centennial mandalong pty limited …...mandalong southern extension project (msep) were in part...

`

CENTENNIAL MANDALONG PTY

LIMITED

MANDALONG TRANSMISSION LINE TL24 RELOCATION PROJECT

ECONOMIC IMPACT ASSESSMENT

January 2016

V Economic Assessment

Centennial Mandalong Pty Ltd TL24 Relocation Project

January 2016

2

Prepared by

AIGIS GROUP

Mark Sargent Enterprises

ABN 41317 992 919

13 Debs Parade

Dudley NSW 2290

p/f: 02 4944 9292

m: 0423 489 284

e: [email protected]

This document does not purport to be all inclusive or contain all information which its recipients may require. The writer accepts no liability for any direct, incidental, consequential or indirect damages resulting from the use of or reliance on the information contained herein except insofar as any such reliance was made known to the writer on or before the publication of this document. This document also includes certain statements that reflect various assumptions, which may or may not prove correct. Any projections presented in this document are illustrative only and should not be taken as a certain indication of possible future events or returns.

mailto:[email protected]



January 2016

3

EXECUTIVE SUMMARY

This Economic Impact Assessment has been prepared as part of the

Statement of Environmental Effects (SEE) in relation to a modification to

Development Consent No. SSD-5144 by Centennial Mandalong Pty Ltd

(Centennial Mandalong) for the extension of mining at Mandalong Mine. This

application seeks consent for the relocation of a section of TransGrid’s 330kV

Transmission Line TL24. The relocation will support more efficient resource

extraction with decreased risk of impact on transmission infrastructure. This

action is supported by a feasibility study undertaken by TransGrid which has

determined that the best option is to relocate a section of TL24 to enable

undermining of the transmission line.

The current proposal is adjunct to SSD-5144. Therefore, the proposed Project

is classified as State Significant Development pursuant to State

Environmental Planning Policy (State and Regional Development) 2011. As

such, development consent for the modification is sought pursuant to Part 4,

Division 4.1 of the NSW Environmental Planning & Assessment Act 1979

(EP&A Act), as a Section 96(2) modification.

The Environmental Impact Statement (EIS) for SSD-5144 noted that

Centennial Mandalong was engaging with TransGrid in relation to the TL24

feasibility study. On that basis, the estimated economic effects of the

Mandalong Southern Extension Project (MSEP) were in part based on an

assumption that TL24 would be relocated to an alignment that permitted

proposed mining and the transmission infrastructure to co-exist.

This economic assessment is presented in two parts. Initially, the impact of

the Project at the broader State level is assessed using a Cost-Benefit

Analysis (CBA) approach. The CBA focuses on mining during the period of

planned operations in the vicinity of TL24. It principally describes differences

in outcomes from mining relating to the two scenarios for managing impacts

on TL24. A Local Effect Analysis (LEA) is also presented. This considers

regional and local impacts of the Project. The discussion of certain

environmental effects of the Project necessitates different assumptions in

terms of their extent and duration.



January 2016

4

The proposed Project involves an approximate twelve-month construction

period, assumed on current planning to commence in mid-2017 completing in

mid-2018.The Project will employ approximately 15 full-time equivalent (FTE)

employees over the construction period.

Approval of the Project will result in greater royalty and tax yields for State

and Federal governments. This will also have a positive social impact over

the duration of the Mandalong Southern Extension Project, when compared to

the alternative approach discussed in this report, as the additional public

revenues support more services to the community.

Given the relatively small scale of the Project, there is a proportionally limited

range of other external costs and benefits associated with the Project. A

number of the environmental impacts relating to the Project are restricted to

the construction period only, while others may have longer-term effects.

Quantitative and qualitative assessment of the economic, social and

environmental impacts indicates that the positive aspects of the Project are

greater than are the potential negative externalities.

The net economic benefit associated with the increased resource to be mined

is a net present value (NPV) of approximately $7.0 million, which essentially

equates to the royalties that would be foregone if the line was not relocated.

The benefit-cost ratio (BCR) of 13.6 for the Project is also positive (Table 6).

Under alternative sensitivity testing scenarios based on changes to

assumptions on discount rates and Project benefits and costs (Tables 7 and

8), the comparative benefit of the Project remains robust.

With respect to the external impacts, Centennial Mandalong and its advisers

are engaged in a continuous process of stakeholder consultation and

development of mitigation programs that will ameliorate impacts to the

greatest practical extent. Importantly, Centennial Mandalong has negotiated a

mutually satisfactory agreement with TransGrid, which will see TransGrid’s

infrastructure and service obligations safeguarded against the likelihood of

potential impacts in the absence of the relocation of the relevant section of

TL24, while enabling recovery of the additional coal resource.



January 2016

5

TABLE OF CONTENTS

Executive Summary 3

Table of Contents 5

Abbreviations 7

1. Economic Analysis and Impact Assessment: Purpose and Approach 8

2. Project Background and Justification

2.1 Project background 10

2.2 Project objective and justification 11

2.3 Description of proposed Project 12

3. Project Economic Analysis – Cost Benefit Analysis (CBA)

3.1 Focus of analysis 12

3.2 Discussion of approach to CBA 13

3.3 Analysis of Project alternatives 14

3.4 Project-related economic evaluation 14

3.4.1 Estimation of economic benefit 16 3.4.2 Assessment of Centennial Mandalong corporate income tax liability

16 3.4.3 Estimation of social, economic and environmental costs 18 3.4.4 Physical area applied for estimation of impacts 19

3.4.5 Estimation of impacts 25 3.4.6 Estimation of net economic benefit/cost 26

3.5 Sensitivity analyses 26

4. Regional and Local Economic Effects Analysis

4.1 Approach 28

4.2 Discussion of localised environmental impacts 28

4.3 Regional Context 29

4.3.1 Lake Macquarie Region economic effects 29 4.3.2 Community consultation 30 4.4 Extended economic impacts 30

4.5 Quantitative and qualitative assessment of economic and

environmental impacts 31

4.6 Summary 36

5. Additional Requirements

5.1 Cumulative impacts 36

5.2. Intra-generational and inter-generational equity 36

6. Conclusion 37

Reference List 38

Appendix 1: Comparative economic analysis of project alternative differentials –

Mandalong TL24 Relocation Project 2016-2024 40



January 2016

6

LIST OF TABLES

Table 1: Mandalong Southern Extension Project – Director General’s

Requirements (as adopted for TL24 Project) 9

Table 2: Production differentials – alternative mining approaches 15

Table 3: Estimate of economic benefit – Mandalong TL24 Relocation Project 17

Table 4: Valuation methods – socioeconomic and biophysical impacts 23

Table 5: Economic valuation of environmental and social costs – Mandalong

TL24 Relocation Project 25

Table 6: Estimate of project net benefit, $’000 26

Table 7: Sensitivity analysis– alternative differentials – (adjusted discount rates)

