Roxby Downs (Indenture Ratification) (Amendment Of Indenture) Amendment Bill

22 Nov 2011 archivespeech

This speech is in relation to the Roxby Downs (Indenture Ratification) (Amendment Of Indenture) Amendment Bill.

The Hon. J.M.A. LENSINK (21:16): I rise to make some remarks in relation to this particular bill, coming from it, as I do, with a particular interest in environmental issues. I would like to say that I will avoid as much as possible engaging in hubris or hyperbole, as other people, particularly in the House of Assembly on the government benches, have done in relation to this particular project.

It has been quite a fast and intense project and bill to be involved in for those of us on this side of the house. I note from some comments from my crossbench colleagues that they did not have the advantage of some of the briefings that we had with BHP and with some of the senior people from the Olympic Dam expansion task force, which is probably regrettable because I think that anybody who is part of the governance in any way, shape or form, also being through the parliamentary process, ought to have had the benefit of that information. It has certainly been very useful for me personally on a couple of particular issues, most notably the desalination plant, but on other ones as well. I will talk about that in a little more detail.

It has been a pretty intense process. We do like to do our due diligence on this side of the house—a very, very important part of the process. We never like to let anything slip through to the keeper without having spoken to all the relevant stakeholders and heard all the different points of view. BHP has done a good job keeping in touch with the Liberal shadow cabinet and joint party probably over a year or so. We then had the issue of this indenture amending agreement dropped on us fairly late in the piece. I think it is fair to say that the former premier and former treasurer had something to do with that timing. Notwithstanding that, we do respect the fact that BHP desire to have this bill passed by 20 December, and that is a critical date.

I was a member of the shadow cabinet subcommittee that had access to information early on a confidential basis. I think the first briefing we had was on about 4 October, which was with former minister Foley and some of his senior officers. At that time, we made the point that if the government was so keen to get the bill through then they certainly needed to at least consider sitting for the optional sitting week because we were not going to be a rubber stamp.

I reject any comments by any of our crossbench colleagues that there has been some sort of cosy deal done with the Liberal Party and that we are in any way a rubber stamp. I also reject the Hon. Mark Parnell's comments that he is the genuine opposition in this debate, and I will make some remarks in that regard as well.

On 7 October, that same subcommittee met with BHP. On 12 October, we had briefings with the Olympic Dam task force, crown law and others. These briefings were then extended to our full joint party on 24 and 25 October, so it has been an exceedingly short time frame, particularly given this is, in financial terms, the largest project South Australia has ever seen. I think key to the debate in many senses is the question of risk. BHP has a huge amount of risk on its side of the balance sheet. A lot of it is up-front, it is a very high capital risk and it is on the scale of tens of billions of dollars—more than most people can contribute. Certainly in my personal sense it is more money than I can possibly think of, and it will be many years before the company is cash positive and before it turns into positive profit territory.

That is a very important part of this debate, because I hear from the Greens and others suggestions that BHP has endlessly deep pockets to do all sorts of things and fix all sorts of ills that may be about to occur. I think in some ways that is a pretty unfair proposition for anybody to make because it is other people's money we are talking about. It is the company's decision ultimately and will be a decision of the company board next year. It is shareholders' funds, and a lot of those people are mum and dad investors or superannuation funds and the like, and they deserve to have their funds treated fairly in the market and not to be impeded just because they are seen as the big player in South Australia, which in a wealth sense is shrinking, at a national level at least.

This project is not like anything we have ever seen: it will be a great big hole in the ground. It is proposed that ultimately it will become a tourist destination once the mine is closed. I appreciate that BHP has sought, through the deal and through the terms of the indenture, to mitigate some of that risk, and that explains some of the conditions it has. As stated by the Hon. Rob Lucas and Mitch Williams, who was the lead speaker in the House of Assembly on this issue, there may well have been negotiations that could have been done better on the government's part, but we will not know until the fullness of time because that is part of the nature of the deal. We may have done things differently, but that is hypothetical, so we will not really know. Some of the assumptions about the royalties have been a bit fanciful, and I was surprised to see that an organisation of the calibre of BankSA would delve into the issue of a potential future fund, assuming that there would be rivers of gold flowing to South Australian coffers from these funds and that therefore we ought to preserve them, whereas in reality, as the Hon. Rob Lucas has also spoken about, the funds may at their peak be in the order of something liked $25 million per annum.

