GOVERNMENT BILL: Olympic Dam Expansion - Roxby Downs Indenture Bill
November 22nd, 2011
On the 22nd of November, Mark spoke to the Roxby Downs (Indenture Ratification) (Amendment of Indenture) Amendment Bill.
Mark Parnell spoke about the appalling approval and negotation process undertaken by the Government and BHP Billiton and outlined some of the enormous environmental, social and economic impacts of the project.
He also outlined the merits of the Greens' 'no uranium' Roxby expansion option which is not only technically feasible, but would lead to less water and energy use and many more SA jobs.
The Hon. M. PARNELL: A number of members of parliament, here and in the other place, have said recently that this is probably the most important bill they will consider in their parliamentary careers. I think those people are right. The decisions that we make in this parliament now will have ramifications well beyond the life of this parliament, in fact well beyond the lifetimes of every single person in this parliament, and potentially well beyond the end of the century.
When it comes to the biggest industrial project in South Australia's history, we have one chance to get this right and that chance is now. There is no point in coming back in 10 or 15 years time and saying, 'We wish we had not made so many commitments. We wish we had not given up so much for so little.' There is no point coming back saying, 'We wish we had been more thorough and given this project more scrutiny.' There is no point coming back and saying, 'I wish we hadn't got caught up in all the hype. I wish we had focused more on what was in the state's long-term interests', because by then it will be too late. We will have passed into law a deal which locks in future generations and locks in low standards and high public subsidy.
We have to recognise at the outset that there is an enormous power imbalance at play here. There has been a totally predictable and rather depressing game taking place between one party, who we are told has all the cards—BHP Billiton, the world's largest and richest diversified resource company—and the other party, who we are told has very little bargaining power—the government of the state of South Australia. However, BHP Billiton does not hold all the cards. In fact, we hold the ace, and that is, the ultimate ability to determine how, when and by whom our non-renewable resources are exploited.
Ultimately, the approval is up to us. However, once that approval has been given, the train essentially leaves the station with BHP Billiton in the driving seat and the rest of us, including the government, sitting back in third class watching as the scenery flashes past out of our control. So, that is the choice we have before us today. We have these two players: we have BHP Billiton and we have the executive arm of the South Australian government, which has signed a contract. However, this contract is only a piece of paper until it is ratified by the parliament, and that is the purpose of this bill.
The contract before us even includes a clause saying that, if the parliament does not sign it, all bets are off. Yet what the government and the world's richest resource company have been discussing, and what the contract determines, is the future of our collective asset. These resources belong to the people of South Australia. They do not belong to BHP Billiton, they do not belong to the executive; they belong to the people of this state, and that includes people yet to be born. That fact well and truly brings each and every one of us in this parliament—the formal elected representatives of the people of South Australia—into a pivotal role. We have to decide what we want to happen to our communal resources.
I want to speak briefly about the process of this bill and the indenture and the role that the parliament has to play in it. The mining minister in another place and various other ministers have said that this parliament has no role in tinkering with the indenture. We are told that we can only say yes or no. I disagree utterly with that notion. Just because the executive arm of government has negotiated a deal, I do not accept that that means the parliament has no role and must meekly roll over and accept the deal no matter what the contract says, no matter what rights have been given away and no matter how poor the deal actually is. Certainly a yes or no outcome is the final result, but I think parliament has an important role; I think it is our responsibility to go through this contract in some detail. In fact, it would be a gross dereliction of our duty as representatives of the people of this state if we were not to do so.
If we as a parliament do not think that this is the best possible deal for the use of our non-renewable resources, then I believe we are duty bound to try to improve the deal. If we cannot improve it, we need to reject it, but, at the very least, the parties—being the executive and BHP Billiton—need the guidance of parliament as to what is and what is not acceptable so that they can renegotiate a better deal that is in the interests of all South Australians. As I say, these are non-renewable resources; it is not a magic pudding. We can only use these resources once. If we as a society want to be responsible, we are bound to maximise the benefit for the one time that these resources can be used.
The government has been spinning the line that if one single sentence or one single word of the indenture is altered in this contract, BHP will walk away. The truth is that that is rubbish. The government knows that that is rubbish and BHP Billiton knows that that is rubbish. I am afraid that I have been around long enough to see a veritable conga line of corporations threatening to take their bat and ball and go home if they do not get everything their own way, but, guess what? They cannot take our resources with them. Those resources are staying here in South Australia and they are not going anywhere until we have settled on the arrangements for their extraction and their exploitation.
I also challenge the notion that parliament, by scrutinising this legislation and proposing changes to it, is somehow creating a problem of sovereign risk. The argument goes that, if the executive goes away and negotiates a contract which the government then votes to change, somehow this presents an unacceptable risk to our reputation and that business will no longer to seek to invest in our state. Of course, that is absolute rubbish as well. The only real uncertainty is which favoured corporate players will get to write their own laws and which companies will have to comply with the general law of South Australia. That is the only uncertainty at play here. Sovereign risk may exist in Angola or Zimbabwe, but it certainly does not exist in a modern, effective and educated democracy such as Australia. Companies can cry wolf, but we should focus on the facts and we should not focus on scare campaigns. So, parliament can and should be able to change the rules as it sees fit.
Corporations, on the other hand, never talk about sovereign windfall when the parliament lowers their corporate tax rate or changes the planning rules in their favour. You never hear sovereign windfall discussed; it is only ever sovereign risk. But we should name it for what it is. It is just risk—it is not sovereign risk—and corporations, especially ones that operate on a global stage, deal with risk every single day. For example, they have to work with daily fluctuations in exchange rates and even unforeseen weather events. Corporations use the term 'sovereign risk' to try to bully governments into giving into their demands. I seek leave to continue my remarks.
The Hon. M. PARNELL: Before the break, I was talking about the myth of sovereign risk. If this parliament decides to amend this indenture, I can guarantee that it will not signal the end of the mining boom in this state nor a massive flight of foreign capital out of South Australia. We all know South Australia is a great place to do business because we have natural resources, an educated workforce, a stable political climate, and the rule of law prevails. The idea that there is a sovereign risk problem is simply laughable.
We also need to note that the debate in this parliament will be the only opportunity we have to ask and, hopefully, receive answers on the record to questions about this massive project. So far, it has been very difficult to get answers. Certainly, the process so far has provided no opportunity for BHP Billiton's scientists and consultants to be asked directly about some of the more contentious aspects of the project. In short, they have never been required to prove their case in an accountable and public way.
The nature of the secrecy provisions in the indenture, the unwillingness of BHP Billiton and, before them, Western Mining, to answer questions, and the overriding of state laws such as the Freedom of Information Act means that what happens on site at Olympic Dam is rarely shared with the South Australian people. I look forward therefore to using the opportunity of this parliamentary debate to getting some essential information about this indenture agreement on the public record.
There is a range of environmental, social and economic impacts that we will need to explore as we work through this bill. There can be no doubt, from both supporters and detractors alike, that this proposed mega-expansion will have a massive range of impacts for our state. This parliament is the appropriate place for a serious discussion about those impacts. I propose to speak in general terms about the project and then focus on specific issues in the bill, but, for my contribution today, I want to go through some of the overall impacts first and then we will move on later to the committee stage and to some questions.
All this debate in parliament is expected to take some time, but I fully expect that we have sufficient time. I note that the other place took over 12 hours of debating time. In the lower house, members were given a great deal of freedom in their remarks on the report of the select committee and, in the committee stage as well, they were able to go through each and every clause of the indenture, and I fully expect that we will be given similar freedom. I make the point that this is not filibustering; it is not deliberately delaying the debate. It is simply doing our job of scrutinising the legislation to the best of our ability, and I think the people of South Australia, whom we represent, expect nothing less of us.
Let us look at this question of delay. From BHP Billiton's perspective, the project is already delayed before we even get to debate the bill in this place. Members would have seen the headline in The Australian last Friday in an article by Matt Chambers. The headline read, 'Further delays to force BHP's hand', and the article states:
"BHP Billiton chief executive Marius Kloppers has warned that further regulatory delays on the $20 billion-plus Olympic Dam copper, gold and uranium expansion could mean the company looks at other options for its huge cashflows."
So, there we go. Again, we have these threats of the world's biggest resources company taking its bat and ball and going home. As I said earlier, they will not be taking our minerals with them if that is their attitude. The article goes on:
"Speaking after the company's annual general meeting in Melbourne yesterday, Mr Kloppers tempered chairman Jac Nasser's enthusiasm for the project by saying things needed to move quickly."
'In our base-case plan, we've got a preferred date for Olympic Dam...and it's probably fair to say we're a little later than we'd like to be,' Mr Kloppers said.
'If something gets delayed, then inevitably, probably what the management will do, it will present the board with other options. I think that's important.'
Mr Kloppers here is making a very veiled threat that, if there are delays to the project, there are plenty of other places they can spend their money—they will take their bat and ball and go home.
Interestingly, those comments came after Mr Nasser had said that the $1.2 billion of precommitment spending already approved by the board indicated how keen the board was to go ahead with Olympic Dam. The article, quoting Mr Nasser, says:
'It is always difficult when you are thinking of it as some kind of down payment, I think of it like the GDP of Nicaragua or something,' Mr Nasser said.
So, it looks like Jac Nasser, at the AGM last week, was off message. He was giving a little too much away. Basically, what he is saying is they are committed and the proof of their commitment is their expenditure, whereas Marius Kloppers was keen to perpetuate the myth that there is a risk that it might all fall over if they do not get all the approvals they need straightaway.
Of course, what we all know is that, once BHP Billiton have their approvals in place and have their indenture, they will take their own time to make a final decision about when and how to proceed. That decision is likely to be many months after this parliament has passed the bill. It could even be as late as the middle of next year.
Another assertion that I would like to challenge is that this project has undergone extensive public consultation. This is what we are told if we complain about the quantity and quality of community engagement. We are always reminded how long it has taken to get to this point, how many trees were chopped down to produce the biggest document ever printed in South Australia. Certainly, we have had an enormous stream of company spin contained in a series of publications that have collectively chewed up far too many trees, but two things have been missing.
First, there have been the extraordinary gaps in the amount of relevant scientific and economic data provided on critical elements of the project. To briefly touch on just one example which I will expand on later, the fundamental economic question of whether BHP Billiton could export the ore to China for processing, or process it here in South Australia, was brushed off in less than one half of an A4 page in a 15,000-page document. That is the key question about jobs in South Australia—half a page out of 15,000.