- NPV 27

Table 8: Sensitivity analysis – alternatives differential – (adjusted economic revenue/cost

assumptions) - PV 27

Table 9: Comparison of construction employment levels (proportion of workforce) 29

Table 10: Type 2A Multipliers – construction 31

Table 11: Economic Impact Assessment – Summary Table 32

LIST OF FIGURES

Figure 1: Approximate extent of community potentially immediately affected by

the Project 21

Figure 2: Lake Macquarie (West) Statistical Local Area 22



January 2016

7

ABBREVIATIONS

ABS: Australian Bureau of Statistics

BAU: Business as Usual

BCR: Benefit-Cost Ratio

CBA: Cost-Benefit Analysis

CO2-e: Carbon dioxide equivalent

DA: Development Application

DGRs: Director General’s Requirements

DPE: Department of Planning and Environment

EIS: Environmental Impact Statement

EMS: Environmental Management System

EPA: Environment Protection Authority

EVRI: Environmental Valuation Reference Inventory

GDE: Groundwater Dependent Ecosystem

GHG: Greenhouse Gas/es

GVA: Gross Value Added

I/O: Input/Output

LMCC: Lake Macquarie City Council

LEA: Local Effects Analysis

LGA: Local Government Area

MSEP: Mandalong Southern Extension Project

Mtpa: Million tonnes per annum

NPV: Net Present Value

PAC: Planning Assessment Commission

SEE: Statement of Environmental Effects

SLA: Statistical Local Area

SSD: State Significant Development

TL24: TransGrid Transmission Line TL24

tpa: Tonnes per annum

VPP: Voluntary Planning Payment



January 2016

8

1. ECONOMIC ANALYSIS AND IMPACT ASSESSMENT: PURPOSE AND APPROACH This economic impact assessment forms part of the Statement of Environmental

Effects (SEE) for the proposed relocation of electricity transmission infrastructure

owned and operated by TransGrid (the Project).

The Project is adjunct to a Development Consent, State Significant Development

SSD-5144, regarding the Mandalong Southern Extension Project (MSEP), which was

approved by the NSW Planning Assessment Commission (PAC) in October 2015.

Centennial Mandalong proposes to modify SSD-5144 pursuant to Section 96(2) of

the NSW Environmental Planning and Assessment Act 1979. Specifically,

Centennial Mandalong is seeking to modify SSD-5144 for the Mandalong

Transmission Line TL24 Relocation Project. As part of this Project, it is proposed to

remove twelve (12) existing steel lattice towers and replace those with eight (8) new

steel lattice transmission towers, situated on a new alignment.

The Environmental Planning and Assessment Act 1979 (EP&A Act) is the principal

piece of legislation governing the assessment and determination of development

proposals of this nature in NSW. It aims to encourage the proper management,

development and conservation of resources, environmental protection and

ecologically sustainable development. The Project is classified as State Significant

Development pursuant to the State Environmental Planning Policy (State and

Regional Development) 2011. As such, development consent is sought pursuant to

Part 4, Division 4.1 of the EP&A Act.

In relation to the development application, presentation of an economic assessment

is a provision under Schedule 2 (7) of the Environmental Planning and Assessment

Regulation 2000 (EP&A Regulation), associated with the EP&A Act, which requires,

in particular:

(1)(c) an analysis of any feasible alternatives to the carrying out of the development,

activity or infrastructure, having regard to its objectives, including the consequences

of not carrying out the development, activity or infrastructure.

(1)(f) the reasons justifying the carrying out of the development, activity or

infrastructure in the manner proposed, having regard to biophysical, economic and

social considerations, including the principles of ecologically sustainable

development set out in subclause (4).



January 2016

9

Environmental Assessment Requirements for the ‘parent’ MSEP proposal were

issued by the Director General for the Department of Planning and Infrastructure in

March 2012. These have been adopted for adequately assessing the requirements

for the TL24 Project. Table 1 below details those requirements that are relevant to

this assessment and where they have been addressed in this document.

Table 1 - Mandalong Southern Extension Project – Director- General’s Requirements (as adopted for TL24 Project)

Requirements Addressed in this Report

Potential direct and indirect economic benefits of

the Project for local and regional communities and

the State.

Cost-Benefit Analysis

Section 3

Regional and Local Effects

Analysis Section 4

A detailed description of the measures that would

be implemented to minimise the adverse social

and economic impacts of the Project including any

infrastructure improvements or contributions and/or

voluntary planning agreement or similar

mechanism.

Section 4/Table 11

A detailed assessment of the costs and benefits of

the development as a whole, and whether it would

result in a net benefit for the NSW community.

Sections 3-5

This assessment addresses relevant economic impacts of the Project as provided for

in these requirements. The approach to this assessment is to estimate the direct

social, economic and environmental benefits and costs of the Project. The extended

regional economic benefits and costs of the Project are also considered. The broader

effects are assessed through a Cost Benefit Analysis. This element of the analysis is

necessarily limited by the comparatively small scale of the Project, however this

application must be considered in the context of the broader MSEP. The economic

assessment for MSEP details the overall economic impacts of the entire project. The

more localised effects of the Project are then examined separately, although the

latter analysis recognises that some elements of the broader assessment are

relevant at this more particular level.



January 2016

10

In addition to the assessment of beneficial economic outcomes, the benefit or cost to

the community of other aspects of the Project, such as social and environmental

outcomes, are quantified where practicable. This element of the approach is

consistent with the requirements of subclause 7(4) (d), Schedule 2 of the EP&A

Regulation.

