Monsters of Rock: Aboriginal heritage decision puts back NSW gold mine "10 years"

McPhillamys gold mine on thin ice after ministerial ruling
Federal decision on Aboriginal heritage grounds inflames tensions between miners and government over red tape
New Hope, BlueScope report results

Regis Resources (ASX:RRL) has flagged that it could dump a long proposed New South Wales gold mine after a decision by the Federal Environment Minister to ban its tailings storage facility under Aboriginal heritage laws put the project back another “5 to 10 years”.

The section 10 call made by Labor’s Tanya Plibersek came almost four years after the application was first filed by traditional owners at the McPhillamys gold deposit near Blayney.

While Plibersek had indicated in a statement last week as many as 30 other locations for the TSF had been considered and that the decision was not to “block the mine”, Regis rejected that interpretation in a strongly worded statement today.

Although other locations had been considered in the early design phase of the ~$1bn gold development, expected to produce 1.7Moz of gold over almost a decade, Regis said they had not been feasible.

To redesign the project, submit new studies and get new State and Federal approvals would take 5-10 years, Regis said, with the $1.2 billion gold producer now reviewing McPhillamys and the accounting of its reported 1.9Moz reserve.

Legal avenues are, obviously, being considered. Regis says the decision contradicts the process proscribed in the EPBC Act, the decision of New South Wales’ Independent Planning Commission last year and the submission to that process by the Orange Local Aboriginal Lands Council.

“Regis is extremely surprised and disappointed that, after a nearly four-year, protracted Section 10 assessment process, Minister Plibersek has concluded there are grounds to block the development of the McPhillamys Gold Project. This has effectively overridden the conclusions on this question that were already determined by the NSW Independent Planning Commission (IPC) and Minister Plibersek on approving the Project under the Environmental Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act),” Regis MD Jim Beyer said in a statement.

“The referral made by Regis under the EPBC Act included an assessment of Aboriginal cultural heritage, which at that time, the Minister’s delegate did not note as a point of concern for the Project.

“The recently released Definitive Feasibility Study (DFS) demonstrates that the Project has significant value, both for Regis and as an economic contributor to the local community and to all levels of government in the form of jobs, infrastructure, skills and training, procurement, council rates, state and federal taxes and royalties.

“Given this value, Regis has persevered in the face of a lengthy approvals process and was reassured with the feedback received from the Orange Local Aboriginal Land Council (OLALC), the key local Aboriginal representative group, and their subsequent submission in relation to the Project to the IPC.”

Plibersek last week had said the site would pose a threat to the headwaters of the Belubula River.

“The headwaters are of particular significance to Wiradjuri/Wiradyuri people and are linked to ongoing cultural practices of the area. They have featured in many traditions practiced for generations including by Aboriginal people transitioning from youth to young adulthood,” she said.

“Some of these traditions have been disclosed to me privately and must remain confidential due to their cultural sensitivity. If this site were to be desecrated, it would be an threat to the continuance of Wiradjuri/Wiradyuri culture.”

Bar the shouting

While Plibersek did the Old El Paso por que no los dos? line (“why not both?”), Regis has made it clear it has little appetite to go back to the drawing board, reviewing the $190m carrying value of the project.

It already suffered significant blowouts as development approvals delayed the project. A PFS in 2017 posted a capex bill of a little over $200 million anticipating production to begin by late 2019.

By earlier this year most analysts predicted inflation to put a pricetag of $550-650m on the development. A recent DFS blew those out of the water, placing capex at an eye-watering $996m.

The Regis decision came the same day as a court of appeal decision forced silver developer Silver Mines (ASX:SVL) to walk back development consent on its Bowdens deposit, approved around the same time as McPhillamys by the IPC in 2023, because a power line for the mine was not included in the IPC review process.