Secondly, there has been a complete absence of opportunities for the South Australian public to ask direct questions of BHP Billiton, or their scientists, and to receive an answer. Instead of holding public meetings and involving accountable question-and-answer sessions as part of the public engagement process for the original EIS, the public were forced to participate in a sham process that involved individuals having one-on-one chats with various representatives from the company. The problem with that is twofold.
The first is the complete absence of a public conversation, which is a shared audience collectively discussing an issue, and the complete absence of any accountability. Those BHP Billiton officials could make all manner of claims and assurances to an individual member of the public with no accountability, no witnesses, and no recording. In addition, BHP Billiton simply does not engage with the media to respond to issues and questions. I have lost count of the number of times I have been asked to give interviews of the last four years where the interviewer has been forced to explain that they asked for a representative of the company but nobody was made available.
Of course, the reason for that is obvious: it is not in the company's interest for questions to be asked and answered; they know that they do not need to be accountable, and there will be no consequences for them if they say nothing. The last thing that BHP Billiton wants is a debate, with university oceanographers challenging their version of reality in relation to the Upper Spencer Gulf and the prawn fishery or the giant cuttlefish. Why would BHP want to engage if they do not have to? There is nothing in it for them. The loser in relation to this cone of silence debate is the South Australian public.
I would like to touch on some other aspects of the process that has got us to where we are considering this bill in parliament and the presentation to parliament of a final, binding, long-term contract, as the government would have it. This project has followed the basic steps set out in the Development Act for a major development, and that is the logical pathway for a project of this type to take. The major projects stream is the only trigger for an environmental impact statement in South Australia; certainly, this project is far too complex for the Development Assessment Commission to consider on its own.
However, the EIS process in South Australia is a fundamentally flawed process. Ultimately, the process will lead to approval of project that the government likes, and only those that the government does not like will fail. The merits of the project always play second fiddle to the political imperative. The EIS, however large, is ultimately the proponent's document, and its purpose is to downplay the significance of environmental concerns and to placate the reader, and decision-makers in particular, with assurances that they know what they doing and that the project is as good as it can be.
Whilst the public can make submissions, there is no capacity to seriously challenge the science behind the various assumptions. Public submissions fall on deaf ears and rarely result in the proponent making any changes at all to the project's configuration, which just goes to show you that they must have got it right in the first place or that they never had any intention of changing anything, and the government nearly always never makes them.
To make sure that nothing can go wrong with this cosy process, the Development Act has been set up to make sure that absolutely nothing can be challenged, regardless of its merits or even its procedural correctness. Of course, this is the notorious section 48E of the Development Act which means that, whether the proponent tells the truth, a tissue of lies, or simply makes stuff up and hopes for the best, there is nothing that anyone can do about it.,
None of the 157 conditions of approval under the Development Act are publicly enforceable and certainly none of the advisory notes published alongside the conditions are in the Government Gazette of 10 October are enforceable. Similarly, none of the conditions, promises, and assurances in the indenture that we are debating today are enforceable by the owners of the resource, namely the South Australian public. What is more, much of the information about how the project is being conducted and the impact it will have on the environment will be kept secret from the owners of the resource. I will have more to say about that when we get into committee.
One small victory that the Greens managed to achieve was to extend the amount of time for public consultation in the original EIS. That was a very minor concession, but it at least enabled members of the public to come to grips with the massive document. It certainly did not remedy the problem with the process. I might just add, as most members know, that that assurance of a longer public consultation period was actually provided by the former premier on Twitter, which was his preferred method of communication for these things.
The bill before us today is a hybrid bill, and it was declared as such by the honourable Speaker of the House of Assembly. As a result, the bill was subjected to a select committee of the other place. That process was an opportunity to redress, albeit slightly, the inadequacies of the process up to that point. However, the honourable members of that other place chose not to take their job seriously and the resulting exercise was a sham of an inquiry. Rather than take the opportunity as legislators to rigorously scrutinise the biggest industrial project in South Australia's history, they chose a very quick and tokenistic process that they believed would satisfy the standing orders but had no intention of asking hard questions or demanding answers.
I would like to put the following facts on the table in relation to that process. First, the committee did not advertise its inquiry or call for submissions. In fact, the only way I found out that the committee was conducting hearings was to personally approach the committee's secretary and also to scrutinise the room booking system on the parliamentary intranet. That is how I found out about the meeting and the first set of witnesses. Secondly, the committee did not agree to allow members of the public to attend until the day of the hearing, when members of the media were hanging around outside the room—and I can say that those members of the media certainly were not there because the government invited them.
Thirdly, once the meeting was underway, it became clear that the only people invited to give evidence were the cheer squad; namely, the proponent, the government and the mining lobby group, the Chamber of Mines and Energy. They did not want to hear from anyone who might criticise the project or raise difficult issues. Ultimately, it was only after the intervention of the Greens that the committee agreed to hear from the Conservation Council of South Australia, which had three days' notice to make a submission. None of the other people who wrote to the committee were given an opportunity to present their views. I remind members of that fact when they get impatient with the Greens for putting a lot of material on Hansard, asking a lot of questions and moving amendments. Most of this is being done on behalf of constituents who have been otherwise disenfranchised from the process.
The record should also show that the report of the select committee does not reflect the interest in the project in the South Australian community. At face value it looks as if only a handful of people had anything they wanted to say to their elected representatives about this bill and this project. The committee's report records 19 submissions, and I do want put those names on the record. Mostly, these are people who answered a last minute call from the Greens to put in urgent submissions and hopefully shame the government and the opposition into at least considering an alternative point of view. We suspected a sham process, and that was exactly what we got.
The people who, without being notified officially by the government, found out about the committee's hearings and put in submissions were as follows: Mr David Noonan; Doctors for the Environment Australia; the Medical Association for the Prevention of War; Mr Sid Wilson; Mr Richard Quilty; the City of Whyalla; the Conservation Council of South Australia; Mr Kevin Buzzacott; Friends of the Earth Adelaide; Ms Laraine Lerc; Mr Al Lad; Associate Professor Jochen Kaempf; Ms Paula Horbelt; the Women's International League for Peace and Freedom; Mr Andrew Scott; the Environmental Defenders Office (SA) Inc.; People for Nuclear Disarmament (WA); Ms Michele Madigan; and the final submission, from three people, Mr M. Fechner, Mr D. Pumpa and Mr R. Tscharke.
What is interesting is that the only groups that the committee actually invited to make written submissions were the City of Whyalla, the City of Port Augusta and the Arid Lands Natural Resources Management Board—incidentally, a group whose role is completely undermined by the act and the indenture. They were the only three bodies that were invited, apart from the cheer squad I mentioned before—the company, the government and the Chamber of Mines and Energy. In fact, the Chamber of Mines and Energy did not even put in a submission, yet they were invited to give evidence. The Conservation Council had to make their plea to present their case to the committee through the media.
The formal record of that select committee shows very little interest in this legislation, which is why I wanted the record of the Legislative Council to show what really happened. I also remind members that I have had on the Notice Paper for some weeks a contingent notice of motion for a select committee of this chamber to consider this hybrid bill. I note there is nothing in the standing orders that prevents this house from trying to fix up the poor job that was done in another place.
If the motion is successful, I propose that the committee meet as a matter of urgency and that we invite to give evidence a selection of those other groups that made submissions and were denied a hearing by the House of Assembly. We should also invite back BHP Billiton to ask some of the important economic and environmental questions that our colleagues in the other place did not get to. This is a task that could be done fairly quickly, and it could be over before the end of the optional sitting week.
But, for now, I am glad that we managed to at least provide a tiny amount of balance in relation to the select committee of the House of Assembly. Sadly, it was not enough to take that inquiry out of the sham category and give it more credibility, but it was something. In relation to briefings, I acknowledge that I have appreciated the two briefings we had with Paul Heithersay and other members of the Olympic Dam Task Force, including Mr Peter Dolan of the EPA.
Following the second of those briefings, we supplied a list of over 60 technical questions to the task force in order to speed up the debate. The answers came back just after the close of business on Friday. My staff and I have been working through them since to determine which issues need to be further explored in the committee stage of this bill. Of course, the one thing we have not had the chance to do is get answers on the public record from BHP Billiton.
Certainly I attended, as other members have done, the briefing for MPs held some years ago. I understand other members have had more recent briefings, but these are not meetings of record, as the one-day show at the Convention Centre was not a meeting of record. Part of my genetic make-up as a lawyer is that I like things on the record; I think it is a great way of extracting the truth. One of the most disappointing aspects of this whole process is that the final sign-off was artificially dragged forward by the government to facilitate a media opportunity for the departing premier.
Nominating a 20 October deadline to conclude the Roxby expansion negotiations left our state in a terrible negotiating position. The question must be: how could it be otherwise? It gave all the power in the world to the richest mining company. They knew that all they had to do was hold out on the things they wanted and watch the clock tick down, knowing that the premier needed their signature on a deal before a certain date. BHP Billiton had South Australia well and truly over a barrel, and our government put us there.
The analogy, I think, is like the person who goes into the second-hand car yard and announces up-front that they have to buy a car by 4 o'clock that afternoon and, what is more, it has to be the red Ford over in the corner. It does not put you in a great bargaining position when the other side knows that all it has to do is hold out. I believe that South Australia deserved much better than the government gave us in tying what was effectively a leadership stoush to the most important development decision in our state for a generation.
Another frustration I have is that we as a parliament are being asked to sign off on this proposed project before the BHP Billiton board meets to decide whether it is going to proceed. Certainly, they have decided a certain level of precommitment, but it does raise that issue of why the final arbiter of the fate of our resources will not in fact be the parliament but the board of a foreign company. I think that is another example of the imbalance of power, or at least the perceived imbalance of power, that is at play here. Another piece of evidence, which other members have referred to, is the fact that our premier had to fly interstate to sign the contract; we could not even get the executives to come over here to South Australia.
If we knew definitely that BHP Billiton was going to invest in this project and was committed to this project, we would not have this race-to-the-bottom argument that somehow we have to lower our standards in order to attract investment because South Australia is competing for BHP Billiton's attention with numerous projects in other parts of the world. That is an argument that works only to the company's advantage.
One critical issue that has also been frustrating throughout this process is the disparity in the variety of time frames and project sizes that have been mentioned at various times by the company and by the government. The project approval is for 750,000 tonnes of copper concentrate per year, yet BHP Billiton is reporting to its shareholders that its desired capacity is potentially double that. Then, the overall commentary is about a 100-year project, yet the EIS was for 40 years and the indenture agreement is for 50 to 70 years, with options to extend. The economic modelling was for 30 years, yet the royalty rate is locked in for 45 years.
