Tahmoor closure exposes gaps in government plan for a post-coal Illawarra
When the next Illawarra coal mine closes, who’ll be left to build the industries that follow?
This edition of Future Proof is brought to you with the support of Colliers Wollongong.
The last mine that Woonona’s Darryl Best worked at before retiring was the recently shuttered Tahmoor Colliery.
“It didn’t surprise me that it shut, it surprised me that it went for as long as it did,” Best said, after a court-mandated insolvency as part of the break up of troubled British billionaire Sanjeev Gupta’s empire.
But while the closure of the profitable mine may have shocked some, looking at Best’s career in the metallurgical coal mines that burrow under the escarpment, it’s more of a sense of deja vu.
“I’ve worked at Dendrobium, Wongawilli, Russell Vale, Tahmoor and three of them are shut,” he told The Pulse.
“So it does happen in the Illawarra, and it does have a huge effect on people, on families, and we need to start realising that it will continue to happen.”
As the Illawarra grapples with the loss of another 200 mining jobs after the closure of Tahmoor, time is running out for coordinated action across governments, businesses and the community to ensure that the next time a mine shuts down, it doesn’t come as a surprise.
It’s all good, until it isn’t
Prior to the closure of Tahmoor, there were about 3000 people directly employed in mining in the Illawarra. The sector contributes $2.1 billion to regional economic output, the second most after manufacturing. From the NSW government’s recently released coal industry strategy, one could assume that these jobs and investment will remain in the region for decades to come, with the document confidently maintaining,
“demand for metallurgical coal is expected to persist long term, given the limited feasibility of current substitutes”.
So then why do the Illawarra’s high-quality metallurgical coal mines keep closing?
Former BHP executive and current green energy startup CEO Mark Swinnerton says there are two factors that determine whether a coal mine stays open.
The first, the demand for coal on the local and international market. Currently, there is stable international demand for metallurgical coal, with demand reductions in advanced economies balanced out by growth in China, according to figures from the International Energy Agency.
However, while BlueScope may have committed to coal-based steelmaking with the relining of its blast furnace, other steelmakers are yet to make that call, with 70 per cent of global blast furnaces due for a reline in the next decade, based on analysis from European think tank Agora Industry.
This means that while demand could look good for now, this could change very quickly.
In the Illawarra, this leaves the fate of coal mines up to the whims of international boards of investors and executives. As Best, a four decade veteran of the industry, points out, “it’s not what is happening in Australia that will determine the coal industry; it’s what is happening overseas”.
But the other factor that Swinnerton identifies as decisive is closer to home. The social licence of coal mines to continue to operate remains in question, particularly with expansion paths to bore under the Illawarra, and Sydney’s, drinking water supply.
That’s where the Illawarra’s coal mines could come to an end, Swinnerton said,
“faster than people were originally expecting”.
‘Not registering’: The Illawarra left behind
But while international market forces could decide the future of Wollongong’s coal mines, what replaces them will be up to the Illawarra itself. The focus in the region is now turning to the state government’s proposed Future Jobs and Investment Bill, which will comprise four regional panels, including one for the Illawarra, that will feed information and proposals to the Minister, with a budget of $100 million to back new projects in coal mining regions.
The structure will replace the previous governmen’ts Royalties for Regions program, which was criticised by Labor in opposition being a pork barrelling scheme, but progress on the alternative has been slow, with little to show after nearly a full term in government.
At a February Wollongong City Council meeting, Greens councillor Jess Whittaker put up a motion for council to write to the state government about progress on the Bill.
Normally, Cr Whittaker said, a Greens’ backed motion such as this would either get knocked back by the Labor majority or altered to fit with other councillors’ intentions.
This time, Labor councillors backed the motion and strengthened it, with the Council writing directly to the resources minister Courtney Houssos, instead of the department.
While they await a response, Cr Whittaker said an urgent priority is for the region to receive a share of coal mine royalties to ensure that when the next mine closes, those jobs and investment stay.
