Secrets shroud Shenhua exploration licence

Secrets shroud Shenhua exploration licence deal


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Silos at Breeza, on the Liverpool Plains, where Shenhua is developing a large open-cut coal mine.

Silos at Breeza, on the Liverpool Plains, where Shenhua is developing a large open-cut coal mine.

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Miner claims deal in confidential letter to Premier one year before government renewed its licence

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NSW Government’s dealings with Chinese miner Shenhua are so tightly-held even the state’s Mining Minster can’t clarify when his government sealed a deal to extend the controversial Watermark coal project on the Liverpool Plains.

The Watermark project is one of the most controversial in NSW’s history. Opposition centres on risks to prime agricultural land surrounding the mine site.

On July 9 this year the miner wrote to NSW Premier Gladys Berejiklian demanding its licence be renewed. The letter signed by Dr Ling Wen, chief executive and president of China Energy Investment Corporation, parent company of Australian entity Shenhua Watermark.

Dr Wen said Shenhua had a struck a deal to renew its licence on June 29, 2017 - the same day government agreed to pay $262 million to buy back 51pc of the tenement.

“Agreement on this (exploration licence renewal) was reached on 29 June, 2017 and a Deed of Settlement was signed,” Dr Weng told Ms Berejiklian.

“Shenhua requests that the NSW Government meets its legal obligations and treats Shenhua with the respect that such a significant overseas investment in the NSW economy deserves,” Dr Weng’s letter said.

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The letter was obtained by the Caroona Coal Action Group under freedom of information laws.

Three days after the buyback deal last year, Shenhua told the Hong Kong stock exchange it had secured approval to renew its licence.

“(Shenhua) Watermark reached an agreement with the NSW government in relation to partial extension of the exploration license,” the 2017 statement said.

At that time, a spokesman for Mr Harwin said he had never “discussed with or indicated” to Shenhua that the application would be successful.

Mr Harwin repeated this claim on September 1, in a Budget Estimates hearing. He told parliament that Sehnhua’s exploration licence renewal was still under assessment.

Fastforward to July 21 this year when Mr Harwin awarded Shenhua a five year exploration licence.

The renewal came just 12 days after Dr Weng wrote to Ms Berejiklian and criticised the government for delaying the project and accused it of creating “unacceptable sovereign risk”.

Fairfax Agricultural Media asked Mr Harwin if Shenhua’s claim was accurate, who from government signed the agreement, when it was signed, what were the terms of the agreement and if he had misled parliament when he told Budget Estimates that no agreement had been reached.

Mr Harwin did not respond to the questions.

A spokesperson for the Mr Harwin said commercial in-confidence prevented the him from accessing relevant information.

Significant questions remain.

Did Shenhua mislead the Premier when it said government had reached a Deed of Agreement to renew its licence? Did the Premier sign off on the deal and not tell Mr Harwin? Has Mr Harwin withheld crucial information from the public?

The Deed of Agreement may contain terms impacting Shenhua’s exploration activity which have not been made public.

If it was signed in 2017, when the buyback deal was struck, why wait for a year to announce the exploration licence renewal?

Lock the Gate has launched legal action to obtain legal documents relating to government dealings with Shenhua.

The $262m buyback deal was particularly controversial because NSW exploration licences are typically halved without compensation when they are renewed.

Lock the Gate’s freedom of information request obtained a list of of government documents from 2017 which includes two briefing documents that was sent to Mr Harwin.

One is a draft deed of agreement on the exploration renewal.

The other is a draft Mining Lease deed of agreement.

Mr Harwin said there was no deal with Shenhua for a mining lease, which is required before the mine can be dug.

Shenhua also needs approval from the federal Environment Minister for water management plans under Commonwealth water trigger laws.

Shenhua was contacted for comment.

Probity problems

Labor mining spokesman Adam Searle said the letter Shenhua sent to the Premier was “very disturbing” and “raised questions over unexplained delays” to the licence renewal process.

“It suggest at least in the company’s mind that it had an agreement with government to have its licence renewed,” Mr Searle said.

“It looks as if the government has a given Shenhua approval as a result of the duress it applied.”

Shenhua’s original exploration licence expired in 2016 and was extended under an interim arrangement while government considered the renewal application. Government has the power to either not renew the licence, or reduce its size, without compensation.

“Government had the power under the exploration licence to bring the process to an end, with out exposing the state to any compensatory payments. It decided to put the interest of multinational mining company ahead of the community and farmers on the Liverpool Plains.”

Lock the Gate spokeswoman George Woods said the Shenhua process “need a good dose of sunlight to ensure it was done in the public interest.

“What promises did Shenhua get in return for agreeing to the buyback deal?,” Ms Woods said.

”The Minister should clarify if his comments in Budget Estimates were misleading or not.

“Shenhua’s letter raises the possibility that the Premier has entered into an agreement over the top of her Minister. 

“We can’t know until the information is published, in the public interest.” 

 Caroona Coal Action Group chairwoman Susan Lyle said government should reveal its motivation for the $262m buyback.

“We still have no idea what that was for and are left questing the conditions on that deal, No one knows what they are,” Mrs Lyle said.

Shenhua still owns the land in the excised exploration area, which it could sell to recoup costs.

“Government’s use of public money has to be explained,” Mrs Lyle said.

The story Secrets shroud Shenhua exploration licence first appeared on Farm Online.

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