Whilst the Greens did manage to secure a commitment from former minister Holloway that another EIS would be required if the project increased in size, the biggest risk with this approach is that the approval processes do not account for the cumulative effects of the project. For example, there is potential for the desalination plant discharge to build up over time on the ocean floor. There is a big difference between the build-up from a plant that operates for 30 years and a plant that operates for 100 years. It also makes the consideration of rehabilitation issues extremely difficult; there is no obligation for progressive rehabilitation for a project that lasts a century or more.
I would now like to reflect on the use of indentures as a tool for regulating projects. The first thing to say is that the idea that a state needs special laws to regulate projects when, in fact, every single aspect of that project is already covered by existing statutes is a clear indication that the government has no confidence in the normal regulatory regime and the various offices, departments and statutory bodies charged with overseeing economic, environment and social issues.
The history of indentures in South Australia is a pretty sad one. Whilst political historians love to point to the Tom Playford era and the way in which he used special deals to attract industry to this state, there is very little hard analysis of the quality of those agreements and the legacy they left behind and the impact they caused. Most of these indentures are embarrassing in the extreme when viewed through our eyes, especially in relation to the environmental performance they accepted as appropriate.
The two that stick in my mind relate to the Whyalla steelworks and the pulp and paper mill at Lake Bonney in the South-East. Both authorised unlimited pollution provided it was 'necessary'. The fact that it was avoidable or harmful was beside the point. The Whyalla situation was rectified only when the BHP steelworks were spun off into OneSteel and BlueScope and they could renegotiate the deal, but even then, the new operators harked back to the good old days of no pollution regulation. As soon as the EPA named and shamed their poor environmental performance, they went crying to the government and, ultimately, to this parliament, in 2005 to get the EPA off their back. It was as close as they could get to the good old days. They eventually got their special laws to allow increased pollution. The Kimberly-Clark arrangement in the South-East still has three more years to run until its 50-year free right to pollute expires.
The point to note here is that locking in standards for half a century is usually seen as irresponsible long before the 50 years is up, but that is exactly what we are doing in this bill and in this indenture. In 50 years, all of us, bar perhaps our colleague the Hon. Kelly Vincent, are likely to be dead or, at best, very, very old and long out of public life. Does that mean that it is not our problem? Absolutely not; I think it is our responsibility to get this right.
I want to talk now a little bit about the Greens' approach to this project, because there has been a deal of misinformation spread by the mining minister and others. The Hon. Tom Koutsantonis, the mining minister in another place, expressed the view that if you are opposed to uranium mining then it is dishonest to try to amend this project to make it better. That is absolute rubbish. The Greens have never made any secret of the fact that we do not support uranium mining, but the uranium component of this project is, effectively, an optional extra.
We make no secret of the fact that we are opposed to uranium, so we commissioned a report to see if a non-uranium Olympic Dam expansion was possible, and I will talk about that a little bit more in my contribution. The report came back basically saying that not only was a no uranium expansion technically feasible, it would also use less water and less energy and create more jobs. We know that it is possible to leave the uranium behind in the tailings. It is possible to do it and we should do it. That leaves us with copper, gold, silver, a little bit of iron ore and rare earths, and the Greens are not opposed to mining those substances.
This project is overwhelmingly a copper mine. The uranium component is small. It has been shrinking over time and it is planned to shrink even further. Again, I refer to The Australian of last Friday 18 November and Mr Kloppers speaking after the company's annual general meeting in Melbourne. The Australian reported it as follows:
Mr Kloppers strengthened previous indications BHP was not looking at producing more uranium from Olympic Dam until well into the expansion's production life. "The first two phases of Olympic Dam are really copper only and gold only type of things," he said. "In due course we need to think about whether we extract more uranium, but I see that as a separate decision, separate kit, separate capital decision, separate returns."
Why? The obvious answer is that there is a dim future for nuclear, especially after the Fukushima nuclear reactor accident, and I will come back to that later. What the Greens have tried to do is to be as strong advocates as possible and seek to ensure that we get the best possible deal for South Australia by maximising the economic benefits while minimising the considerable environmental and social costs. We have also tried to ensure that more information on the expansion was made publicly available, with a better debate involving a wider range of scientific and economic experts and the affected communities concerned.
Now that we have reached the final parliamentary debate, we are moving a number of amendments in an attempt to ensure that the state gets a better deal than the one we have before us. I know, Mr President, that you and other members will be disappointed, having seen the tabled amendments, that they only number 28, when the expectation was 100, but I point out that one of the amendments has 100 subparts to it and they are the components that relate to our suggested changes to the indenture. I imagine that it will not take as long as members might have feared to go through all of those amendments, however, we do need to work through them all very carefully.
I now want to go on to some of the promises that have been made by the state government and the federal government. Over the years, the Rann government has made all sorts of promises about this expansion, particularly in terms of jobs and environment protection. Most of these promises have not eventuated; their short lives have been consigned to media releases. I would make the point that those media releases are in an unmarked grave now that the former premier's releases are no longer available on the government's website. They had a short life and they are now buried.
Although there have been many promises made, I would like to remind the council of two of them. Both of these have been the subject of Greens motions over the last 12 months, and I will certainly not be repeating what I said back then. The first issue is that the government promised that we would not become China's quarry. The second issue is that the expansion would employ world's best practice environmental management.
Let us start with China's quarry. I remind this chamber that the premier's media statement from 2007 entitled, 'BHP Billiton's "China Option" is not South Australia's option'. I will quote from some of that media statement. It states:
"Premier Mike Rann has told BHP Billiton that the South Australian Government will strongly oppose any moves by the company to do most of the processing of minerals from the expanded Olympic Dam mine overseas. The giant mining company has today publicly revealed that it is exploring a second option to ship uranium bearing copper ore from Olympic Dam directly to China, with correspondingly lower levels of processing in South Australia."
The premier went on to say:
"South Australians own the resource. South Australians own the minerals. And the South Australian taxpayer is being asked to invest massively in infrastructure to support this project. We have a right to expect a decent return on that investment in the form of jobs and economic development for the long term."
I could have written that, but they were not my words. That was former premier Mike Rann back in 2007. He went on to say:
"We have a good relationship with BHP Billiton and will continue to work to add value to the resource. We do not want this world-class resource to be unfairly viewed as some kind of giant quarry from which both jobs and minerals are exported. I am aware that offshore processing is not the only option BHP Billiton is now considering."
It is very clear now that, from as far back as 2007, our role, as the then premier so eloquently described as China's quarry, was already being locked in. It is to this government's great shame that it did not insist on a more rigorous assessment of the domestic processing option. For more details on this issue, I urge members to go to the speeches I made on this topic in June and July of this year.
More recently, there has been another attempt to spin the idea of domestic processing. Current Premier Weatherill, I think, was misleading in claiming in The Advertiser recently that 'the mine will see a doubling of processing on the Olympic Dam site'. This doubling of on-site copper processing is entirely voluntary in the Development Act approval, and it is basically left to a call by the company to be made in its own self interests via the auspices of an indenture that gives primacy to commercial considerations in project configuration and infrastructure. In other words, it is up to them whether or not they do it. The Premier's claim is simply unsupported by the evidence.
The final environmental impact statement, Chapter 2, Consolidated List of Commitments, does not include a commitment by BHP Billiton to double on-site copper production to 350,000 tonnes per year. The Development Act approval, at condition 22, Mining and Processing, General conditions, which applies within the special mining lease, does not require a minimum level of on-site copper processing; rather, it provides that the production limit of 750,000 tonnes of copper per annum can be made of either refined copper product produced on-site or of an equivalent copper rich concentrate.
Condition 22 does not require a doubling of processing on the Olympic Dam site. It does provide an authority to produce up to 750,000 tonnes of refined copper produced on-site if the company chooses to do it but, equally, it could be used to only produce a concentrate and potentially for the level of on-site copper production to actually fall in the future. Of course, the government would dearly love to claim some type of expansion of domestic process, but it has not insisted upon it. There is absolutely no guarantee that it will happen despite the government's spin.
The second promise that the government has spectacularly failed to deliver on is that this expansion would employ world's best practice environmental management. BHP Billiton stated that it was willing to be subject to the world's best practice standard. For example, in a forward to the supplementary EIS released in May, Dean Della Valle, the President of the Uranium Customer Section Group of BHP Billiton wrote:
BHP Billiton, as the world's largest mining company, is well placed to develop a project of this importance and magnitude while ensuring best practice in health, safety, environmental management and community engagement.
The federal Australian Labor Party made commitments in the federal elections of 2007 and 2010 in the ALP policy, in their national platform, August 2009 and March 2007, that 'Labor will accordingly only allow the mining of uranium under the most stringent conditions.' They also say that they will:
"...ensure that Australian uranium mining, milling and rehabilitation is based on world's best practice standards."
Most notably, in 2009, when the original EIS was released, former premier Rann said the following about the expansion project:
"It has got massive benefits for South Australia, but I will insist that world's best practice in terms of the environment is complied with."
But, again, we find that, now that we are considering this indenture, this promise turned out to be just words and had no substance. In my motion that was debated a little while ago (which the Labor government opposed, despite its mirroring their federal policy platform), I outlined why this proposed expansion will fall far short of world's best practice. In fact, it is not even up to Australian best practice, nor even South Australian best practice, and I would urge members to go back to that debate and remind themselves why that is, in fact, the case.
None of this has stopped federal environment minister Tony Burke from continuing to perpetuate the lie about world's best practice. In announcing the federal approval for the expansion, he said:
"My decision is based on a thorough and rigorous assessment of the proposed Olympic Dam mine expansion, including independent expert reviews and consideration of public comments received on the project's environment impact statement. These reviews made recommendations to ensure that the proposal meets world's best practice environmental standards for uranium mining and ensures management of native species and groundwater resources."
The minister goes on:
"With these conditions, I am confident the Olympic Dam mine can progress in accordance with world's best practice in environmental protection and management."
Yet, these so-called stringent conditions are nothing more than a rehashing of all the weak commitments that BHP Billiton has already promised for years. The assessment report made it abundantly clear that this project will be worlds away from world's best environmental practice. The spin that is coming from both the state and federal governments needs to stop. It does no credit to either government, and it simply confounds the public, who deserve better. I think the government should be honest and say, 'We want this project too much, and we are prepared to let BHP Billiton dictate whatever terms it likes in order to get it.'
This bill also represents an attack on proper democratic principles and the rule of law in a democracy. First, we have the overriding of not just a small number of identified public statutes: we have a wholesale subjugation of state law to the interests of the company. Whilst there are 20 acts that get special mention, the whole of the South Australian statute book has to be read down and take second position to the commercial interests of the company as expressed in the indenture.