2. PROJECT BACKGROUND AND JUSTIFICATION

2.1 Project background

Centennial Mandalong is seeking to modify its development consent SSD-5144 to

permit the Mandalong Transmission Line TL24 Relocation Project. Should this

adjunct application be successful, to achieve optimum coal extraction and limit

subsidence effects on surface infrastructure, Mandalong Mine proposes to arrange

for the relocation of a 2.4 kilometre section of TransGrid’s 330kV Transmission Line

(TL) 24. As part of this project, it is proposed to remove twelve (12) existing steel

lattice towers and establish eight (8) new steel lattice towers situated on a new

alignment.

The relevant section of TransGrid’s existing 330kV electricity transmission line

represents a significant constraint to the mine plan for the Mandalong Southern

Extension Project (SSD-5144). Suspension towers, which are those where the line

passes through without changing direction, can withstand a certain amount of tilt and

strain and can be protected from subsidence to a certain extent. Tension towers,

where the line is fixed to the towers, are installed where there is a change of direction

or a clearance issue and these towers have very low tolerance to tilt and strain due to

the line being tightened or slackened, and instability of the structure due to the

change in line angle. Impact to TransGrid’s infrastructure has largely been minimised

by the mine layout, however it was not possible to avoid the lines altogether. As

such, as described in the EIS for MSEP, a feasibility study has been undertaken by

TransGrid which has determined that the best option is to relocate a section of TL24

to avoid undermining of the tension towers. On the basis of the findings of this

investigation, a mutually satisfactory resolution has been negotiated between

Centennial Mandalong and TransGrid in relation to relocation of TL24.

The Project Application Area (PAA) comprises a total area of approximately 540

hectares. An estimated 8.5 hectares of vegetation clearing is required for the new

section of TL24, which includes a 60-metre-wide easement and all associated access



January 2016

11

tracks, entirely on freehold land owned by Centennial Fassifern (a subsidiary of

Centennial Coal Company Limited). Following the establishment of the eight new

towers and relocation of the transmission line, the redundant twelve towers will be

decommissioned, dismantled and removed in consultation with key stakeholders.

Upon completion of the line, the easement for the redundant section of TL24 will be

relinquished and a new easement will be created over the new section of TL24.

Construction relating to the Project is scheduled for the day period only during

standard construction hours, in accordance with the NSW Interim Construction Noise

Guideline (ICNG). There may be a requirement for TransGrid to undertake some

stringing or cutting in activities outside of the daytime hours stipulated in the ICNG if

any of the required outages on the lines are not possible during normal construction

times. Throughout the construction period, Centennial Mandalong will undertake

ongoing consultation to address any concerns raised by the local community.

2.2 Project objective and justification

The Project objective is to relocate a section of TransGrid’sTL24 transmission line to

ensure that mining carried out pursuant to SSD-5144 will not impact on electricity

transmission infrastructure.

The Environmental Impact Statement (EIS) for the Mandalong Southern Extension

Project SSD-5144 (Section 5) included the following statement, which explains the

justification for the Project;

‘TransGrid is undertaking a feasibility study to determine the best way to further avoid

and/or manage subsidence-related impacts on its infrastructure within the Southern

Extension Area. Centennial Mandalong is engaging in on-going consultation with

TransGrid in this regard. If it is determined that relocation of a section of TL24 is

necessary, approval will be sought for the relocation as a separate development

application’ (GSS Environmental 2013:98).

The outcome of TransGrid’s investigations was to recommend relocation of the

relevant section of TL24. Following further negotiations between Centennial

Mandalong and TransGrid, the proposed corridor was agreed as a suitable

alternative infrastructure alignment.



January 2016

12

The MSEP was predicated on the assumption of such an outcome. This assumption

was necessitated by the operational and financial impacts that ‘stepping’ longwalls

around the resource below the existing TL24 would involve. This would require an

additional four longwall changeovers, which would restrict production for a total of 16

weeks during 2019 and 2020. The effect on production would be decreases in

volumes forecast assuming a relocation of TL24, of approximately 18 percent and 17

percent in 2019 and 2020 respectively. These decreases would represent a reduction

in the financial and economic outcomes estimated in the approval process for MSEP,

when compared with the cost of relocating TL24. Approval of the relocation therefore

would result in the benefit of avoiding the loss of this volume and the associated

royalties for the State.

Therefore, the Project justification is to ensure delivery of the MSEP objectives,

consistent with the assumptions on which the MSEP was based, including the

relocation of TL24. As noted in the EIS, Development Consent SSD-5144 did not

include a specific assessment of the proposed relocation of TL24. As a

consequence, this application to the Department of Planning and Environment is

required. The intention is to modify the MSEP development consent in accordance

with the requirements of the Act and regulations noted in Section 1.

2.3 Description of proposed Project

The Project involves the following key stages: Establishment of access tracks and clearing of the required 60m-wide

easement;

Construction of proposed tower foundations and establishment of

towers for the new section of TL24;

Stringing and cutting in of lines on the new section of TL24;

Removal and remediation of redundant TL24 structures.

3. PROJECT ECONOMIC ANALYSIS – COST BENEFIT ANALYSIS (CBA)

3.1 Focus of analysis

The Project involves the replacement of existing infrastructure which is not owned by

Centennial Mandalong. The Project’s effects on production relate to relative impacts

on the proposed mine plan of the existing and proposed locations of TL24 in terms of

the recoverable resource in each instance, which were discussed in the MSEP EIS

(Section 5). The economic impact analysis presented for the ‘parent’ MSEP



January 2016

13

identifies the quantum of the economic benefits relating to the preferred mine plan,

and also the socioeconomic costs associated with MSEP. The current application is a

modification to the MSEP consent SSD-5144, which will support Mandalong Mine’s

operations by eliminating certain constraints as identified in Section 2.2.

This economic analysis is presented in two parts. Initially an analysis of the impacts

at State level is presented. This element is based on a partial application of Cost-

Benefit Analysis (CBA) principles, which recognises the broader effects of the

Project. This analysis is necessarily limited as a result of the Project’s comparatively

small scope in the context of the MSEP.

CBA has some limitations in accounting for the particularly localised impacts of the

Project, particularly those resulting from the construction of the new infrastructure

and decommissioning of that being replaced. As a consequence, an additional

detailed analysis of these regional and local area impacts (Local Effects Analysis or

LEA) is presented. This analysis recognises that the environmental and social

impacts are significantly concentrated in a small and specific part of the western area

of the Lake Macquarie City Council (LMCC) Local Government Area (LGA). The key

economic aspects of the project, although of limited magnitude, may be considered

as being more broadly distributed. The impacts of this Project are also limited by its

small scale, and the brief period of construction-related activity into which some of

the more apparent localised impacts will be compressed.

