The $1 billion Dendrobium coal mine expansion proposed by BHP spin-off South32 was blocked by NSW’s planning commission in February, citing threats to Sydney’s water supply.
But now Deputy Premier Paul Toole has declared the mine extension as State Significant Infrastructure (SSI) because of its importance to Port Kembla steelworks and thousands of workers.
If approved, the extension of the mine near Wollongong would allow the extraction of an additional 78 million tonnes of coal from new areas underground.
The proposal would result in over 250 million tonnes of greenhouse gas emissions over the life of the project, according to critics.
The project would also lock in BlueScope Steel’s preferred blend of coking coal through to 2048.
“South32 welcomes the NSW Government’s decision to declare the Dendrobium mine extension project to be State Significant Infrastructure,” a company spokesman told AAP.
“This marks an important step.”
Green steel, made using hydrogen and renewable energy, is decades away, according to Bluescope’s court testimony backing the Dendrobium mine extension.
The Illawarra blend of metallurgical coal is BlueScope’s preferred option as it produces a high-quality coke, which cuts operating costs, according to analysts at Global S&P.
South32 will now submit a new mine plan for approval under the SSI process.
The SSI decision comes as governments grapple with how to achieve net zero carbon emissions by 2050.
Steelmaking is one of the biggest emitters of greenhouse gas emissions worldwide, prompting many major economies – including Australia but not China – to agree at the Glasgow climate conference COP26 that the industry must make major emissions cuts this decade.
NSW Energy Minister Matt Kean still believes the Illawarra, and the Hunter region, are poised to become green hydrogen production and export powerhouses, and has hopes for future green steel production.
BlueScope Steel has a climate chief dabbling in new technologies for its Port Kembla works, including biochar and hydrogen, but is on record as not wanting to be a leader in green steel.
Rio Tinto and BlueScope agreed in October to explore “low-carbon steelmaking” using Pilbara iron ores, and clean hydrogen.
BlueScope is also working with federal agency CSIRO on a pilot project.
But metallurgical coal sourced from South32’s Dendrobium and Appin mines remains crucial for the steelmaker.
The steelworks were established at Port Kembla over 90 years ago because of the access to rich seams of metallurgical coal and a deep-water port.
A Grattan Institute report last year found green steel was “no longer a fantasy” because of progress on using hydrogen rather than coal to strip the oxygen out of iron ore to make steel.
The analysis showed Australia could capture about 6.5 per cent of the global steel market, generate $65 billion in annual exports and create 25,000 manufacturing jobs in Queensland and NSW.Jump to next article