Another attack on democracy relates to some curious provisions that have been incorporated into the bill that appear to be designed to dissuade protest. I refer particularly to proposed new sections 14 and 15 of the act, and these sections create penalties for interference with the desalination plant infrastructure. Of course, the question must be asked: what is so special about that infrastructure? What is wrong with existing criminal laws that prohibit and punish conduct around theft, damage and interference? What is wrong with those laws? Why do we not have special provision for every separate industrial facility? We do not get a special act of parliament making special laws for interfering with ice-cream factories or shoe factories.
When you look at new section 15, you find that anyone who boats or swims over the inlet or outlet pipes of the desalination plant—perhaps on their way to see the giant cuttlefish—face a $2,500 fine unless they get BHP Billiton's permission first.
Another issue that is problematic in relation to the existing indenture, and which will be equally problematic under this new one, is the veil of secrecy that the company and the government can throw over the project. As well as the secrecy provisions of the Freedom of Information Act and the Radiation Protection and Control Act, we have additional secrecy provisions built into the indenture, which will make it very difficult for anyone to get any information about this project unless the company wants it disclosed.
I now want to move on to some of the economic issues around this project. The dollar figures that are thrown around about this project are really quite extraordinary and difficult to comprehend. The latest estimate is that this project involves something in the range of a $1 trillion to $1.4 trillion resource. This is an enormous asset that the people of South Australia own, and we are indeed fortunate to be living with such wealth. The simple question the Greens are asking is: are we getting a fair return on that enormous amount of capital?
Since the deal has been struck, the government has, surprisingly, been talking down how much we will be getting and emphasising all the difficulties and the costs for the company in their quite feeble explanation, I think, of why our return, especially in relation to royalties, will be relatively low. For example, an article in The Advertiser on 26 October quoted Treasurer Jack Snelling as saying that the Olympic Dam expansion project's economics were 'marginal'.
Our return will be surprisingly low. According to the assessment report, South Australian government revenues are projected to increase by between $2.4 billion and $3.4 billion over the 30-year modelling period. In very crude terms, that is around a quarter of 1 per cent of the value of the trillion-dollar resource that we own, and that is before we consider all the costs for monitoring, rehabilitation, maintenance and the many millions of dollars committed for state spending on Roxby Downs infrastructure.
Yet a week earlier, on 20 October, at the BHP Billiton AGM in London, Chief Executive Marius Kloppers was excitedly announcing how good a deal Olympic Dam was for the company. He said Olympic Dam was a tier 1 asset because it was 'large scale, long life and low cost'. It was an asset from which they would be able to 'extract decades worth of organic growth that is both highly profitable and relatively low risk'.
When working out whether or not this is a good deal for us in South Australia, we have to consider both the revenue in as well as the costs out. The big problem for South Australia is that the reason that the project is low-cost, as BHP says, is that they have been able to avoid many of the basic environmental protections and these costs will now be borne by the state. I want to talk about royalties briefly. One of the most controversial aspects of the indenture is the agreement to lock in a low royalty rate for 45 years.
In discussions at the select committee, in one of the few interesting bits of evidence to come out of that process, the task force acknowledged that there was no particular reason for choosing the 45 years, especially when the economic modelling was for just 30 years. There is simply no advantage in locking in a low royalty rate for such an incredibly long time. The government has effectively dealt us out of the bonanza, and this is a particularly economically irresponsible component of this indenture. The agreement also fails to capture the true value of our share of the revenue.
Another interesting article, which members might have seen, was again in The Australian on 21 October, with the headline, 'A case of Olympian incompetence by South Australia.' This article was scathing in relation to the deal that was struck. The article said:
"The royalty agreement negotiated by South Australia for BHP Billiton's Olympic Dam expansion has robbed the state's citizens and all Australians of the opportunity to share in the profits of what will become the world's biggest mine.
This deal is a monumental example of state government incompetence when it comes to acting as custodian of the nation's mineral wealth.
South Australia has agreed to a regime based solely on percentages and even cents per tonne of the mine's production. Mike Rann, who stands down today as Premier, has done South Australians a disservice that will cost them dearly for almost half a century."
I just remind you, Mr Acting President, that these are not my words. This is economic commentary in the pages of The Australian newspaper—that dear friend of the Greens. The article goes on:
"Rann and his administration should know full well that these royalties fail to capture a fair share of mining profits. This has been in the economic literature since the 1970s and was made more prominent by the Henry review. Yet the deal does not contain a single element of profits-based taxation.
The case for such measures is all the more compelling given that the mineral resources rent tax will not tax the millions of tonnes of copper, uranium, silver and gold the mine will be [producing] under the 45-year agreement, because the MRRT only applies to coal and iron ore.
Given that this is an agreement negotiated in the 21st century, it beggars belief the state could have agreed to a regime based exclusively on production-based royalties that hark back to medieval times.
But none of these ideas penetrated the thinking of the South Australian government when it negotiated its 45-year agreement for BHP's $30 billion expansion.
The three-tier regime involves 3.5 per cent for refined mineral products, meaning copper and gold, and 5 per cent for uranium oxide and uranium-bearing copper concentrates.
There's also 35¢ per tonne on extractive minerals sold to a third party, but this is not even indexed for inflation, so its value will diminish over the life of the agreement.
When asked to explain how the government could have agreed to a non-indexed royalty, a spokesman said it was a trade-off in negotiations because BHP had asked for the expansion to gain concessional royalty rates for new mines. Well, that issue should not have even been on the table, because Olympic Dam is an existing mine.
The spokesman declined to say why a profits-based regime had not been considered.
This agreement will unfortunately stand as a sad and enduring indictment of the weakness of our state governments when it comes to negotiating with powerful mining multinationals."
That is the analysis, that is the business case, as produced in The Australian newspaper—an absolute damning indictment of incompetent negotiation that future generations will bear the cost of.
I am looking forward to the debate when we get to the royalty section of the indenture. As a basic principle, the Greens believe that BHP Billiton should be subject to future changes (up or down) in the royalty rate, in the same way that every other mining company is subject to those changes.
Another issue that I have raised in parliament before is that of a sovereign wealth fund. Essentially, these types of funds are a way for us to live off the interest of our capital, rather than spending the capital itself. Notwithstanding the complexities of the horizontal fiscal equalisation arrangements that affect commonwealth/state financial arrangements, this indenture bill completely fails any test for consideration of this issue. Again, the article in The Australian on 21 October states:
"Given the environmental legacy of this mine, including above-ground storage of radioactive tailings and risks to water resources, a profits-based royalty could have been paid directly into a sovereign wealth fund. This fund could be used to compensate future generations who will most certainly have to live with greatly depleted mineral resources, and the environmental consequences of this mammoth venture."
The article concluded:
"For a project of this nature and magnitude, with inherent risks for future generations, taking out insurance in the form of a future fund is clearly warranted.
But this won't happen with the royalties agreed to by the myopic state government."
There are commentators who agree with the Greens that we could and should have done much better.
A further issue that I have raised in parliament this year is the way that we can value-add structural benefits to South Australian manufacturing industries from this expansion. I was very impressed with what Thinker in Residence Göran Roos was saying about extending the benefit of the mining boom beyond just that industry sector and into manufacturing.
One of the key points that Professor Roos has been making is that our manufacturing sector is at significant risk from the emergence of what is often called 'Dutch disease'. Dutch disease is the phenomenon where a significant decline in the manufacturing sector follows a resources boom. An economy becomes so inflated by revenues from the resources industry, which leads to a sharp increase in foreign currency that throws the exchange rate out of kilter, making exports from other industries prohibitively expensive.
Professor Roos argued strongly that South Australia needed to look to Ontario, Canada, and Norway to see how they have responded to major resources booms through government-led industry intervention. In particular, Professor Roos said that Ontario has actually used the resources boom there to create new local manufacturing. Professor Roos talked up the potential of the Roxby expansion to assist rather than harm, if the right rules were in place.
The indenture makes mention of an industry and workforce participation plan; however, there are no specific commitments or requirements in that plan. The only thing the company is required to do is prepare a plan, and that is simply not good enough. My very great fear is that the government has again missed an incredible opportunity. The question is: what if the plan is no good? When that question was posed to Paul Heithersay of the Olympic Dam task force during the briefing, his only response was that the indenture minister would talk to the company and that public pressure would force BHP Billiton to do the right thing. That approach strikes me as incredibly naive or, at best, hopeful.
A number of special deals are provided to the company under this bill and this indenture. The indenture is populated by a significant number of special deals, most of which are unnecessary. What strikes me is that it is particularly illogical that the larger and wealthier a corporation is the more discounts and more special deals it attracts. My office has been contacted by a number of small business operators expressing their anger and dismay at how unfair the deal is compared with the deal that they receive from the state government.
One thing that is missing from the economic analysis of the economic benefits of this project is how much, in total, taxpayers are actually going to be giving to BHP Billiton. For example, let us look at the amount of the diesel fuel rebate that the company will receive from the commonwealth. BHP Billiton, the world's largest and richest mining company, is set to make an absolute killing and to rip the public purse through diesel fuel subsidies of 18.5¢ per litre less than you or I, or any other non-mining company, would pay.
The Olympic Dam expansion will increase diesel use from 25 million litres a year in the current underground mine operations to something like 480 million litres of diesel a year at full open pit production levels. Diesel usage will average some 400 million litres a year throughout the five or so year period of the construction of the open pit, and diesel subsidies will pass $70 million a year and total $350 million over that period of the five or so years it will take to dig the hole. These subsidies will pass the $60 million a year that the company will be paying in state mining royalties, so they will be making a profit when you look at these two measures, when you trade off the royalties and the diesel rebate—and that will be the situation for much of the rest of this decade.
This intended massive public subsidy to promote greenhouse-intensive fuel use in this BHP operation contrasts with the very limited commitment that the company has given in its BHP Climate Change Position paper, which is from June 2007 and which was referred to in the draft environmental impact statement. That statement requires them to invest an equivalent figure of $350 million over a similar five-year period—that was 2008 to 2012—to support low emission technology developments and greenhouse abatement across all the company's operations.
So, diesel use will rise further, and it will continue through decades of mining operations as they continue to dig and widen the pit and to haul ore from a deepening pit of up to a kilometre down, with diesel subsidies to reach nearly $90 million a year at full open pit production levels. Using information from the company's EIS documentation, the Australian Conservation Foundation calculated that if this travesty of a subsidy were to continue from the start of open pit construction through the now approved mining operations, up to the year 2051, the subsidy would total over $3.2 billion and entail diesel usage of up about 17,900 million litres of diesel in the Roxby operation.