3.2 Discussion of approach to CBA

In terms of the MSEP, the Project, if approved, represents an initial capital cost, with

some subsequent positive implications for economics of the overall mining operation.

The effects examined in this report are those directly related to the short-term Project

that may impact on relevant parties. Consideration of these effects is intended to

allow the community to consider the TL24 Project in the context of socioeconomic

and environmental factors that are relevant to them. This approach is consistent with

the aims of the 2015 departmental economic assessment guideline which states that

with respect to environmental impacts in particular, the analysis of impacts ‘should be

based around how local people will experience the proposal, with priority to be given



January 2016

14

to effects that are perceived to be material at the local level’ (DPE 2015:20)1’. This is

also an important consideration in the context of the distribution and assessment of

impacts discussed in Section 3.1.

The Project will support some employment and commercial activity in the

construction stage, as labour, goods and services are procured. There will be no

longer-term implications for employment at Mandalong Mine associated with the

Project. There will be a range of impacts, such as noise, during the limited

construction period and the disturbance of approximately 8.5 ha of land owned by

Centennial Fassifern, to accommodate the realigned TL24. These effects are

considered in detail in the following analyses.

3.3 Analysis of project alternatives

Ordinarily, the ‘base-case’ alternative to the proposed Project, may be considered as

the ‘do nothing’, or ‘business-as-usual’ (BAU) circumstance. For the purposes of

comparison, the economic effects of this approach are described in the ‘parent’

MSEP application, which anticipated the relocation of TL24, which is therefore

assumed as the base case.

The alternative approach to relocation of TL24 is the adoption of an adjusted mine

plan that would involve longwall panels ‘stepping around’ the coal resource below the

relevant section of the existing TL24. From the perspective of public impacts, this

approach would result in part of the recoverable resource being sterilised, at the cost

to NSW and the Commonwealth of the foregone royalties and taxes on that coal.

Table 2 compares the impacts of these two alternatives. The analysis focuses on

changes in operational and production requirements, which informs the subsequent

economic valuation of these changes. It is emphasised that the issues discussed in

this section do not take into consideration the risks of potential impacts on the

existing TL24 that would be associated with attempting to ‘mine around’ the current

alignment. Briefly, the key operational differences between the two alternative

approaches to mining this area of the resource are:

1 At the time of preparation of this economic assessment, Technical Notes supporting the DPE Guideline had not been published. As a result, there may be some methodological differences between this assessment and those to be recommended in the Technical Notes when published.



January 2016

15

Alter the mine plan to ‘step around’ the part of the resource underlying the

current TL24 alignment. This would necessitate four (4) longwall changes in

2019 and five (5) changes in 2020, with total disruption to operations of

around 16 weeks, which would severely compromise the continuity of

operations during this period;

The preferred option of relocating TL24 to permit low-risk mining of the full

projected resource, in the context of other identified constraints.

The differences in production for the affected years (2019 and 2020), and the overall

reduction across the mining program for the area immediate to TL24, taking into

account other operational adjustments, are displayed in Table 2.

Table 2 Production differentials – alternative mining approaches

Relocated TL24

tonnes ‘000

Current TL24

tonnes ‘000

Differential realignment

vs current tonnes ‘000

2019 ≈ 5,140 ≈ 4,200 ≈ 940

2020 ≈ 4,640 ≈ 3,850 ≈ 790

Full program

(mining in

TL24 vicinity

≈ 37,987 ≈ 36,587 ≈ 1,400

Table 2 demonstrates that the practical effect of the alternative approach is to reduce

output and associated financial benefits such as royalties. The approach also

introduces severe operational constraints in years 2019 and 2020, the effects of

which are discussed throughout this report.

3.4 Project-related economic evaluation

The cost-benefit analysis (CBA) data presented in this section are present values

(PV) and net present values (NPV), at an assumed discount rate of 7 per cent,

except as otherwise noted2. Internal data provided relates to the 9-year period from

2016 to 2024, which incorporates the period during which mining operations are

planned to take place in the direct vicinity of TL24, and which therefore will be

affected by the proposed relocation.

2 The economic appraisal principles employed herein are consistent with relevant parts of NSW Treasury TPP07-6 Economic Appraisal Principles and Procedures Simplified.



January 2016

16

3.4.1 Estimation of economic benefit

As was discussed in Sections 3.1 and 3.2 of this report, the conventional sources of

benefit associated with a mining Project, such as royalties, taxes, employment and

commercial activity, are detailed in the economic assessment for MSEP and generally

are not applied to this Project. However, there is a benefit in terms of the increased

recoverable coal resource that the proposed Project would permit when compared to

the alternative approach. The key sources of benefit for the current Project are

described below:

An increase in recoverable resource, with associated increases in financial

returns to State and Federal governments and communities;

Reduced risk of negative impacts on TransGrid-owned (i.e. third-party)

infrastructure;

The relocated infrastructure is more distant from certain nearby residents than

is the existing infrastructure, thus potentially reducing some impacts;

There is no cost to TransGrid’s direct or ‘downstream’ customers relating to the

relocation of this critical public infrastructure.

The nature of these benefits indicates that most are either qualitative in nature, or

problematic to quantify due to the extent to which those benefits are dispersed.

The approach taken in this assessment is to focus on the incremental benefits and

costs of the Project. These are defined as the differential between these metrics for

the alternatives of relocation of TL24, and retaining it in its current position. Based

on the impacts detailed in Table 2 and the related material, the economic benefits

associated with the Project are summarised in Table 3. State taxes (e.g. land tax)

and local government and taxes and fees (e.g. land rates levied by LMCC) are

excluded from this analysis, as these would be levied on Centennial Mandalong in

relation to ongoing operations, and are not affected by the Project alternatives.

3.4.2 Assessment of Centennial Mandalong corporate income tax liability

The DPE guidelines (2015) include provision for reporting of federally-levied

corporate income taxes as a component of the economic benefit of projects3. Tax

liability in respect of Centennial Mandalong is assessed by Banpu Australia Co. Pty

Limited (as holding company for Centennial Coal Company Limited) at aggregate

3 Calculated as a population-based proportional return to NSW.



January 2016

17

level for the entire company and not on the basis of individual operations. Therefore,

Centennial Mandalong does not report corporate taxes as a stand-alone operation.