There is a lot of stuff that is a bit of urban mythology in the ether about this project that relates to the amount of wealth involved, but certainly there will be a huge benefit from the indirect benefits to the South Australian economy which will not necessarily flow through South Australian coffers but which will be benefits that a lot of South Australian businesses will enjoy because of the huge amount of infrastructure required through the building of a new landing strip, the huge trucks that will have to be purchased, and so on and so forth. I will not go through the long list of infrastructure because it is easily available to anyone who wants to look at it on the website. The environmental risk is also potentially huge, and for this reason there has been an extensive environmental impact process, which has culminated in the assessment report provided quite recently. It is something I have been quite keen to get my hands on. I will refer to Mr Parnell describing himself as the real opposition, because on his part that was a bit of a Freudian slip. I believe he opposes this project, no matter how many hoops BHP jumps through. This for him is a cause célèbre and, as one of my house of assembly colleagues said, 'He was born to oppose this particular project.'

It is an area that I know a lot of people have environmental concerns about. A lot of those people have contacted me as well, and I have shared a lot of concerns about that too. However, I do think that the environmental impact process has been thorough, I think the assessment process has been thorough, and I think that those issues have been explored.

There are still environmental risks, but I believe the assessment report process seeks to mitigate those by placing conditions on approval. Some 600 licences still need to be approved, even though overall the environmental processes have been ticked off, and so those will be ongoing. The assessment report is a document which was coordinated by the Department of Planning and Local Government and saw input from a lot of government scientific agencies across the board, particularly SARDI, the EPA and, to a degree, PIRSA.

This project includes a raft of new infrastructure: airport, roads, rail, etc.; the desalination plant, pipelines and corridors; the landing facility; the Hiltaba village; expansion of the Roxby township and conversion of the underground mine operation to an open pit; operation of the smelter; the new tailings storage facility and rock storage facility; and there are various chapters which deal with all of those in detail.

All the recommendations of the assessment report will become conditions or requirements of approval, and the indenture minister is to consult with the relevant agency as these arise. The conclusion of the assessment report was that the environmental impact is negligible, and ongoing monitoring will take place through those licences.

The specific question was put to the team that if they had had outstanding concerns would they have recommended approval of the project to the government, and the answer to that was no. So the assessment report has discussed all outstanding issues arising from the draft EIS, the supplementary EIS and the final EIS. For anyone who wants to read that document, it does refer back to each of those EISs where relevant. At the end of the relevant chapter it states whether BHP's proposed methods are acceptable or not acceptable, and in each case it has agreed that they are acceptable. All the components of the project have been subject to EIS processes because it is a declared major development. A number of issues were raised in various chapters which relate to various parts of the process.

Chapter 4 relates to mine operations and processing, so it covers native vegetation, impacts on the arid lands recovery project, the tailings storage facility and impacts of drawdown on the local springs, and site contamination. There is an extensive consideration of groundwater issues; solid waste; the impact of dust, plant emissions, noise, light, and radionuclides on fauna; and greenhouse gases. Chapter 5 is the desalination plant, which is probably the area of most interest to a lot of people. Chapter 5 covers some 19 different topics, and that chapter was coordinated by the EPA with expert advice from various agencies, including SARDI. I would just like to say for the record that I was the bunny who referred the issue of desalination to the Environment, Resources and Development Committee of the parliament, and we looked at both the Stanvac issue and Point Lowly. The ERD Committee came out with a recommendation against the location, and I note since that a lot more work has been done by the government and BHP on that particular proposal. There are additional conditions, which I believe is a significant achievement. The assessment report's conclusion is that there is no threat to marine life from the desalination plant.

I think that this issue of the desalination plant does deserve further note because it is a very large concern, particularly to the communities that live in and around Spencer Gulf. It is described that the seawater north of Point Lowly is where that exchange is quite limited; however, there is a lot of exchange with the southern ocean throughout winter months. There is a condition known as dodge tides, which occur every six months, in late May and November.