Another unacceptable special deal that the company has is the granting of $1 rent for a large amount of public land with the option, at the company's request, of turning some of those leasing arrangements into freehold title. In effect, we are giving away many hundreds of square kilometres of public land to the world's richest resource company for nothing.
In relation to employment, all sorts of figures have been bandied about regarding how many jobs will be created at Olympic Dam. One of the early popular figures was 20,000, although since the government has rolled over on the China option the figure is down to about 13,000. However, I would strongly recommend a cautious approach before we believe how many long-term jobs will really be created. The mining industry is very good at promoting a myth of being big job creators. I recommend that members look at a recent report from the Australia Institute entitled 'Mining the Truth' that debunked this and many other myths.
I also remind members that it was BHP Billiton who devastated the town of Ravensthorpe in Western Australia and sacked with no notice hundreds of workers when they closed down the nearby nickel mine overnight. This is an industry that has been shedding workers for decades in response to new technology and it will not be afraid to do it again. It is also clear that BHP Billiton will aggressively use cheaper foreign workers on a fly-in/fly-out basis from overseas through the new airport that we are being asked to approve through this indenture process.
The big question about jobs is: how many more South Australian jobs would have been created if the government had insisted on domestic processing rather than exporting our ore to China for processing? That most fundamental question has received no answer in any of the documents provided by the company, and I will be interested to see what sort of answer we get when we ask that question in committee.
I now refer to the environmental management provisions of this bill and indenture. Much of the detail about how the environmental impacts of the project will be managed are to be contained in the environmental management program under clause 11 of the indenture. The first thing to say about this arrangement is that the sign-off and supervision of compliance with that program is to be conducted by the indenture minister, who is almost certainly to be the mining minister and not the environment minister or the Environment Protection Authority.
The government has made a huge song and dance about how the independent EPA will have a primary role, yet when you look a bit closer you will see that it still has its hands tied and in fact will not be the key decision-maker for most environmental decisions. I will have more to say about the alleged role and independence of the EPA in committee, but for now I just remind members that, even under existing South Australian law, the EPA does not have the power to say no to licensing a declared major project such as this. To suggest somehow that the EPA will be able to put a stop to bad practices, or even shut down operations if it is not happy with the company's environmental performance, is just not true.
At first sign of a dispute with the EPA the company will, first, try to bog down the agency in negotiations. Then, when push comes to shove, it will be off to arbitration, where the decision-maker is obliged to have regard to the objectives of the project but not the objectives of our environmental legislation. After all, where the two conflict the indenture and the commercial needs of the project will prevail in all things.
I turn now to the nuclear implications of this project. What is completely lacking in all this debate is any discussion around the appropriateness of South Australia's participation in the global nuclear cycle and how South Australian uranium is implicated in these global problems, including nuclear weapons, nuclear waste and, most recently, the nuclear disaster at Fukushima. The Fukushima disaster was an enormous wake-up call for an industry that loves to trumpet its safety. It is an enormous evolving catastrophe that has meant that a large swathe of the Japanese countryside is now essentially a sacrifice zone. As members would know, areas within 20 kilometres of the reactors are now uninhabitable and off limits, and that is what radioactive substances do—they are frighteningly toxic.
At the time of the Fukushima disaster, the federal government declined to confirm or deny whether any South Australian uranium was involved. The company itself cited commercial in confidence, saying that it does not disclose its contracts as to where (that is, which utilities and reactors) its uranium goes. However, the website of Tokyo Electric Power Company (TEPCO) confirms that it bought uranium, under long-term contracts, from Olympic Dam. Earlier, Western Mining (WMC Resources) reports confirmed the sale of uranium from Roxby to TEPCO.
What we now know is that it is now highly likely that Australian uranium fuelling the Fukushima nuclear disaster included uranium from the Olympic Dam mine and that this may have been in five of the six reactors that had been part of that disaster. But I do not expect people to take my word for it. I refer members to the evidence given before the Joint Standing Committee on Treaties in Canberra on 31 October. I will share with members a brief exchange from that committee hearing. The acting chair of that committee, Senator Ludlam from Western Australia, asked the following question of Dr Robert Floyd, Director General, Australian Safeguards and Non-Proliferation Office, Department of Foreign Affairs and Trade:
Senator LUDLAM: "In the wake of the disaster in Japan, it has been impossible for the public to discover whether Australian uranium was in the plants at Fukushima Daiichi. The Japanese government knows, the utility knows and we know that Australian uranium is obviously sold to Japan in quite high volumes, but not where it goes. We are told that these matters are commercial in confidence. As regulators, how often do you bump into commercial-in-confidence considerations in trying to do your job?"
I will not read the whole of Dr Robert Floyd's response, but he did say the following:
"We can confirm that Australian obligated nuclear material was at the Fukushima Daiichi site and in each of the reactors—maybe five out of six, or it could have been all of them; almost all of them. As a percentage, we have the details of that amount that came through our reconciliation visit with Japan."
So, there you have it: the uranium that we mine in South Australia is now contaminating—and will do so for some time—the countryside of Japan. In fact, on speaking to a journalist earlier today, I have not seen it yet but apparently there is a report out today that shows that some 10 per cent of Japan is now affected by radiation from the Fukushima disaster.
To put the danger of uranium into some sort of context, look at it like this: the total value of uranium sales from Australia since the Olympic Dam mine began in the 1980s is something in the order of $25 billion to $35 billion. So far, the cost to Japan, in the wake of the Fukushima disaster, is reported to be over $70 billion—in other words, three times as much—and every time fresh reports come out, the scale and cost of the disaster rise.
The next issue I want to look at is this idea of China as the primary market for South Australian uranium. BHP Billiton has effectively proposed only one country, China, for direct sale of uranium-infused concentrates. Precedent sale of uranium in concentrates is not, in fact, sanctioned under any of Australia's nuclear treaties and bilateral uranium sales agreements, and BHP Billiton's plans to export this material to China requires a new or amended nuclear treaty with China. The Greens believe that such a treaty would further undermine our so-called nuclear safeguards.
Federal minister Burke has signed off on the company's plans and granted Environment Protection and Biodiversity Conservation Act approvals to the infrastructure, processing and transport for this uranium-infused bulk copper concentrate, but he has done that ahead of and pre-empting the negotiation and signing of a nuclear treaty before it has been presented to federal parliament and before the required inquiry has been conducted and certainly before any treaty has been signed and ratified.
The very great fear of the Greens is that commercial vested interests in uranium mining companies are in fact now writing the script for Australia's uranium sales deals, and this is the case under both Liberal and Labor federal governments. Now it seems that the Prime Minister wants to write off Australia's commitments to the non-proliferation treaty to sell uranium to India, no doubt in large part for BHP Billiton's interests to provide a second market for the uranium-infused bulk copper concentrate from the new open pit mine, and also to allow them to lay off some of the increased uranium yellowcake production from the pit onto India, which is one of the very few new potential nuclear markets.
The illusion of protection in uranium sales will further unravel as the Australian safeguards and non-proliferation office bookkeeping exercise fail to track uranium that exists in concentrates in non-transparent China, as the developing world struggles with nuclear risks that Japan was unable to contain and as Australia's uranium fuels nuclear insecurity in one of the most volatile regions of the world. Therefore, the Greens strongly argue that a full nuclear events risk analysis is required, that includes the potential economic consequences for this proposed project and the potential for loss of BHP Billiton's social licence to operate in the sale of uranium.
The sort of risk analysis that we believe should take place would include things such as the following: nuclear accidents, including the lessons that we have learned from Fukushima; the continued unresolved nuclear waste management problem and the consequences that will flow from the use of BHP Billiton's Olympic Dam uranium; the failure of state transparency or accountability on nuclear issues—no-one ever hears of whistleblowers in China; if we think it is difficult to get information here, just imagine what it is like in countries like China—nuclear proliferation, the threat of use or the actual use of nuclear weapons; and many other things need to be taken into account.
The impact on the willingness of countries to invest in nuclear has been considerable following the Fukushima disaster, with Germany and Japan seeking an early phase-out of their domestic nuclear power industry. This will have a sustained impact (no doubt) on uranium prices, and not even the Prime Minister's current push for expanding those sales to India is likely to affect that result. So, this is a good opportunity for us in South Australia to reconsider whether we want to be such a pivotal part of the global nuclear cycle. We need to ask ourselves whether this is our gift to the world, our gift to the people of Japan, a gift that keeps on giving for many thousands of years.
I want to talk now about water use in relation to this mine. I will start with the desalination plant, because much of the public concern about this project is focused on the location of the desalination plant at Point Lowly. The sudden recent drop off in cuttlefish numbers has emphasised how important it is to protect this area from the encroachment of industrial activity, of which this mammoth desalination plant is just one part.
I acknowledge that there has been a tightening of discharge dilution thresholds; in fact, this is, I think, the only extra condition in the whole of the assessment report, beyond what BHP Billiton had already promised to do in its EIS, but the pollution load is still unabated and ecological conditions applied may only be recognised and attempted to be addressed after the event of the impact. It may well be that irrecoverable impacts occur, such as a change in cuttlefish breeding behaviour and a decline in the abundance of the species. At the end of the day, the plant is simply located in the wrong location; no amount of retrofitting and buying in of scientific expertise can get past that fact.
It is not just the cuttlefish. In the Upper Spencer Gulf there is an incredibly important nursery for a number of significant commercial fisheries and aquaculture species. In July, in response to the release of the supplementary EIS, the Keep the Gulf Clean campaign, which was launched by the Spencer Gulf and West Coast Prawn Fishermen's Association in 2009, in response to BHP's plans to build the desalination plant, released a media statement as follows:
"Over the last two months, we've had a team of eminent Australian marine scientists reviewing in detail BHP's supplementary EIS as it relates to the Point Lowly desalination plant and the very real conclusion is that the risks to the marine environment, and in particular prawn species, not only remains, but in BHP's own assessment, has increased.
The scientific team led by marine environmental consultant and former Wildcatch Fisheries SA Chairman, Dr Gary Morgan, has called into question the science and the interpretation of the data."
The release and the accompanying report then details the many flaws in the eco-toxilogical data presented by BHP, and equally concerning is the analysis of BHP's own updated hydrodynamic modelling that identifies the added risk of toxic deoxygenated layers of hypersaline water pooling near the seabed. The release concludes by Dr Morgan saying:
"Given the inadequacy of BHP's analysis, an independent scientific panel must be appointed to determine and conduct the appropriate test and analysis because what has been done to date is far from convincing.