Furthermore, given the extent of Centennial Coal’s portfolio of operations and their

varied performance in any given year, a proportional estimate of entire group tax

liability cannot be validly attributed to individual operations. Even less so can a

reliable assessment of taxes be made over the life of an individual project in the

context of this volatility. As a result, corporate tax is not reported in this assessment.

The necessary exclusion of this material will contribute to a conservative estimate of

benefit, as ordinarily some component of tax paid by Centennial Coal would be

returned to NSW.

Table 3: Estimate of economic benefit – Mandalong TL24 Relocation Project

Economic Benefit Estimation assumptions Estimate $’000

Increase in NSW government

royalties from increased

resource recovery

Difference between proposed and alternative approaches adopted as beneficial increase in royalties.

≈$7,500

Wages/salaries associated with

construction-stage employment

positions (15 FTE)

Discounted to zero, as positions assumed as being otherwise employed on alternative work in the absence of the Project

-

Total economic benefit ≈ $7,500

The assessment in Table 3 excludes the benefits of short-run employment and

commercial stimuli associated with works on the Project. These stimuli are sources of

direct and indirect benefit in the local and broader economies in which employees

and suppliers spend their incomes and transact business. However, given the limited

nature of these, and the general assumption of the likelihood that labour and other

resources would be alternatively otherwise employed, these benefits are assumed to

have no incremental impact.

The incomes of mine employees are considered in the economic assessment

previously prepared for the Mandalong South Extension Project. Although the nature

of work carried out would differ as between the two alternative approaches to

managing mining in the vicinity of TL24, it is assumed that any difference in

employee wage and salary incomes would be immaterial.



January 2016

18

3.4.3 Estimation of social, economic and environmental costs

The Director General’s Requirements (DGRs4) issued by DPE for the Mandalong

Southern Extension Project identifies key issues that the EIS prepared for the Project

must address. These relate to:

Land resources (subsidence, soil, land and agriculture);

Water resources;

Biodiversity;

Heritage;

Air quality;

Greenhouse gases (GHG);

Noise;

Traffic and transport;

Visual;

Social and economic.

The economic assessment for MSEP dealt with these effects in detail for the entire

project of which the TL24 Project forms part. All effects were assessed for the TL24

relocation, however there are a limited number of effects for which the Project will

have incremental impacts, with a number of these being of limited scale and duration.

In order to estimate the net cost or benefit of the project, it is advantageous to

provide a monetised estimate of these impacts where possible, based on specialist

assessments of their magnitude, and relevant valuation methodologies, which are

displayed in Table 4. In particular, this assessment adopts a benefits transfer

method, which is acknowledged by relevant government agencies as a valid

approach.

In relation to these valuations, five key points must be observed:

Given the comparatively small scale of this Project, a number of the effects listed

above are likely to be minor, and as previously discussed, some may improve as

a consequence of the Project. For example, the affected parties may in many

cases be fewer in number than would be the case for MSEP;

Where possible, the valuations applied to benefits transfer are derived from

studies accessed through relevant government bodies. This may be considered

as placing some greater level of reliability on these studies;

4 These were equivalent at time of issue to Secretary’s Environmental Assessment Requirements (SEARS) under the 2015 Guidelines.



January 2016

19

The identified valuation methodologies have been selected to as closely

represent similar existing conditions for this Project as was achievable. However,

in some instances the valuation methodologies are either more general, or

related to situations of a different nature that retain some level of comparability. It

is also relevant to recognise that although the Project is predicated on the

relocation of infrastructure, it does not change land use in the area, as the new

infrastructure will maintain its present function, and be situated on Centennial

Mandalong’s mining lease. This fact of itself may be considered as a mitigating

factor in terms of valuing the extent of impacts on social amenity in this area;

The distribution of these impacts varies across communities. For example, some

impacts such as noise will be mainly apparent to residents in the immediate

vicinity of construction works. As discussed, the scale of this Project is small, so

even these effects may be limited. On the other hand, the notional effect of land

clearing may be notionally more widely distributed.

There remains an unquantified element of social impact. This may be described

as the ‘intrinsic value’ of certain impacts or effects, as attributed by individual

stakeholders. This aspect can be highly individualised and subjective, and

consequently may not be accurately quantified, as the estimation techniques

applied, although based on valid methodologies, may not align with individual

stakeholders’ values.

3.4.4 Physical area applied for estimation of impacts

For the purposes of CBA, the principal ‘community’ to be considered in the estimation

of impacts such as financial returns to government, is nominally the population of

NSW as a whole. However, it is evident that some impacts will be concentrated on

communities or small groups of residents in very close proximity to the proposed

Project. Particular aspects of this Project are relevant to each of these groups

respectively, specifically:

The relocation of TL24 will eliminate the risk of mining causing interruption to

the State’s power supply network, which is a broad impact;

The majority of households located in close proximity to the existing power

line will subsequently have this section of the line removed to a greater

distance from their properties than is presently the case, the impact of which

is specific to these households.



January 2016

20

Figure 1 identifies the residential receptors who may be impacted. The diagram

illustrates the increased distance between most properties and the proposed

easements, when compared to existing infrastructure. This indicates the limited

extent of impacts and suggests that given the small scale of the Project, it is

appropriate to consider this as the relevant element of the community for

consideration in estimating the extent of these specific impacts.

In addition to the impact of Project scale and resident proximity in limiting the extent

of impacts, the construction stage of the Project is also of short duration

(approximately 12 months). In view of these matters, the affected community for

consideration in this assessment is proposed as the residential properties designated

as R11 to R295.

Figure 1: Approximate extent of community potentially immediately affected by

the Project.

5 Note that properties R22 and R29 are either obscured or partially visible in Figure 1.



January 2016

21

With respect to potential impacts that may be considered as being more broadly

distributed, the Lake Macquarie (West) Statistical Local Area (SLA), Code



January 2016

22

110054655 (ABS 2016), is adopted for estimation of most impacts (illustrated in

Figure 2). Project-related traffic movements will be one relevant impact during this

construction period. Although these are considered to be within local road network

capability, there will be an increase in movements, including heavy vehicles, which

will be concentrated in the local area of Mandalong, and will necessitate transit

through the local area. Therefore, the SLA is assumed as the relevant area for

consideration of these impacts.