With Regis generating cash from its Duketon and Tropicana mine shares in WA, which will deliver close to 400,000oz in FY25, the miner now says its at a loss on where to spend it, with McPhillamys slated to be the next cab of the rank. It is now more likely to need M&A to sustain and grow its business or exploration success to keep Duketon running as it transforms from a low grade open pit mining hub into a collection of underground deposits.

Regis boss Jim Beyer, also the president of the Association of Mining and Exploration Companies lobby group, used a conference call today to lament the uncertainty of the development landscape in Australia.

“I think what this has done, and unfortunately we’re the poster child for it, but unfortunately, this has highlighted what is potentially going to be a growing issue for the industry,” he said.

“It can happen to anybody that’s got a plan to start being under construction or in operation. It’s quite significant and concerning.

“It’s not new. I think the Act has been around since 1984 … but what we’re seeing is that … and I’m not making a comment about the Regis and the McPhillamys (decision) in particular, but the risk is going forward that … the intent is lost somewhat, and it’s been weaponised as anti development, which is a real concern.”

AMEC’s CEO Warren Pearce joined the discussion today, flagging an even greater fight from the resources industry over upcoming ‘nature positive’ laws which would create a federal environmental protection agency and give its CEO powers to exercise decisions on approvals on the Government’s behalf.

“If any project, no matter how thoroughly consulted, negotiated, supported and assessed, can be knocked over by the objections of only a few people at the end of the process, then how can any company or investor have confidence to invest in Australia,” he said.

“If this is what industry can currently expect from the Federal Government, what exactly is in store for us if the Government’s new Nature Positive legislation is introduced.”

New Hope results

New Hope Corp (ASX:NHC) and Bluescope Steel (ASX:BSL) were among the materials stocks on the reporting line up today.

New Hope’s July quarterly showed a company in relatively consistent form, pulling in underlying EBITDA of $216.3m for the quarter and $859.9m for the financial year.

The Bengalla and New Acland mines produced 9.1Mt of saleable coal, up 26% YoY in FY24, with 8.7Mt (+14%) sold.

Costs came in, before royalties, of $77.8/t despite rail issues in the final term, with an average sales price in the quarter of $181/t.

Soul Patts backed NHC delivered 3.37Mt of ROM coal, down 8% as stripping ratios from 3.7x to 4.4x, with sales up 9% from 2.358Mt to 2.558Mt.

New Hope said the coal price rose 8.7% in the quarter, with increased demand from China providing a ‘clearing house’ amid a balanced market, which remains sensitive to demand or supply shocks.

BlueScope shares fell over 3% meanwhile, as underlying EBIT at its Aussie operations dropped 30% to $376.9m on soft building and construction activity and EBIT in the US fell 3% to $935.1m for FY24 despite higher volumes at its North Star plant. Some earnings from its North American property group have been delayed into FY25.

New Zealand Pacific Islands business was also down 66% in terms of underlying EBIT to $43.7m, while the south-east Asian market outperformed, with BSL’s Asian underlying EBIT 13% higher at $159.6m, driven largely by Thailand and Malaysia.

BlueScope warned of continuing macroeconomic pressure in FY25, forecasting underlying EBIT for H1 Fy25 for $350-420m, after generating $1.34bn for the full FY24 year, along with $806m in reported NPAT, $861m in underlying NPAT, a 30c per share dividend and on-market share buyback of up to $270m. The steel and steel products maker returned $548m to shareholders over the course of the year.

BSL says it is increasing its focus on cost and revenue performance in light of challenged economic conditions.

“At the start of 1H FY2025, BlueScope is seeing a convergence of macroeconomic challenges across BlueScope’s largest regions. In Australia, performance is impacted by low Asian steel spreads, driven by high regional steel production and exports, which affect both steel prices and raw material costs. Inflationary pressures, including higher electricity costs, add to the challenges,” the company said.

“In the US, while demand in steel-consuming sectors is stable, channel purchasing behaviour has seen the hot rolled coil spread fall to post-pandemic bottom-of-cycle levels.”