The supplementary EIS suggests that marine communities near the discharge point could resemble those 10 to 20 kilometres north of Point Lowly. Ominously, that's an area where prawns and giant cuttlefish do not occur in abundance. I cannot stress enough the critical need for robust monitoring. We are asking that this fragile marine environment is respected."
I should point out that, since its launch, the Keep the Gulf Clean campaign has been supported by a range of high-profile ambassadors from the fishing and aquaculture industries, including Tuna King, Hagen Stehr, as well as food industry ambassadors, Maggie Beer, Simon Bryant and Michael Angelakis.
I applaud the stand of the Spencer Gulf and the West Coast Prawn Fisherman's Association and the many other individuals and organisations who have been campaigning on this issue for years, including Andrew Melville Smith, Greg Curnow, the members of the Cuttlefish Coalition and scientific experts, such as Bronwyn Gillanders, Dan and Emma Monceaux, and many others. I would like to especially acknowledge two people in particular, and I would like to do so because they were denied the ability to speak to the select committee. They are Sid Wilson from the Alternative Ports Working Group and Associate Professor Jochen Kaempf, who has arguably done more than anyone else to push BHP Billiton to justify the science behind its misguided proposal. Sid Wilson wrote:
Dear member of Parliament. Community groups and individuals in the Whyalla region [and throughout the world] have grave concerns re the impact and risks that the installation of a BHP Billiton desalination plant will place on the Lowly Peninsula and Spencer Gulf marine environment.
In the near future, you will make a decision on the indenture act associated with the new mine development at Olympic Dam by BHP Billiton.
A critical issue in the indenture is the proposal to develop and operate a large desalination plant on the Point Lowly Peninsula and discharge huge volumes of saline wastewater into the Upper Spencer Gulf. The indenture allows for future extensions to the proposed plant.
Concerns have been expressed regarding the desalination plant site over the last three years in many forums; community, industry and government via submissions, media, personal and group letters, emails and representation. Modelling and research has been carried out by scientists.
Currently, the government draft indenture for the new mine supports the desalination plant on the Lowly Peninsula. As this indenture goes to parliament, the following concerns must be addressed:
There is still a wide variance on the views held by reputable scientists regarding the risks that the huge saline wastewater discharge presents to the gulf.
Much of the support for the proposal to be sited on the Lowly Peninsula is based on modelling and it appears that little or no proof of the modelling outcomes have been demonstrated in practical real terms in situ.
The risk during dodge tides in the Upper Spencer Gulf appear, to people with local knowledge, to be underestimated.
There are alternative sites for the desalination plant which appear to be better options and have not been subjected to detailed investigation.
The current and potential value of the Lowly Peninsula and the Upper Spencer Gulf marine areas to the liveability—social, recreational, tourist, environmental and economic diversity, sustainability and prosperity of the region and the state appear to be misunderstood, undervalued or ignored.
The desalination plant project impact and risk on the Lowly Peninsula appear to have been considered in isolation as a single project, with no-one looking at the big picture, combined of existing and other proposed industries on the Lowly Peninsula ie. the existing Santos plant, approved diesel storage and refinery, proposed commodity port, concept of an ammonium nitrate plant and the proposed desalination plant.
The consequence resulting from an excursion in the plant in a large, high flow of saline waste return water to the gulf could be extreme and it appears that it relies on instrumentation and human control to manage it.
Therefore the question that needs to be asked and debated is 'Are the risks of operating a large desalination plant on the Lowly Peninsula and Upper Spencer Gulf too high and, therefore, the precautionary principle should be applied? In short: don't do it.
The other person who I think the select committee was short-sighted in not hearing from was Professor Jochen Kaempf, and this is what he had to say:
This is a message for members of the South Australian Parliament and a final call to protect the iconic Giant Australian Cuttlefish of the Upper Spencer Gulf from industrial pollution.
This is an important moment in South Australia's history. At this point in time, the South Australian Parliament is in the process of finalising amendments of legislation that will allow BHP Billiton to install a large seawater desalination plant at Point Lowly in the Upper Spencer Gulf.
Approval of this Indenture Bill will grant BHP Billiton the exclusive rights to continuously pollute the Upper Spencer Gulf for many years to come. The pollution zone will be located within a short distance of 1 km from Australia's most precious marine breeding habitat of the Giant Australian Cuttlefish. This species is a true Australian icon and endemic to the Point Lowly region.
The appearance of tens of thousands of cuttlefish in the Point Lowly region in June/July every year is a spectacular natural wonder, not occurring anywhere else in the world. Cuttlefish have a short life span of only 1?2 years and are therefore particularly vulnerable to marine pollution. Adult cuttlefish are bottom feeders. Their exposure to the pollution zone cannot be avoided and consequences are uncertain. Nevertheless, it is not far-fetched to predict that large-scale industrialisation will cause the extinction of the cuttlefish and other marine species in the Upper Spencer Gulf.
From the scientific point of view, it is important to point out that BHP Billiton's choice of Point Lowly for the desal plant has been based on severely flawed science that did not compare the relative ecological importance of alternative regions. This choice contradicts first principles of conservation and risk management and cannot be classified as world-best practice. Instead, this choice implies a high risk of destruction of important natural heritage.
As [a] marine expert, I hereby urge members of the South Australian Parliament to vote against the indenture bill. I ask every decision-maker involved to step back for a minute and to listen to their heart, to think about their children and their children's children, and to ignore their political alliance before making a decision in this important matter.
What really matters at the end of the day is that we can tell our children that we did the best we could to conserve and protect Australia's precious environment. Indeed, economic growth is important in a competitive world, but only if this does not pose a severe threat to the environment. The most efficient control mechanism for the protection of the cuttlefish is risk prevention. Don't allow BHP Billiton to pollute this precious marine ecosystem. Make a wise decision. The world is watching.
Professor Jochen Kaempf, whilst that might seem to be emotive language, has showed many members of this place, in various committee hearings, his PowerPoint presentation and his detailed oceanographic modelling showing how the water flow in the Upper Spencer Gulf makes it one of the worst possible locations for a desalination plant.
Of course, the desalination plant is not the only water concern in relation to this project. With the expansion, BHP Billiton intends to increase, not decrease, its take of publicly-owned fossil water from the Great Artesian Basin. The review of this indenture by this parliament provides a unique opportunity for us to return 42 megalitres of water each day to the Great Artesian Basin without impacting adversely on any aspect of the mine expansion.
To explain, the company's licence to extract water from the Great Artesian Basin, issued in 1986, will expire in 2036. The licence grants to the company an open-ended right to renewal such that the company will be entitled to take water from the Great Artesian Basin for the life of the mine. Certainly, the indenture we have before us envisions the right to continue up until at least 2051. The company is currently complying with the terms of its GAB licence and the licence is so drawn that, so long as the company complies with the licence conditions and the GAB extraction remains sustainable, this parliament will never be able to terminate the licence. That is why we need to deal with it now in this indenture.
Experts and other commentators have asserted that there is nothing in any part of the EIS documents that indicates that the GAB resource is integral to or even significant for the expanded Olympic Dam mine. Nowhere, in any public document pertaining to the expansion of the Olympic Dam mine, has the company asserted that it needs the GAB water. Instead, the language is one of entitlement to that water and this is not a reasonable basis to allow this extraction to continue, when we have the opportunity to end it.
One person who has been active in this debate, Mr Richard Quilty, BHP shareholder and regular commentator in the media, has suggested that the debate here in the South Australian parliament exposes a very dangerous precedent. If we, during this approval of the indenture, decline to seek the company's surrender of its GAB licence, we will establish a new and very significant environmental, planning and perhaps even legal precedent. He says that those who, in the future, seek a right of access to GAB water, will be able to rely on the BHP Billiton approval to establish that need for GAB water is not a prerequisite to the establishment of a right to access that resource. This is certainly a precedent with substantial environmental and social consequences for the whole of the Great Artesian Basin.
Not only that, the only justification which BHP has mounted in its environmental impact statement for the continued extraction of water from the GAB, once the desalination plant is constructed, is the significant capital invested in the development of the GAB well field and associated pumping stations and pipelines. Those words are from the EIS, yet the bore fields infrastructure was actually constructed by the mine's previous owner, Western Mining Corporation, prior to 1986, and again, before 1999.
In fact, there has been no substantial investment by BHP Billiton in bore fields infrastructure since the mine was acquired in 2005. Furthermore, against the argument that the acquisition price for WMC of $9 billion included any substantial investment in bore fields infrastructure, the following points, I think, show the lie to that assertion.
Firstly, the proportion of the capital applicable to the bore fields infrastructure would have been minuscule against the total value of the other mine infrastructure acquisitions. In other words, it was never a substantial investment. The current value of the Olympic Dam deposit was recently asserted by former premier Rann, in the presence of BHP Billiton CEO Marius Kloppers, to be in excess of $1.4 trillion—in other words, more than 150 times the 2005 acquisition price—and that figure shows that that price, in 2005, and the small part of that that might relate to bore fields infrastructure, is entirely insignificant.
The bore fields infrastructure is, in some cases, 25 years old and, in any case, I do not think any of it is less than 12 years old. Any capital investment in that infrastructure would have been amortised or depreciated, if not totally written off, by now.
At last week's AGM in Melbourne, the issue was raised from the floor. Not only did all shareholders applaud the woman who raised the issue at the end of her presentation, but Jac Nasser, BHP chairman, responded to the meeting by asserting that she was making a very good point. He invited her to meet personally with Nasser and the board, after the AGM.
It is remarkable and, in fact, deeply disappointing that the state government, in all the months of negotiations over the indenture, did not manage to achieve what one person speaking for five minutes on the floor of the BHP Billiton AGM managed to achieve. Premier Weatherill claimed in The Advertiser recently that 'this GAB water will have no foreseeable impact on the basin'. I think that is a misleading statement. The extraction of significant amounts of water has a material impact on the Mound Springs community—it has in the past, and it will in the future.
The unique Mound Springs community is listed as an endangered ecological community. It is protected under section 18 of the commonwealth EPBC Act and, as a result of our allowing the extraction to continue, it will ensure further risk and pressure on that listed ecological community. So, now is the time; it is possible to do it, especially given that the desalination plant (albeit in the wrong spot) will provide more than enough water for the mine's needs. This is an opportunity to wean them off the Great Artesian Basin, and we should take that opportunity.
In relation to energy and greenhouse, we know that in the next decade the expanded Olympic Dam mine will increase South Australia's energy demands by at least 40 per cent, and it will increase our emissions by up to 14 per cent. The latest state estimate for Olympic Dam greenhouse pollution is for an increase of 4½ million tonnes of CO2 equivalent per annum. This will undo much of South Australia's efforts to use renewable energy, to put urgent action to reverse climate change and to prevent South Australia contributing to science-based targets for the reduction of greenhouse gas emissions by 2020.