Figure 2: Lake Macquarie (West) Statistical Local Area

Source: Australian Bureau of Statistics6

6 http://www.censusdata.abs.gov.au/census_services/getproduct/census/2011/communityprofile/110054655?opendocument&navpos=230

http://www.censusdata.abs.gov.au/census_services/getproduct/census/2011/communityprofile/110054655?opendocument&navpos=230



January 2016

23

Table 4: Valuation methods – socio-economic and biophysical impacts Description Methodology/Source of Valuation mechanism Valuation

measure/unit Comment on application

Biophysical Strategic Agricultural Land (BSAL)

Streever WJ, Callaghan-Perry M, Searles A, Stevens T & Svoboda P (1998): “Public Attitudes and Values for Wetland Conservation in New South Wales, Australia” – simulated market price/WTP EVRI reference number 02309-0732

$173/household per annum

No impact will be incurred on strategic agricultural land (SLR 2015a)

Water resources

Not separately estimated Not separately estimated

Modelling indicates that the Project will cause no additional impact on the immediate environment and/or water users in the vicinity, with management strategies adopted. (GHD 2015)

Biodiversity Land & Water Australia (2005): Making Economic Valuation Work for Diversity Conservation: Australian Government Department of Environment & Heritage; Jakobsson K. & Dragun A. (2001) The worth of a possum: valuing species with the contingent valuation method. Environmental and Resource Economics 19, 211-227.: - simulated market price/ WTP

$213/household per annum (preservation of 700 species –flora

& fauna - VIC)

Implied cost of $0.30 per species. Applied to 3 threatened fauna species detected in surveys undertaken in the PAA (RPS 2015a pp.3). Total $0.90 per household p.a. 19,592 households (Lake Macquarie West SLA, ABS Census 2011)7.

Heritage Allen Consulting Group (2005): “Valuing the Priceless: The Value of Heritage Protection in Australia” – choice modelling/WTP

$7.65 per capita p.a. for each 1,000

places protected

Assumes Census 2011 population count (Lake Macquarie West [52,400]), 5 identified Aboriginal and one [1] possible scarred tree (total 6 ‘places’) likely to be affected [RPS 2015b pp v-vi]. Implied cost $0.05 per capita per annum

Air quality DEC NSW (2005): “Health Costs of Air Pollution in the Greater Sydney Metropolitan Region” - cost of injury/replacement; WTP EVRI reference number: 07200-41439

$282 - $1,311 per capita per annum

(upper bound assumed for estimation)

Concentrations are predicted to be below the relevant advisory reporting standard at all identified sensitive receptors during construction of the Project. Consequently, no impact is assessed.

7 The possibility of effects of the corridor on biodiversity may endure beyond the nominal project-life assumption of 30 years indicated by DPE Economic Assessment Guidelines (2015). A residual cost based on

a remediation cost of $15,750 per hectare (Engenicom, 2012), escalated by CPI to $16,469/Ha (2015) is assumed at Year 31. This estimate should be considered as conservative (i.e. a high value), as the cost is based on the rehabilitation of surface mine workings.



January 2016

24

Description Methodology/Source of Valuation mechanism Valuation measure/unit8

Comment on application

Greenhouse gases (GHG)

The Garnaut Review (2011:72): http://www.garnautreview.org.au/update-2011/garnaut-review-2011/garnaut-review-2011.pdf

$25 per tonne/CO2-e 1,355 tonne/CO2-e. Relates to use of plant and equipment in construction phase only.

Noise Day B, Bateman I & Lake I (2010): “Estimating the Demand for Peace and Quiet Using Property Market Data” - Hedonic pricing (impact on dwelling values) EVRI reference number: 06153-105312

$98 - $205/dB per annum (upper bound

assumed for estimation)

16 affected receptor dwellings in relation to cumulative construction noise (Global Acoustics 2015:11). 2.5 persons/household (ABS 2011 Census). 11 receptors (≈28 persons) with possible increase of ≤ 2dB: 5 receptors (≈13 persons) with possible increase of ≤ 12dB

Visual Curtis I.A. (2004): “Valuing Ecosystem Goods and Services: A New Approach Using a Surrogate Market and the Combination of Multiple Criteria Analysis and a Delphi Panel to Assign Weights to Attributes – actual market pricing. EVRI reference number: 0663 - 1365

$1,142 - $1,453/Ha per annum (upper

bound assumed for estimation)

Two residential receptors (R9 & R12) subject to impacts of low visual significance (GBD 2015:23)9. Valuation based on 8.5Ha area to be cleared, comprising 60m wide easement and all access tracks (Centennial Mandalong 2015:3).

Electro-magnetic field

Not assessed Not assessed No estimate calculated due to very minor magnitude of effects.

8 All values adjusted by latest available annual CPI at time of preparation (1.5% September Quarter 2015 [09/14 – 09/15]. Source: http://www.abs.gov.au/AUSSTATS/[email protected]/allprimarymainfeatures/938DA570A34A8EDACA2568A900139350?opendocument 9 Although R9 is assessed as being subject to effects of low visual significance, R9 has been determined to have a residual beneficial predicted impact, resulting directly from the removal of the redundant section of the TL24 transmission line which is either directly visible from, or is proximate to the R9 dwelling.

http://www.garnautreview.org.au/update-2011/garnaut-review-2011/garnaut-review-2011.pdf

http://www.garnautreview.org.au/update-2011/garnaut-review-2011/garnaut-review-2011.pdf

Economic Assessment Centennial Mandalong Pty Ltd

TL24 Relocation Project January 2016

25

3.4.5 Estimation of impacts

Table 5 details the assessed impacts relating to the Project. These assessments are

based on the assumptions and assessment parameters detailed in Table 4.

Additionally, these present values are discounted over periods relevant to the nature

of the impact, commencing in 2016, with the works assumed to commence in the

2016-2017 financial year. As has been previously stated, noise impacts, for example,

are restricted to the twelve-month construction period, whereas effects on

biodiversity associated with clearing of the infrastructure corridor, should they

eventuate, may occur over the ‘life’ of the corridor. The valuations presented in Table

5 should also be considered in conjunction with Table 11, which provides further

detail on the conclusions of the specialist environmental impact assessments on

which the valuations are based.