Background salinity is an important point because concerns have been raised about increasing salinity over time in that area and the impact that will have on marine species living in the area. The background salinity is 35 to 36 grams a litre. The Point Lowly range is 40 to 43 grams a litre, which peaks in late autumn, before the winter rains arrive. Local fisheries there include snapper, King George whiting, blue swimmer crab, western king prawn and southern calamari, and we have aquaculture there through yellow tail kingfisher pens and Pacific oyster growing beds.

The choice of location of the Point Lowly plant, which is pages 148 and 149 of the assessment report, states the criteria on which that particular site was chosen, and it is a combination of cost and environmental concerns. I note, through the supplementary EIS, that the government required more detail on 20 potential other sites, which included the West Coast.

I would like to spend a bit of time talking about this issue. I have been critical personally and as part of the ERD Committee of that particular location, so it was pleasing that the other sites have been looked at in greater detail. The argument has always been that Point Lowly is the closest spot for BHP to locate the desalination plant, and the assessment report outlines the criteria for how it chose the site, those three criteria being length of water supply pipeline, distance to a water depth of greater than 20 metres, and suitable available land and infrastructure.
The assessment report goes on to say: The SEIS analysed a substantially expanded range of alternative sites in Spencer Gulf, lower Eyre Peninsula and the West Coast against an expanded list of criteria.

The analysis confirmed Point Lowly as the preferred site because:

? Dispersion of return water would be greater there than at any of the other alternative sites due to the high average current speed;

? Costs would be lower and there were fewer logistical issues than at most of the alternative sites;

? Alternative sites provided limited net environmental benefit.

...BHP Billiton also determined that discharging return (waste) water into the gulf was the best option, compared with land-based discharge to evaporation ponds or an inland salt lake, or injection into underground aquifers.

The reasons for not discharging return water onto the land involved cost and adverse environmental impacts, including having to clear 12,000ha [I assume, of native vegetation] to create evaporation ponds and the need for lining to prevent leakage into the groundwater. I think those are important points. It is not the final, final proposal, because the desalination plant is probably up to five or more years from being construction, but the outlet has been extended by an additional 200 metres so that the outlet pipe is now three kilometres from Whyalla and 10 kilometres from Backy Point, which are the two cuttlefish breeding grounds. The return water does, in fact, disperse rapidly from Point Lowly due to a local rip. The impact of the desalination plant, we are told, is equivalent to the evaporation of one day per year. Strong sea floor currents remove one year's salt over winter. A very important concession is that BHP is committed to real-time monitoring of salinity levels which will be overseen by the EPA.

The assessment report also talks about the reviews of the marine species that live in that area. The two species that people are most concerned about are the cuttlefish and the western king prawn. Ecotoxicity studies have been done of a number of marine species. The greatest concern of the substance that could cause toxicity was salinity or salt. A dilution factor of 1:70 was modelled to protect 99 per cent of the species.

Chlorine is not an issue because that is to be disposed of on land. Testing was done on 16 species to detect what is called, in scientific terms and according to the Australian standard, EC10 or effect concentration on 10 of the species. I point out that is not mortality but what are described as sublethal effects such as failure to thrive or sluggishness and so forth. This research—many studies, I would assume, have been done given that it was 16 species—was reviewed by Dr Michael Warne of the CSIRO. As a result of his reviews, Dr Warne proposed a dilution factor of 1:85 which was to increase the margin of safety. The cuttlefish deserve particular note, and 1:55 is regarded as a safe and conservative consideration for their safety.

On page 168 the assessment report states:

...considers there should be no impact of return-water discharge on the Australian Giant Cuttlefish.

However, it recommends that BHP Billiton implement an annual BACI-designed monitoring program to assess the biomass and abundance of cuttlefish throughout the Point Lowly region, including Backy Point.

It then goes on to nominate several conditions. Dissolved oxygen is also an issue that was looked at and is a concern for short periods when chlorine dosing occurs in the plant. There have been references to the Kwinana plant which operates in Western Australia's Cockburn Sound; however, I point out that these periods occur due to naturally occurring reasons. Modelling of this area suggests that the levels will cause a negligible difference, but the assessment report still recommends that BHP needs to do more work to establish a baseline prior to construction of the plant.

