MAXINE MCKEW: Well, now to the audacious plan to divert a river around a mine. Environmentalists say it has never been done before and they fear disastrous consequences if the Swiss company Xstrata proceeds with a scheme to change the course of several kilometres of the McArthur River in the Northern Territory's Gulf region to allow the development of an open-cut mine. During the wet season in the Top End the McArthur becomes a huge flood plain. The local environment protection authority says there's a significant risk that contaminated seepage from mining and milling will reach the river. The Territory Government has given conditional approval to the diversion and is under pressure from the Prime Minister to give the full go ahead. But who stands to benefit? Murray McLaughlin reports.
MURRAY MCGLAUGHLIN: The McArthur River Mining runs for 300 kilometres from its source in the Barkly Tablelands north to the Gulf of Carpentaria. At this point half way along its course it's only a kilometre from the McArthur River mine. This time of year, the river barely flows. But during the wet season in the Top End it can spill far and wide across huge flood plain. Only five years ago it nearly engulfed a mine.
PETER ROBINSON, NT ENVIRONMENT CENTRE: The concern is when the river is in flood and you've got millions and millions of litres of water pouring around and past that mine every day and that's the problem.
MURRAY MCGLAUGHLIN: The McArthur River mine opened in 1995. Until now, it's been an underground operation. It still contains one of the world's largest deposits of zinc and lead. The plan now is to convert to an open cut operation.
BRIAN HEARNE, MCARTHUR RIVER MINING: To get any more ore from underground would require putting cemented fill into place and certainly with that added cost to our operation, we wouldn't be able to operate.
MURRAY MCGLAUGHLIN: But the major ore body lies under the bed of the McArthur River. To access it, the mining company wants to divert the river for 5.5 kilometres in order to extend this open cut pit.
BRIAN HEARNE: I think the science is well advanced for the diversion of streamed rivers and there's an Australian standard for that already been developed as well.
STUART BLANCH, WWF AUSTRALIA: This is a brave new world. No government in Northern Australia has ever proposed allowing such a river diversion, particularly with the potential for major heavy metal contamination of the river.
MURRAY MCGLAUGHLIN: The McArthur River mine was borne out of expediency, driven by Prime Minister Paul Keating who was there for its opening in September 1995. The mine was the first major project accepted for fast tracking under Keating's One Nation policy, which aimed to encourage development by cutting through "the red, green and black tape" .
PHILLIP TOYNE, ACF 1986-92: It resulted in a process that left many important considerations out, resulted in approvals being given that were irreversible before a lot of information was available. And it relied on a whole series of studies and plans to be developed after the approval when there was no chance of any meaningful intervention by regulators.
MURRAY MCGLAUGHLIN: The CLP Government in the Northern Territory oversaw the hasty approvals process for the McArthur River mine in the early 1990s. Development at any cost seemed the prevailing policy. Then Chief Minister Marshall Perron said in 1993: "We believe having a marginal mine paying no royalty is preferable to no mine at all."
MURRAY MCGLAUGHLIN: And having mined millions of tonnes of ore over the past 11 years, McArthur River Mining has yet to pay a cent in royalties to the Northern Territory Government.
BRIAN HEARNE: Our royalty agreement with the Government was we need to actually pay back the initial capital that was put into the operation and then we pay a percentage after that on royalties. We haven't paid back that initial capital yet.
MURRAY MCGLAUGHLIN: A leaked draft of a Northern Territory Treasury submission to Cabinet casts doubt on suggestions by McArthur River Mining that it'll be paying royalties within a couple of years if the open cut expansion goes ahead: "even in a best case production and price scenario, this seems unlikely give MRM's accumulated losses and investment that would be required to develop an open cut operation."
MURRAY MCGLAUGHLIN: The Treasury leak is more remarkable for its disclosure that the mine enjoys a heavy subsidy from the Territory Government of some $5 million a year and rising towards its electricity costs. The subsidy will continue while the mine operates till 2015. But the mining company, in a statement to the 7.30 Report, said the terms of its electricity supply agreement are strictly commercial.
MRM: "There is no term in the contract that considers price relief via a rebate or subsidy adjustment."
MURRAY MCGLAUGHLIN: The Northern Territory Treasurer's office has confirmed that the subsidies run for the life of the mine and won't be changed. The environment group which received the leaked document prefers the Government's story.
PETER ROBERTSON: We're losing millions of dollars each year through the non payment of royalties and then, on top of that, we're handing out millions of dollars a year to the mine in subsidies. So the suggestion that we are somehow benefiting from this mine economically has to be seriously questioned.
MURRAY MCGLAUGHLIN: Prime Minister John Howard is touting the mine's benefit. In a letter to the Territory's Chief Minister obtained by the ABC, he says the mine's expansion would benefit the Gulf region and the Australian economy. Further, he urges the Territory to expedite its approval of the river diversion for the mine's expansion. The Territory's Environment Minister has given qualified approval that she retains doubts.
MARION SCRYMGOUR, NT ENVIRONMENT MINISTER: I do not think the risks identified with the expansion can properly be managed as MRM has outlined. For this reason, I have advised the Mines Minister that a substantial security bond ought to be set, including provisions for post mine environmental management.
MURRAY MCGLAUGHLIN: MRM has now prepared a mine management plan which the Territory Mines Minister will consider before signing off on the mine expansion. This vehicle is travelling the route of the proposed diversion channel which will replace 5.5 kilometres of natural river bed above the lead and zinc deposits. The biggest hurdle facing MRM will be a requirement to mimic the vegetation along the existing river banks, to maintain natural habitats.
BRIAN HEARNE: Certainly we will have to plant a lot of trees along there and have to demonstrate it's going to hang on and the reasons why it's going to hang on.
MURRAY MCGLAUGHLIN: The Territory Government's EPA fundamentally questions the expansion plans. It says the company's approach is to wait and see if impacts occur, then take remedial action. But the MRM rejects the criticism that this is not best practice management.
BRIAN HEARNE: There's multiple lines of defence in all the designs that we've put in and certainly as far as I can see it's not reactive management.
MURRAY MCGLAUGHLIN: For the four Indigenous language groups affected by the mine, the expansion proposal is something of a replay of the drawn-out fight before the mine began. But the company has some traditional owners on side.
GORDON LARSEN, TRADITIONAL OWNER: We wasn't able to knock that thing back because the mining company know how to do it. They look after everything, whatever.
MURRAY MCGLAUGHLIN: But the few voices of support are drowned by opposition. The Northern Land Council assembled this group to demonstrate the strength of opposition to the mine expansion.
PHILLIP TIMOTHY, TRADITIONAL OWNER: If an accident do happen, it will affect the Gulf and the river system, which our food chain is involved with, you know.
MURRAY MCGLAUGHLIN: Pressure is building on the Northern Territory Government to reject MRM's plans to divert the McArthur River. Traditional owners from the Gulf joined environmental groups in a protest at Parliament House in Darwin last week. MRM itself may yet save the Government from a green and black backlash. The company has said it'll close the mine if the Government insists on conditions that prove too costly and it's doing those calculations now.