Korean steel giant POSCO's plan to build a new coal mine in the Southern Highlands region of NSW has taken a hit after a state water agency raised "significant concerns" about the optimistic water modelling used in the project's environmental impact statement.
Known as Hume Coal, the project aims to extract 39 million tonnes of coking and thermal coal from near Berrima over a 23-year period, with coking coal expected to comprise 55 per cent of the mine's sales.
But the project's location within Sydney's water catchment has concerned the state's major dam operator and water provider WaterNSW, which accused Hume Coal of using modelling that underestimated the mine's impact on groundwater levels.
"The use of average rainfall input, rather than probabilistic or worst case scenario ranges, makes derived groundwater impact predictions non-conservative (or) optimistic for dry periods," the agency said in a submission. "This lack of conservatism is a significant concern to WaterNSW and should be addressed."
"Surface water flow may also be more heavily impacted than is predicted by the proponent's models."
Aside from the quantity of water used in the mine, WaterNSW also raised concerns about the mine's impact on water quality in the catchment area for Sydney's biggest dam.
"WaterNSW does not consider the assessment of grey and blackwater from the development, nor the proposed management techniques, adequate or suitable for use in the Sydney drinking water catchment," the agency said.
"The proposed development is located within the Warragamba Dam catchment. Unless the water intake is properly managed and accounted for the Hume Coal project may significantly reduce the quantity of water in the Sydney water catchment area."
WaterNSW urged Hume Coal to conduct more studies and improve its modelling.
To add injury to insult, the National Trust expressed concern that the landscape of the Southern Highlands was incompatible with the development of a coal mining landscape.
Hume Coal is not the first coal project to attract concerns about water; New Hope has been trying to win approval for an expansion of the Acland mine on Queensland's Darling Downs for more than a decade, and the expansion's impact on local groundwater levels has sparked major concerns among nearby farmers.
Groundwater has also been a major issue in the high profile fight of Shenhua's Watermark coal project on the Liverpool Plains.
Just last week Shenhua sold 51.4 per cent of its exploration licence for Watermark back to the NSW government in exchange for $262 million, and that sale came after the NSW government paid BHP Billiton $220 million to cancel its Caroona coal licence.
POSCO was recently a bidder for Arrium's Whyalla steelworks but was beaten by British companies Liberty House and SIMEC.
