New research: Six billion dollar loophole for the Hunter Valley coal mine extension

A loophole in NSW’s planning process is enabling the Hunter Valley Operations (HVO) coal mine - the largest proposed coal mine expansion in the state – to significantly misrepresent the economic cost of its continuation project, new research from the Australasian Centre for Corporate Responsibility (ACCR) reveals.

ACCR’s review of the 2024 cost-benefit analysis submitted by the HVO Joint Venture (51% Yancoal, 49% Glencore) demonstrates that by relying on an outdated NSW Treasury framework, the company has vastly inflated the project’s net value to NSW and underestimated its costs.

While public projects must use NSW’s current Treasury guidelines, introduced in 2023, which align the evaluation of emissions with the state’s legislated climate targets, private projects like HVO are not required to do so.

This billion-dollar loophole allows private projects to bypass emissions costing standards compulsory for public projects in NSW, undermining the integrity of the planning process.

When ACCR re-modelled the costs of the proposed HVO continuation project using the current Treasury guidance:

• the cost to NSW of the project's emissions jumped from $3.7 million to more than $6.3 billion
• the stated $7.8 billion in net benefits collapses to a net loss once Paris-aligned coal prices and the full scope of emissions are included.

Further, the current HVO cost-benefit analysis excludes key emissions sources, such as intrastate coal rail transport, which are required by the Treasury guidelines. Including these would add another $560 million to the project’s costs.

The HVO Joint Venture is seeking to extend the life of the mine to 2045. Following concerns from the NSW Government about fugitive methane and climate impacts, a revised mine plan, including a new cost-benefit analysis, is being prepared by the company.

ACCR is calling on the NSW Department of Planning to close the loophole and require all private projects – including HVO – to use the current Treasury guidelines. This is especially critical for projects that materially affect the state’s emissions trajectory.

Key Findings of More cost, less benefit for NSW: the flawed rationale for the Hunter Valley coal mine expansion

• HVO underestimates its emissions costs by 1700 times by using an outdated framework.
• Modelling using current Treasury guidance slashes the project’s net benefit by 81% from $7.84 billion to $1.5 billion.
• Factoring in Paris-aligned coal prices flips the project from a benefit to a net cost to the community.

The HVO project threatens the state’s ability to meet its legislated emissions reduction targets, shifting the burden to other sectors.

Commenting on the report, Naomi Hogan, Company Strategy Lead, ACCR said:

“This loophole is handing coal companies a license to mislead. The HVO analysis omits billions in emissions costs by using an outdated framework that doesn’t reflect NSW’s current climate commitments.

“If the HVO Continuation Project goes ahead under this flawed rationale it will punch a hole in the state’s climate targets and could end up costing the people of NSW.

“The Department of Planning must fix this. All projects must be assessed equally, using the same, current, Treasury guidance. It is essential for transparency, accountability and ensuring NSW isn’t saddled with hidden costs from emissions-intensive coal.

“The upcoming cost-benefit analysis from HVO must use the current Treasury guidance if the NSW government is to make an informed decision about the true costs of this project to the state.”