The valuations recognise the risk of impacts being incurred, and are based on the

conservative assessment of such risk. Centennial Mandalong and its contractors will

deploy all avoidance, mitigation and minimisation strategies recommended to ensure

that the identified risks are not realised.

Table 5: Economic valuation of environmental and social costs of TL24 Relocation Project

Environmental/social

impact

Estimation assumptions Estimate of cost

GHG Works in FY2017/18 only Assessed PV ≈ $27.6K

Noise Works in FY2017/18 only Assessed PV ≈ $39.1K

BSAL & water No impacts assessed as

likely

Not assessed

Air Effects below relevant

advisory reporting standard

Not assessed

Aboriginal & historic heritage Possible effects commencing

in FY2017

Assessed PV ≈ $37.5K

Biodiversity Possible effects commencing

in FY2017


Visual amenity Possible effects commencing

in FY2017


Traffic No adverse impacts expected Not assessed

Electromagnetic field Effects reduced Not assessed

NET (UNMITIGATED) ENVIRONMENTAL COST ≈ $554,000



26

3.4.6 Estimation of net economic benefit/cost

Table 6 displays the measures of net economic benefit of the Project for the State

and local/regional communities, based on the benefit and cost assessments detailed

in Tables 3 and 5.

Table 6: Estimate of Project net benefit , $’000

Economic benefit (PV) $7,548

Economic cost (PV) $554

Net Present Value (NPV) ≈ $6,994

Benefit-Cost Ratio (BCR) 13.6

The anticipated outcome of the project in terms of its net economic impacts on the

State and regional communities is approximately $7.0 million dollars, with a positive

BCR of 13.6. The most significant quantifiable element of the Project is the increase

in recoverable resource and the associated greater royalty and tax returns to

governments 10. This resource would otherwise be uneconomic to mine due to the

position of the existing transmission line. From a qualitative assessment perspective,

the short-run employment and commercial stimulus associated with the construction

work required to effect the relocation also represent a contribution to the employees,

their households, and indirectly to the broader economy. This element is not included

in the quantitative estimates, as it represents employment that might otherwise be

substitutable for alternative employment.

3.5 Sensitivity analyses

As previously identified, the alternative to the proposed Project is the adaptation of

the mine plan to avoid undermining the current TL24 corridor. In practicality, this

approach is cost-prohibitive and is not considered economically or operationally

sound (refer to Section 2.2). A standard comparison of the difference in outcomes

between the two alternatives, using adjusted discount rates mandated by NSW

Treasury, is presented in Table 6. The most apparent source of risk for this Project

would be delays in the construction schedule, which may increase the duration of the

‘window’ for some possible impacts, but would not affect the extent of impacts.

10 Note that the element of corporate income tax in respect of this Project is not quantified, as discussed in Section 3.4.2.



27

Table 7: Sensitivity analysis – alternatives differential (adjusted discount rates) - NPV

Project option component Discount Rate 4%

$’000

Discount Rate 7%

$’000

Discount Rate 10%

$’000

TL24 Relocation Project net (mitigated) social & environmental impact cost

816 554 406

TL24 Relocation Project State & community benefit

8,812 7,548 6,494

TL24 Relocation Project NPV

7,997 6,994 6,088

As has been discussed in previous sections of this report, the net effect of the Project

not proceeding would be a reduction in government (public) revenues. This is

demonstrated by the inferior production and economic outcomes identified in Tables

2 and 7, which quantify the losses entailed in not relocating TL24. It should be noted

that this relates only to the effects of the reduction in recoverable resource under the

current TL24 corridor. However, in overall terms, Mandalong Mine’s ability to mine

the full extent of the resource approved for extraction under SSD-5144 would clearly

be compromised.

Table 8: Sensitivity analysis – alternatives differential- (adjusted economic revenue/cost assumptions) - PV

Evaluation Element Preferred Project (TL24 Relocation)

$’000

Preferred project 7,548

Revenue ∆ 25% & costs ∆ 25% 8,743

Revenue ∆ 25% & costs - 25% 8,992

Revenue - 25% & costs ∆ 25% 5,346

Revenue -25% & costs - 25% 5,595

Changes in assumptions for public revenues and costs indicate that the Project is

economically sound across a range of scenarios. Separate analyses based on

adjustments to discount rates and performance outcome assumptions demonstrate

that the differential between relocating the relevant section of TL24 and retaining it in

its current location for the Project support the relocation of the line. The ability to

realise the additional benefit is reinforced by the agreement between Centennial

Mandalong and TransGrid as to the Project. The principal component in these



28

outcomes is the portion of royalties foregone by the NSW Government were the

Project not to proceed.

A comparison of the full project impacts over the period of mining in the vicinity of

TL24 is presented in Appendix 1 of this report. Those analyses further demonstrate

the overall greater benefit to NSW government revenues associated with the

proposed Project.

4. LOCAL EFFECTS ANALYSIS

4.1 Approach

This analysis firstly identifies and where appropriate, discusses quantified

assessments of the localised social and environmental impacts of the Project. The

effect of the stimulus provided to the local and regional economies by the Project is

then considered. A discussion of the application of multipliers to quantify the

extended benefit/cost relativities of the proposal is then undertaken. As is anticipated

by the current guideline, the valuations of environmental impacts remain the same as

those calculated and presented in Section 3 for the CBA.

4.2 Discussion of localised environmental impacts

Tables 3 and 4 respectively identified the bases for quantifying the environmental

impacts, and the relevant estimates of effects for the Project. Table 11 compares the

benefit and cost impacts in the context of those quantified assessments and also key

qualitative aspects of each impact, with particular emphasis on the matters identified

through community consultation and required under the MSEP Director General’s

Requirements assumed as being relevant to this analysis. In addition, the table also

identifies the policies and specific actions proposed by Centennial Mandalong and its

specialist advisers in avoiding, managing and/or mitigating the externality impacts of

the Project.

The quantified assessments of these impacts form part of the overall CBA for the

Project. Importantly, however, many of these environmental impacts will principally

affect those members of the local community who are resident in close proximity to

TL24, or residents of the SLA, as distinct from broader, less contiguous community

groups, such as those resident in other parts of NSW. The methods of assessment

reflect this situation. Impacts such as those relating to construction noise are clearly

highly localised and will cease once the construction program is completed.