Currently, the Hunter and Central West are first in line for cash injections, partly due to these regions’ dependence on producing thermal coal, which has a shorter global lifespan, and the black stuff being a proportionally larger contributor to the local regional economy.
But with mines shutting down now and in the near future, the Illawarra is pushing to get to the front of the queue.
Swinnerton is blunt in terms of the current priorities in Macquarie Street.
“Illawarra is not registering,” he said.
“We need to do a better job at advocating for the interest of the Illawarra in this area. We are a major mining region in NSW, we have the opportunity, we have the need. I think we need to advocate more to government to say, let’s be part of that future, and be right at the front end of the queue as well.”
Having sat around the table with ministers responsible as part of a delegation from coal mining regions, Best says there have been improvements to the bill, including requiring the minister to act on the advice of local divisions, introducing community consultation and expanding transparency and reporting, but said as it stands, the proposal falls short on the environment, including preventing unviable mines from entering the never-ending purgatory of “care and maintenance”.
“So we don’t get coal washing down the hill into people in Russell Vale’s backyards.”
A spokesperson for NSW Resources said with the legislation currently before parliament, the focus is on supporting jobs in mining regions and diversifying local economies.
Jobs, what jobs?
But exactly what the jobs for mining regions will look like in the future is up for debate. Swinnerton’s Green Gravity has a test site in Russell Vale and a “Gravity Lab” in a former BlueScope warehouse, and is pushing for changes in land use regulation to allow for renewable energy start ups to repurpose the existing utility power connections and infrastructure on site at mines and enable these locations to continue to power the nation and its export industries.
“Our region has a huge opportunity to deploy new clean technologies onto the mine sites, just starting with the stuff that we know isn’t going to be used again,” Swinnerton said.
A recent upper house inquiry into post mining land use heard of significant barriers to what should be a relatively straight-forward process of converting a former open-cut mine site into a solar farm. In response, the NSW government has committed to delivering a review of the Mining Land Act by June this year.
For Best, there are opportunities in adjacent industries, citing the example of the Victorian government which has purposefully aligned the Gippsland offshore wind zone with the current and impending closure of brown coal mines and power stations in the La Trobe Valley.
While offshore wind in the Illawarra has stalled for now, both Best and Swinnerton cited the Illawarra Renewable Energy Zone, a state government initiative, as an under-utilised mechanism for developing an industry that could absorb the skills and investment mining has traditionally contirbuted to the region.
“It’s a great initiative, and I still think we’re under delivering on the potential,” Swinnerton said. “I’m encouraged by EnergyCo putting more resources now into the Illawarra with an attempt to take it forward, but we could move faster.”
If you refer your friends to The Pulse Illawarra, and they subscribe, you will receive complimentary access to our content. Find out how it works here.
The Illawarra is poised for transformation. Smart money and forward-thinking leaders are positioning for opportunities ahead.
We’re proud to introduce a special guest series by Connor Pearce, a respected former business journalist at The Illawarra Mercury, who examines five game-changing dynamics and unpacks the big economic questions.
You can read more from the Future Proof series as Connor Pearce examines the future - and the fault lines - across key sectors that will define the Illawarra over the next decade:
It’s AI-generated with a fake author - the rise of one of Wollongong’s most searched websites
Closing the loop: Inside the movement building a circular economy in the Illawarra
Not business as usual: The new wave of Illawarra businesses combining profit and purpose
A new energy: Meet the creatives reshaping industry in Port Kembla
Go south-west: Can Picton Road and the SWIRL precinct unlock new corridors of growth?
Port Kembla’s energy future: Will gas, hydrogen or offshore wind win out—and who will decide?
The new care economy: With aged care and the NDIS under pressure, what comes next?
Cranes in the sky: Housing policy from the ground up—and why not everyone agrees.
The business of play: Tourism’s next act, and how to price the “experience economy.”