The South Australian government approval conditions effectively limit the required contribution of renewable energy to only some 10 per cent of the total electricity demand by 2020, and that is after allowing for heat recovery through co-generation. That is far short of both the state renewable energy target of 33 per cent and the commonwealth mandatory renewable energy target of 20 per cent.
It is quite remarkable that the best the company is required to do is prepare a plan. There are simply no requirements to reduce their emissions until 2050. The Conservation Council of South Australia, amongst others, has argued that clause 11A of the indenture fails to require any tangible requirement for BHP Billiton to achieve the stated EIS goal of a 60 per cent reduction in greenhouse emissions by 2050.
Furthermore, there are no requirements in clause 11A for BHP Billiton to commit to medium-term targets, or a greenhouse gas reductions pathway, commensurate with the scale of emissions that will be caused by the mine. Also, there are no requirements to report energy and greenhouse emissions from the expanded mine. There are no requirements for energy use and greenhouse gas reporting to be provided to South Australian stakeholders, disaggregated into the key components of the expansion and the expanded mine.
I note that national greenhouse and energy reporting standards do not provide disaggregation of emissions and do not include scope 3 emissions. This issue of scope 3 emissions is, in fact, quite critical; for example, just the purchase of trucks to haul the overburden 24 hours a day, seven days a week for six years, may result in emissions of half a million tonnes of CO2 equivalent before any diesel is even added to the fuel tank of the truck.
There needs to be much greater accountability in the reporting of energy use and greenhouse gas production, and there must actually be some real mechanism in place to reduce this enormous greenhouse burden. A focus on fossil fuels, rather than long-term investment in renewable energy, is not responsible and it misses an opportunity. It is one of those areas where we have completely missed the incredible leverage that we have to require BHP Billiton to provide for their energy needs through renewable energy.
In 2006, I had an opinion piece published in The Advertiser, and in it I argued that there were two possible solutions for the government to resolve the clash between the massive energy demands from the Olympic Dam expansion and the need for urgent action on climate change. I said:
"Either the expansion must take place without a significant increase in emissions, or the rest of the state must cut much deeper and faster to compensate. The good news is that either response has the potential to transform our state's economy for the better."
Back then I noted that there was a record $14 billion corporate profit, that BHP Billiton was in a wonderful position to invest, and invest heavily, in renewable energy in order to cut its own emissions and that such an investment would be a massive boost for an important growth industry.
The second response is also potentially exciting. To achieve deep cuts across the rest of the state will require most of our immediate climate change-related problems to be tackled immediately—such as air conditioners which skew our electricity market at peak times—and would require us to resolve the urban transport problem and force us to create an affordable public transport solution that provides for most trips for most people in urban areas. Once we find solutions to these problems we can then export them to the rest of the world, and that guarantees smart jobs into the future and helps prevent further climate change in other places.
What is depressing is that the government has chosen a third path from the two I suggested five years ago: the third path, apathy and avoidance. Yet the potential for transformational investment in next generation technology—such as solar thermal and geothermal—is very real. However, these things are not going to happen unless the government insists on it, and until then BHP Billiton has made it abundantly clear that they will only invest in renewable energy when it is at the same cost or cheaper than dirty fossil fuels. So where is the incentive? Where is the pressure that we should be putting on BHP Billiton to do better?
The last area of environmental concern that I want to talk about is that of issues in relation to the actual mine site. Essentially, it is being turned into a giant radioactive sacrifice zone, and it will be one of the largest on the planet. Again, I have already spoken extensively in this chamber about what is planned for the management of tailings, the waste rock pile and the open pit, and I do not want to go back over that, but my argument was, and still is, about the need to return the tailings to the pit. That is world's best practice, that is what is required at the Ranger mine in the Northern Territory. If members want more information about that, they can look at my contribution of 6 July.
I do want to touch on just two aspects of the proposed tailings management: the lack of adequate lining of the tailings facility, and an issue that we do not hear much about, and that is the risk to birdlife. In relation to the lining of the tailings pit, in response to my recent question in The Advertiser, 'How can the government claim that they have met their public commitment for the expansion to meet world's best practice when only 4 per cent of the tailings dams are to be lined and the dams are designed to leak?', the Premier made a substantial public admission that natural sediments are being used instead of a plastic liner.
What the Premier did was expose himself in claiming that this use of natural sediments is considered to be more reliable than a plastic liner. That is simply not true, given that leakage through the natural sediment is estimated to be in the order of eight million litres per day over the first 10 years, and that a plastic liner would greatly reduce that amount of leakage. Essentially, the government is allowing the company to avoid basic environment protection costs based on the assumption that the natural limestone layer will be able to absorb the radioactive acid leachate. Yet this is pure speculation and does not take into account pooling and the subsequent deep cutting of hot spots in the limestone layer.
Again, I make the point that the only reason BHP Billiton can claim that this is a low cost project is because they have been able to avoid basic costs of environmental protection, such as 100 per cent lining of the tailings facility. The plastic lining apparently costs some $180 to $200 per square metre, and this would be some $30 million per tailings storage cell to line the central 4 per cent of those facilities. BHP Billiton is being allowed to avoid the additional environmental costs of some hundreds of millions of dollars by fully lining all the cells.
It may reduce its short-term costs, but it will massively increase the long-term cost for rehabilitation that ultimately the state will have to wear. Once again, I remind members that world's best practice for uranium tailings is in-pit management, that is, putting the tailings back below the ground in the form of an open pit mine and thereby ensuring the greatest possible physical and radiological safety in the long term; by long term, we are talking about 10,000 years.
In relation to bird life, Birds SA has identified that the tailings storage facility is a major threat to birds. According to BHP Billiton's annual environmental and monitoring reports, the existing tailings storage facility, they admit, is responsible for about 50 bird deaths per annum in the first 10 years or so, 895 birds in 2006, 311 in 2007, and 282 in 2008. These are gross underestimates of the true mortality that was acknowledged in the draft EIS. The present facility and the evaporation pond has about 400 hectares of tailings storage facility, plus a further approximately 130 hectares of evaporation pond.
The proposed expansion would increase the size of this facility to 3,400 to 3,800 hectares, and this greatly increases the threat to local bird life. BHP Billiton's solution to the threat was to partially cover the area with netting and to introduce design changes, which it hoped would reduce the risk. The Birds SA submission to the original EIS questioned the ability of the netting to survive in the acidic environment, the likelihood that it would be maintained adequately, the lack of suitable back-up should the netting fail, and the lack of a firm commitment by the company to actually do anything.
Apart from clarifying some questions, the supplementary EIS provided no change to the existing design of the expanded tailings storage facility and contained no further commitments by the company. Again, much more needs to be done, and these requirements should be included in the indenture agreement. Things that should be included are: the erection and maintenance of netting over the central decant ponds and the new balance ponds; a more reliable system of monitoring and reporting of losses in the annual environmental report in sufficient detail to allow the effectiveness of control measures to be assessed; and, finally, we need much greater investment to research methods to protect this area from negative bird interactions.
I want to move on to native title and the rights of Indigenous people. South Australia has a sad history of engagement of Indigenous peoples in mining projects and in negotiations for access to land. Over decades, mining companies have picked who they want to deal with and ignored those who disagree. Back in the days of Western Mining Corporation, this was particularly divisive. It led to violence and even a death in the local Aboriginal community in Marree.
If members want to know more about the tactics that were used back then to divide the local Aboriginal community in the 1980s and 1990s, go back to the ABC Radio National Background Briefing story of Sunday 5 March 1995. The transcript of that story is still on the internet, and the reporting by Helen Thomas and Matt Peacock was very comprehensive. That is where you will find the sorry story of how mining companies interact with traditional owners.
I understand that a number of Aboriginal groups have since signed agreements with BHP Billiton not to talk publicly about the expansion, so it is difficult to assess the diversity of opinion amongst Aboriginal people on this matter. There are other groups, however, who have not reached agreement, and they are more able to speak out. The only submission to the select committee was from Kevin Buzzacott, an Arabunna elder from Lake Eyre. He wrote to the committee to request a moratorium on the Olympic Dam expansion. He said:
"I am worried about the ongoing health issues related to uranium mining, seen now especially at Fukushima and ongoing at Chernobyl. The most serious issue I have is the destruction to our ancient sites and the misuse of old underground water. There has been irreversible damage done already, and in the Aboriginal way the old country is sacred. It is prohibited to destroy ancient country."
Mr President, a matter that I know is close to your heart and to many members here is the issue of worker safety. This is another issue the Greens have tried to bring to public attention over the last few years. We have serious concerns about worker exposure to radiation at Olympic Dam, and we have particular concerns about exposure to airborne polonium-210, the notorious substance that killed Russian Alexander Litvinenko in London five years ago; members might recall that incident. It is a substance that is so toxic that the tiniest amount is absolutely fatal.
We believe that BHP Billiton is risking the lives of its staff and its employees at Olympic Dam by exposing them to unsafe levels of radiation. In my submission to the original EIS, I explained how, based on documents I obtained under freedom of information, BHP Billiton uses manipulated averages and distorted sampling to ensure its official figures slip under the maximum exposure levels set by government. The EIS for the expansion simply failed to demonstrate that worker exposure to radiation in the smelter operations will be below international standards, and it underestimates the worker exposure likely to result from the expansion.
The response from the company is not satisfactory as far as I am concerned. BHP Billiton has speculated that increasing smelter throughput by 60 per cent will result in a reduced maximum exposure of nine millisieverts, but this claim has no credibility. The most exposed workers, the furnace tappers and the technicians, will actually spend a greater portion of their work time in the most exposed areas as furnace tapping will take the greater part of the 24-hour operating cycle. BHP Billiton has engineering knowledge and capability to fix the problems in the existing smelter but appears to lack the commitment.
In June last year, Hendrik Gout from the Independent Weekly did a damning expose of the problems of radiation exposure at Olympic Dam, based on the detailed information provided by a whistleblower who was concerned about what was going on. Mr Gout described in his article why concerns remain despite BHP Billiton's assertions that there is no problem. He said:
"Say you go down to Glenelg for a swim. The government says it's safe because the yearly average for e. coli (bacteria found in human faeces) is below danger levels. But taking a yearly average is the wrong methodology. You want to know if the water's safe on the afternoon you go swimming. If you're up over your head in...[biosolids] it makes no sense saying the water's safe over a 365 day-a-year average."