The hydrodynamics have also been examined and that has been done for various fields: the near field, which is within 100 to 150 metres of the diffuser was reviewed by the University of Adelaide; mid-field, which is from that 150 metres to four kilometres, was reviewed by SARDI; and the far field, which is effectively the gulf, which relates to potential accumulation in the gulf. I would like to read a quote in relation to that particular issue because that is one of the key concerns that has been raised many times, that the salinity will be increased over time in the gulf and will, therefore, present a threat to marine species.

The assessment report states: The supplementary EIS made the assumption that the annual seasonal cycle of the salt-ejection mechanism and the salt balances over the same time scales implied that Spencer Gulf flushed annually.

Further, in the next paragraph, it states: Accordingly, the Assessment Report considers it unlikely that there would be any long-term increases in salinity in the northern Spencer Gulf as a result of a desalination plant. To provide ongoing data to demonstrate this finding, long-term accurate in situ monitoring of facility temperature would be required.

There are recommendations that more monitoring take place. In any case, there is time for this to take place because the plant will not be operating for some time and there will be, in the meantime, technological improvements. The EPA will be involved in licensing, so there will be least 12 months' more monitoring prior to commissioning of the plant. I would just like to say for the record—because we in opposition get letters from people asking us what our policies are on these issues—we are quite dependent on the information that we are provided by independent sources.

One of my jokes is that, in opposition, we do not have a marine science division sitting in the corner of my office or sitting in the leader's office anywhere, so we have sought to verify information as much as possible. However, I would like to say that I do have a great degree of confidence in those people who have managed this process and I trust their integrity. Prawns came up as an issue later in the exercise, and obviously we would all be worried—particularly my leader (Hon. David Ridgway) I think would be quite concerned—if there were to be any impact on the wonderful prawns in the Spencer Gulf.

Page 164 of the report states: Modelling showed that the Western King Prawn was unlikely to be adversely impacted by return water discharge, as larval prawns were known to occur in areas of significantly higher salinity of up to 55 ppt. I think the argument there was that the juvenile prawns are actually more tolerant to higher salinity levels than adult prawns, but in any case they do occur north of Point Lowly, which is high salinity. For the sake of the member for Flinders, I would just like to read some of the replies that we received to specific questions which were put to the Olympic Dam expansion task force team. These responses have been prepared by that group in consultation with the EPA. These were specific questions that the prawn industry sought and we have sought replies, and I would just like to put them on the record:

How are you recommending that the EPA undertake real time monitoring? Have you been specific about location of data loggers and specific data that requires collection?

It's condition of the approval that real-time monitoring is carried out by BHP Billiton. The details of the monitoring will be developed as part of the licence conditions set by EPA. It's at least five years before the desalination plant will be constructed, so there's adequate time to get the monitoring design right. We have deliberately not specified the location and type of monitoring stations as technology is rapidly changing and we want to give the EPA and BHP the flexibility to negotiate the best technology closer to the time that it's needed.

The Assessment Report recommends the further analysis of 5 species from 4 taxonomic groups. Have you made any recommendations to the EPA which five species should be monitored as part of the conditions for monitoring impacts of the desalination plant?

The Assessment Report accepted the primary data set provided from the ecotoxicity testing, but has required that further testing be carried out in order to optimise the final design of the diffuser and to inform the EPA licence conditions. The species to be tested will be determined by an independent panel to be appointed by EPA but funded by BHP. While we cannot pre-empt the independent panel, a condition of the Assessment Report is the further testing must include Australian Giant Cuttlefish and is likely to include Western King Prawns as these are important species given the proposed location of the desalination plant.

Do you believe the 2000 ANZECC/ARMCANZ guidelines used for the ecotoxicology assessment are adequate for calculating potential risks to species through all of their life stages?

Dr Michael Warne is a nationally and internationally recognised expert on ecotoxicity testing and the derivation of water quality guidelines. He has conducted testing for a range of species and number of desalination plants in Australia, including the proposed BHP desalination plant. For that reason he was invited to answer questions at the recent Liberal Party briefing. At that briefing, Michael stated that the ANZECC and ARMCANZ guidelines have been adopted for use nationally and the testing procedures recommended therein have been used for desalination plants and other large infrastructure projects all over Australia.

