of the joint venture warned that the extension project requires a rapid approval. 

The project aims to recover further coal resources within the existing mining tenements at HVO, which is located at Lemington, close to Singleton in New South Wales’ Upper Hunter Valley. The approval extends the life of mine from 2026 to 2045 at HVO North and from 2030 to 2042 at HVO South. 

The IPC approval permits HVO to extract 429 million tonnes of coal over a 19 year term. Critics of the extension had sought to shorten the term of the extension for the mine, but HVO had shortened the proposed mining extension for HVO South by five years and reduced project output in a bid to satisfy environmental objections. 

A spokesman for Glencore notes that the Federal government environmental approval is required by the end of December 2026 for operations at the mine to continue. An HVO representative confirmed that the government was expected to reach a decision within this timeframe.

Mining Digital notes the current approved mining completion date for HVO North is 2026, although HVO South has a mining completion date of 2030. 

Sharif Burra, CEO of Yancoal, adds: "We are optimistic the final elements required can be secured, allowing HVO to operate the next 19 years to the benefit of our workforce, local business partners, regional community, shareholders, customers and the NSW economy."

The operator of HVO will continue to engage with the National Environmental Protection Agency to secure this federal approval.

Environmental conditions applied by IPC

Both Yancoal and Glencore stressed that the project's design and operational framework had been revised over the course of the six-year application. 

These concessions were made to ensure the project aligns with both New South Wales and Federal Government legislative guidelines, environmental standards, and net-zero policies. 

Among the conditions of the IPC approval were conditions around increasing the use of renewable power at the mine itself, as well as the purchase of carbon offsets. 

HVO has also committed to review emerging emission reductions technologies (such as alternative fuels and electric-powered mining equipment) at the mine.

Commenting on the conditions, an HVO representative notes that the company considers all the conditions workable.

The IPC approval also imposed requirements for Scope 2 emissions-focused mitigation measures including the optimisation of coal handling operations, the installation of electrical mining equipment as well as investments to decarbonise the NSW electricity grid.  

The IPC also imposed conditions to restrict the HVO from exporting material from the mine to jurisdictions falling short of making efforts on climate change “consistent with the Paris agreement.”

Political discomfort for Federal government

The timing of the approval is likely to cause some near-term political discomfort for Australia’s Federal government, coming shortly after Prime Minister Anthony Albanese offered an outspoken defence of Australia’s decarbonisation ambitions at last week’s New York Climate Week meeting.

“We understand the scale of the [climate change] problem better and the need to tackle it on a far broader front.  And for that we have Climate Group and climate work and so many great worldwide organisations to thank many of you here today,” Anthony told the audience. 

While the current Federal government has taken a more critical view of approving greenfield thermal coal mining projects, it has taken a more supportive approach towards the expansion of existing brownfield projects.

However, the scale of the expansion - the largest coal mining expansion in New South Wales history - and the size of the project’s associated environmental emissions - estimated at about 809 million tonnes of carbon dioxide equivalent, according to the IPC report, are certain to attract the attention of environmental activists.

It is likely that political pressure for further modifications to the project will mount if the Federal scrutiny of the project is protracted.

Meet the partners

Glencore is one of the world’s largest global diversified natural resource companies and a major producer and marketer of more than 60 commodities. Glencore is one of the world's largest producers and exporters of seaborne traded thermal and steelmaking coal.  

Hunter Valley Operations is an Australia-headquartered joint venture between Glencore and Yancoal which operates the Hunter Valley mine in New South Wales. The joint venture was formed following Yancoal’s acquisition of Rio Tinto’s Coal & Allied (C&A) subsidiary in September 2017. Yancoal holds a 51% majority interest in the HVO coal mine in NSW, while Glencore holds the remaining 49%.

Yancoal is a Sydney-headquartered coal miner, which owns or operates eight producing coal mines across New South Wales, Queensland and Western Australia. Yancoal acquired the Hunter Valley coal mining assets from Rio Tinto in September 2017.