Yet that is the very system that is used at Olympic Dam: air samples are taken over long periods and then averaged out. Polonium-210 is released in bursts and any single burst could be deadly, even if the average meets the standard.
In the Olympic Dam smelter there are high emissions during furnace tapping when workers are present, and this occurs around 30 per cent of the 24-hour cycle. Monitoring is done for a few shifts per month and not correlated to the tapping times or process events. This is analogous to measuring the noise from equipment which runs part time, then measuring it when it is stopped and claiming the average noise exposure is less than the regulations. BHP Billiton uses as a defence that technicians are provided with respirators, although these are compulsory only during the tapping process itself. Another quote from the Independent Weekly report explains why that is simply not adequate. It states:
'You have to understand the smelter,' said one staffer. 'It's hot, almost always over 100 (38 degrees C) and often more. The masks are uncomfortable. They make it hard to see. They're heavy, awkward. People sometimes slip them off except when they're not actually tapping, but the...Polonium-210 is everywhere in the smelter.'
The real answer is to remove the danger and not disguise it with a respirator.
BHP Billiton does not undertake continuous personal monitoring of exposed workers; there are no blood tests or urine sampling for radiation poisoning. Therefore, BHP Billiton cannot guarantee that workers have not been exposed. Independent site supervision of radiation monitoring and personnel medical examinations, including urine testing of workers, is required to validate that workers are not exposed to levels that increase the risk of cancer. The government must commit to a longitudinal health study of Roxby workers to ensure that they are not at risk.
In relation to health impacts other than through radiation, there were two submissions made to the select committee, which decided it did not need to hear anymore information about. The first submission is from Doctors for the Environment and the second one is from the Medical Association for the Prevention of War. I will read a few brief extracts from those submissions. Doctors for the Environment, as members might know, is a voluntary organisation of medical doctors in all Australian states and territories. They work to address diseases (local, national and global) caused by damage to the earth's environment. They are, effectively, an independent public health organisation. Doctors for the Environment note recital No. X in relation to the indenture, which provides:
"Health, Safety, Environment and Community...issues are of high importance to the Company. The Company's aspiration is that its operations under this Indenture will cause zero harm to members of the public, its workforce and the communities in which it operates, and that any environmental impact of those operations is minimised. The Company, in conjunction with the State, intends to continue to take adequate measures to safeguard the public, the workforce and the environment in relation to operations under this Indenture."
Doctors for the Environment point that out. That is a statement of intention but it is not backed up with any hard and fast requirements. The doctors point out that there are many examples of mining enterprises that have harmed human health because due diligence was not observed. They point out the legacy from asbestos mining and they point out other examples, such as the people who live around coal mines who suffer increased morbidity and mortality from cardio, respiratory and other diseases. The doctors also point out the dangerous implications of particulate matter of a very small size, PM2.5, those materials that go deepest into the lungs. In relation to Olympic Dam specifically, they state:
"The potential health impacts arising from the unprecedented surface area of tailing dams as a potential source of air particulate pollution have not been answered. These particulates may contain toxic metals some of which may be radioactive. There can be little confidence that the measures to protect the tailings from storm and wind erosion over many decades and perhaps centuries are adequate. In this respect security over many decades is necessary and this must be planned and costed. Expectation has to take into account the fact that past storms have dispersed fine particulates over hundreds of kilometres in prevailing air streams and climate change is expected to bring an increased number and severity of storms.
Potential public health impacts should lead to preventative methods. The preventative method for the mine is to put the toxic radioactive waste into the pit. Presumably this is not proposed because it is more expensive."
I think Doctors for the Environment have put their finger right on it. Their submission, which I should acknowledge is authored by Professor David Shearman, concludes with the following:
"Decisions which have unresolved potential health impacts are being taken under inappropriate time lines which do not allow for independent public health assessment and Doctors for the Environment Australia asks that consideration of the Act be delayed to allow prudent assessment.
In making these observations we are not hopeful of further action but it is our duty as doctors to document our concerns."
I am happy to have put their concerns on the public record. The Medical Association for the Prevention of War also highlighted the problem of tailings management. Their submission was authored by Dr Margaret Beavis, who is the vice president of the association. What she said is:
"The tailings management proposed by BHP is far from acceptable practice. These fine particle tailings are effectively low level radioactive waste, and as such should not be left exposed to the elements. The Ranger uranium mine in the Northern Territory has been required to store similar radioactive waste below ground, where exposure to the elements is greatly reduced. Open tailings will increase radiation exposure for workers at the site. Inhaled radioactive particles cause significantly greater health damage at much lower levels than external radiation. Dust storms and strong winds have the potential to spread particulate matter over long distances.
It is estimated that potentially 9 billion tonnes of radioactive tailings over 44 square kilometres will be left on the surface in perpetuity. Similar arid sites, such as Radium Hill in SA or Witwatersrand Basin in South Africa, have had significant erosion even after being covered, exposing tailings again to dispersion in the environment.
The proposal for 'real-time dust and weather measuring systems'—
as set out in the EIS—
will not prevent the dispersion of dust into the environment."
They are two groups that I think the parliament should have heard from in more detail. If the Legislative Council agrees to establish a select committee to look at this bill, I would hope that those two groups would be called on.
So, what is the alternative? The Greens certainly have many concerns. We have set those out not just today but previously, so what is our alternative? The Greens have chosen to be proactive and to be solution-focused participants in this debate. Last year, we commissioned a report from well-respected Monash University academic, Dr Gavin Mudd. In our instructions to Dr Mudd, we posed two questions: can the Olympic Dam expansion be developed without uranium recovery, and will this scenario lead to net lower environmental impacts?
The report that came back on both questions was a resounding yes. The report stated that a Roxby expansion without the recovery of uranium was a technically viable process. Based on the no uranium recovery scenario, all copper concentrate smelting would need to occur on site at Olympic Dam, ideally alongside complete copper refining. In addition to the other benefits, this would also deliver more jobs and more downstream economic benefits.
The report found that potential water savings would be significant, with this scenario leading to 18.9 million litres of water savings per day. These water savings could possibly lead to a major reduction in groundwater extraction from the Great Artesian Basin, such as closing down Borefield A and reducing the take from Borefield B. Alternatively, both could be closed, and the desalination plant, provided it was put in a more appropriate location, could provide all the mine's water needs.
The report also found that potential electricity savings were significant, with this scenario leading to 293 gigawatt hours of electricity savings annually. The potential electricity savings, based on South Australia's 2009 greenhouse emissions intensity for electricity, which is 850 tonnes of CO? per gigawatt hour, could save about quarter of a million tonnes of CO? annually, or some 25 per cent of current annual greenhouse gas emissions of the existing Olympic Dam operation. To put it another way, the electricity savings from the no-uranium scenario would be equivalent to supplying electricity to nearly 60,000 South Australian households annually.
The report also pointed out that the tailings from the Olympic Dam mine—as I have said before—will remain low-level radioactive waste, regardless of whether or not the uranium is recovered. So, it makes no real difference in that regard. What this report does is explode the myth that somehow the only way the Olympic Dam expansion can occur is the way that BHP Billiton has proposed.
Every step involves a choice, and one of those choices could involve leaving the uranium behind in the same way that the company is choosing to leave behind the huge amounts of rare earths and iron ore that are in the ore body.
Traditionally, BHP has always argued that it has to extract the uranium on economic grounds, but that is a false argument, and I will explain why. The 2010 reported mineral resource for Olympic Dam was 9,075 million tonnes of ore, with copper at 0.86 per cent; uranium oxide, 0.027 per cent; gold at 0.32 grams per tonne; and silver at 1.5 grams per tonne.
Using those figures and the metal prices as of 2 June 2011, this gives values of $670.9 billion worth of copper, $287.1 billion worth of uranium, $133.6 billion worth of gold and $15.3 billion worth of silver. The proportions are: copper, 60 per cent; uranium, 25 per cent; gold, 12 per cent; and silver, just over 1 per cent. Based on reporting by Geoscience Australia, as well as other geological experts, the average rare earths grade at Olympic Dam are: 0.3 per cent cerium, 0.2 per cent lanthanum and 0.084 per cent other various rare earths.
Again, if we use the current metal prices, this gives an average value of $2,110.5 billion worth of cerium, $1,377 billion worth of lanthanum and $707.9 billion of other rare earths. That gives the rare earths in Olympic Dam a total value of $4.2 trillion, yet the company is not proposing to extract any of that wealth from this ore body.
Compare that $4.2 trillion with the $287.1 billion for uranium, and it proves that the economic argument about having to extract the uranium is simply not valid. Even if the price of rare earths collapses by tenfold, which is extraordinarily unlikely, given the use of those minerals in high-tech electronics and that such a rapid fall has never happened before, I think this shows that those rare earths will almost always be more valuable than the uranium.
Of course, leaving the uranium behind only answers some of our concerns. In essence, we believe that this project needs to be a much better deal for South Australia, with greatly reduced environmental costs, greater respect for our laws and the rights of traditional landowners, and a much greater share of the economic benefit for exploiting our resources.
To achieve these objectives, we have proposed a number of amendments. I do not propose to outline them all now. They have been tabled. As I have said, there are 28 amendments, although one of those relates to a job lot of all the changes that we believe should be made to the indenture itself.
In conclusion, I would like to thank the very many passionate and proud community activists, environmentalists, business people, academics, mining insiders, Indigenous leaders and ordinary South Australians who have personally helped me and assisted the Greens to come to terms with this truly enormous project. In particular, I acknowledge the work of David Noonan, who, many members will know, was the face of the Australian Conservation Foundation's antinuclear campaign for many years. In fact, David took over from me at ACF in 1996 when I went to the Environmental Defenders Office. I also thank the many scientists who have given their time.
I would like to close by echoing the statement that was made by Associate Professor Jochen Kaempf. What he said in his call to parliament—a call that went unheeded—was:
"I ask every decision-maker involved to step back for a minute and to listen to their heart, to think about their children and their children's children and to ignore their political alliance before making a decision on this important matter."
In your heart of hearts, you will need to ask yourself three questions: is this the best deal for South Australia, am I comfortable with the low rate of return and the high rate of public subsidy on the one-off opportunity to use these non-renewable resources and, most importantly, am I prepared to leave a significant toxic mess for future generations to deal with? If you cannot answer yes to each of these three questions, you must be prepared to change the poor deal that has been struck.
I completely reject the premise that this parliament is a rubber stamp. I think, as I said at the outset, we are duty bound to get the best deal possible for South Australia. I do agree that this project will set the course of our state for many years to come. I want that course to be in the right direction. I believe we have to get this right, and I believe that now is the time to get this right.
For more information see more about Mark's Olympic Dam campaign.
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