For evaluation of toxicity risk, we would ideally conduct toxicity testing on every life stage of each organism tested however this is not practical. Rather, the approach recommended by the ANZECC and ARMCANZ guidelines is to use sensitive life-stages and organisms that are representative of the organisms that will be exposed to the toxicant. This approach is deemed satisfactory by the Australian and New Zealand whole of governments and a similar approach is used in other developed nations.

Understanding that SARDI has only been asked to assess the Supplementary EIS, as SA's leading marine research agency, where would you recommend building a desalination plant of this size, and what factors would you consider?

SARDI did not assess the Supplementary EIS, nor did it make an assessment of the alternative sites, as this was carried out by DPLG, with the EPA providing advice to assist in the Assessment Report outcomes. The conclusions are outlined on pages 154 to 156 of the Assessment Report.

If BHP started their operations with only one 5-port rosette, will the dispersion rates still be appropriate?

Regardless of the throughput of the desalination plant at commencement, an Assessment Report condition is BHP Billiton will be required through its EPA licence to achieve the design dilution factor of 1:70 at 100m from the diffuser and 1:85 at the nearest cuttlefish area at all times. BHP Billiton has proposed a 4 rosette diffuser for the plant outfall. Diffuser optimisation studies in the EIS documents indicate that the required dilutions can be achieved in a number of ways and discharge velocity and port diameter are the most important factors affecting dilution. Another condition requires BHP to undertake additional modelling at a range of discharge rates and the final design of the diffuser must be approved by the indenture Minister in concurrence with the EPA prior to operation. Additionally, a further condition requires that the plant be constructed to enable the diffuser to be modified to achieve these factors.

BHPB has committed to monitor and identify significant changes to marine flora and fauna communities in the USG.

The concern is around the implementation of the term 'significant' as in lay man's terms could be interpreted to mean large irreversible change.

1. What confidence level will the Govt be seeking to determine when a significant change has occurred?

2. What are the processes or how are any changes going to be proportioned to the desalination plant or environmental or other factors? i.e. where will the burden of proof lie in determining whether any impacts are a result of the desalination plant?

The EPA has required that BHP Billiton undertake what is known as BACI designed monitoring. This essentially provides before (construction) and after (construction) monitoring which through advanced statistical techniques, enables more sensitive detection of ecosystem change. If any changes are detected and are clearly attributable to the desalination plant then it will be up to the EPA to determine whether the changes are significant. Some level of scientific judgement will be required but changes that are irreversible will not be acceptable.

Given adult prawns were identified as the most susceptible through the ecotoxicology testing, and it has been highlighted through an independent review there is still a gap in the testing of the reproductive cycle, there hasn't been a recommendation to monitor juvenile prawns in the vicinity?

Ecotoxicity testing results show that adult prawns were more sensitive than juvenile prawns, but they were not the most sensitive species. Juvenile prawns are known to live in the upper reaches of Spencer Gulf where salinities are significantly greater than what is expected in the immediate vicinity of the desalination outfall. This was supported by the ecotoxicity testing results which found Juvenile prawns to be one of the most tolerant species tested.

A final question...Given the work you have undertaken through this assessment, what areas still cause you for concern?

The Development Assessment and Conditions adequately addresses the environmental impacts for elements of the proposed expansion project. There are no further areas of concern.

Bear with me; there is more.

Questions for the EPA:

How is the EPA going to ensure that the community is comfortable with the monitoring process?

What steps are going to be taken to ensure monitoring is transparent and data/reports are distributed (to the community including business with vested interest in the gulf's health) within a reasonable amount of time i.e. less than 3 months post data collection?

BHP Billiton has committed to (and EPA will require) that its monitoring data be available through a web site. The EPA expects that this monitoring and reporting will be in real time however the precise nature of these arrangements will be determined at the time of setting of licence conditions.

Given the establishment of Marine Innovation South Australia (MISA), SARDI, industries (seafood and tourism) we have either strong vested interests or skills relating to the marine environment in the upper Spencer Gulf, what steps is the EPA taking to ensure a level of independence to oversee the monitoring and reporting of BHP and its licence condition?

Under current legislation (and the proposed indenture), the EPA is independent of government for development assessment, licensing and compliance and enforcement. As with all licensees, the EPA will require a licence for operation of the desalination plant. The licence will include monitoring and reporting conditions. Where necessary the EPA will consult other experts (such as SARDI) in determining the licence conditions.

Have the EPA considered the establishment of an independent board to provide oversight of ensuring licence conditions are being implemented?

The EPA is already governed by a Board established by the Environment Protection Act. The EPA is specifically independent for Part 6 of the Act (licensing) as well as compliance and enforcement.

Given desalination plants of this magnitude are relatively rare in Australia, how will the EPA ensure it will have the skills necessary to ensure it drafts a robust licensing arrangement right with BHP?

We disagree with the statement. There are now six major desalination plants around Australia.

It mentions the Gold Coast, Perth, Kurnell, Southern Seawater and Port Stanvac: Given that all of these plants are licensed under State laws...there is plenty of opportunity for the SA EPA to exchange information with other EPAs around Australia and gain the best practice knowledge and processes on licensing and monitoring for the BHP Billiton desalination plant.

The last question on this list is in regard to BHP:

Through this meeting we would appreciate the support and encouragement for future collaboration between BHP and the Association for ongoing monitoring of the upper Spencer Gulf. This is something you would need to ask BHP however our observations would suggest that they are keen to work with the prawn fisherman association to develop and improve future monitoring and management practices that ensure the long term sustainability of the prawn industry.

I asked some questions directly of BHP, and I would like to read those and their responses to save us time later, in the committee stage. The first question is:

Is it envisaged that the Environmental Management Plan, its Annual compliance plan, Approved Mitigation Plans, audits etc will be public documents?

The Environmental Management Plan and annual compliance report will be public documents. Whether the mitigation plans and audits will be made public is for the Minister to decide.

My second question was in relation to part 13 of the indenture—Water, subparagraph (d). Payment of equal money to the ALNRM will go to an 'Approved Offset Project', which is not necessarily the board, so that suggested BHP's own projects:

Is this likely to be the Arid Lands Recovery project or are there other projects in the pipeline?

Not at the moment. Any project must be approved by the Minister before it can be accepted as an offset. It then must be demonstrated by the company that the money has been appropriately spent. A likely project may be further GAB bore capping, but we have no current plans.

There will be extensive monitoring of native species and other environmental programs. Does BHP intend to employ staff in-house to undertake this work or will it contract the work out?

Both, as we currently do. We have a significant number of environmental staff at Olympic Dam and in the Adelaide office as well as employing experts when work is highly specialised or short-term. I have some more questions which I have already put to the ODEx task force, but they have not had the opportunity to reply so I will put these on the record. One of those questions I have already asked BHP, which I ask anyway. The Environmental Management Program (EMP) is clause 11 of the deed. Is the annual compliance plan to be made available to the public?

In relation to the indenture, clause 8, new section 9(5)(a) of the indenture, implies that Aboriginal heritage sites must be identified up-front. What audits have been done and what sites, as far as we are able to be advised, have been identified? In clause 16, which refers to 19(3) of the indenture, the holder of the licence is not entitled to access any part of the SML unless a 'statement of environmental objectives is in place'. What does that actually mean?

Part 5, clauses 19 to 21, powers of authorised officers:

are these officers already authorised officers under another act or are they exclusively appointed for the purposes of this indenture and for monitoring and enforcement of the EMP and mitigation plans?

Do NRM native veg authorised officers' powers still apply to BHP?

My final question is in relation to geothermal energy and whether opportunities for applying that to this project have been fully explored. Given the hour, I am not going to go into all the other issues about mulga, native vegetation and the Pernatty knob-tailed gecko or the plains rat, but people can read those. They are discussed in detail in the assessment report and environmental impact statement process. I am pleased that the detail of each of these species has been examined and that they will all be under management plans of some type.

With those comments, I endorse the bill.

Debate adjourned on motion of Hon. J.S.L. Dawkins.