29

In arriving at these quantified assessments, it must be recognised that although

some of these impacts may not meet orthodox standards of financial materiality, they

are genuine physical impacts that may be experienced by residents in the immediate

vicinity of the existing and proposed TL24 structures. Recognition of these effects is

consistent with the requirements of the DPE Guidelines (2015:20). From this

perspective, the CBA and this more localised assessment consider both financial and

experienced materiality and therefore recognise both aspects in assessing impacts.

4.3 Regional context

TransGrid will let tenders for the Project, and manage the construction process. As a

consequence, the economic effects of the various goods and services procured are

likely to be distributed across NSW. It is expected that some proportion of the

construction activity will accrue to businesses in the Hunter Region.

4.3.1 Lake Macquarie region economic effects

In terms of works required to relocate TL24, these have no direct impact on

employment by Centennial Mandalong in relation to its mining operations. In respect

of the construction works, ABS Census data (2011) were used to assess the extent

to which such activity impacts on the regional economy. Table 9 compares the

proportions of construction and more specifically heavy/civil construction employment

in Lake Macquarie, the Newcastle Lake Macquarie SLA4, and NSW.

Table 9: Comparison of construction employment levels (proportion of workforce) Employment group

Lake Macquarie

LGA

Newcastle Lake Macquarie

SLA4

NSW

Construction 7.7% 6.3% 7.3%

Heavy & civil

construction 0.75% 1% 0.66%

In each case, construction employment is a considerable component of total

employment, when compared to other employment groups. With respect to

construction employment in general, there is marginally greater employment in the

LGA than in the larger geographic groups. There are also somewhat greater

proportions of employment in the more specific heavy and civil construction group in

the SLA. This would indicate that there is sufficient capacity in the regional economy



30

to provide the required labour to carry out works of the nature of the TL24 relocation.

The concentration of generation and transmission infrastructure in the Hunter and

Central Coast regions associated with the presence of six power stations, also

suggests the availability of regionally-based capacity. On these bases it is

reasonable to assume that some proportion of the economic benefits arising from the

Project would accrue to the immediate region.

4.3.2 Community consultation

Centennial Mandalong has developed and implemented a consultation program in

relation to the TL24 Project. This principally relates to the effects of the construction

of new, and removal of redundant, towers. Stakeholders have been engaged on the

basis of the relative extent of impacts each is likely to experience. Centennial

Mandalong has clearly defined the Project impacts (by phase of construction) and

have committed to ongoing consultation with affected landholders and also via the

Mandalong Community Consultative Committee. Any concerns that have been

raised by stakeholders and particularly affected residents, have been thoroughly

investigated via the specialist reports involved in the EIS. There are no concerns

that would be considered as compromising the Project.

4.4 Extended economic impacts

An estimate of the extended economic impacts associated with the construction of

the Project can be derived using input-output (I/O) multipliers. This method is a

commonly-used approach to providing an approximation of the economic effects of

one industry’s activities across the rest of the economy11. There are certain

limitations to the application of I/O multipliers. These are also acknowledged by

ABS12. The practical effect of these limitations is that the output of multiplier analysis

can only be considered as indicative of outcomes that may result from economic

stimuli.

Multipliers for construction activity were identified for application to this analysis13.

These are relevant for assessment of the impacts of the initial stimulus associated

with the construction works required for the Project.

11 A detailed discussion on interpretation and limitations of multiplier analysis is included in ABS Cat No 5246.0; Information Paper Australian National Accounts Introduction to Input-Output Multipliers; 12 For example ABS Cat No 1301.0, Year Book Australia, 2002. 13 The original source of the DTIRIS multipliers is ABS Cat. No. 5246.0 (as above). GVA multiplier derived from ABS Cat No, 5246.0 & Multipliers for Culture-Related Industries, CMC SWG, Canberra. Aigis Group (2015)



31

Table 10: Type 2A Multipliers – construction

Description Multiplier value

Output Multiplier 2.694

Gross Value Added Multiplier 4.369

Income Multiplier 2.899

Employment Multiplier 2.727

The capital expenditure on the Project (approximately $10 million) may have

extended effects of the magnitude presented above. Employment of the magnitude of

approximately 2.7 times the economic stimulus would result. These indirect positions

represent employment supported in the broader economy as a result of the demand

for additional goods and services related to the Project. With respect to broader

stimulus associated with mining operations, as has been noted previously, these are

discussed in the economic impact assessment prepared for the ‘parent’ MSEP.

4.5 Quantitative and qualitative assessment of economic and environmental

impacts

Tables 2 and 3 respectively identified the bases for quantifying the environmental

impacts, and the relevant estimates for the Project. Table 11 compares the benefit

and cost impacts in the context of those quantified assessments and also key

qualitative aspects of each impact, informed by the matters identified through the

community consultation process and local government economic profile documents.

In addition, the table also identifies the policies and specific actions employed by

Centennial Mandalong in managing and mitigating the externality impacts of the

Project.

prepared multipliers based on 2012-2013 ABS subdivision-level I/O data, which indicates that these multipliers remain applicable.



32

Table 11: Economic Impact Assessment – Summary Table Impact Environmental Assessment

Commentary Benefits Costs Mitigation/treatment

Economic: Consultant: Aigis Group

The project will result in an overall positive economic contribution at a State, regional and also at the local community level.

Economic benefit of preservation of royalty and tax returns to NSW. Estimated benefit: ≈ $7.0 million Construction contractor employment is additional, but discounted to economic value of zero. Reduced risk of impacts on electricity transmission assets and service.

Nil Nil required

Biophysical Strategic Agricultural Land Consultant: SLR Consulting Australia Pty Ltd

Only one Soil Unit was identified during the soil survey and was considered to be non-BSAL as it failed Criteria 9 (Soil Drainage due to poor drainage in the soil profile). Therefore, it can be concluded that there is no qualifying BSAL within the Study Area.

No impact on strategic agricultural land will be incurred.

Nil anticipated

No other action recommended (SLR, 2015a).

Water Resources Groundwater & surface water Consultant: GHD Pty Ltd

1. No appreciable impacts to the water quality within the surrounding area are expected. 2. It is considered unlikely that the Project will result in appreciable differences in creek flows during either construction or operational phases. 3. No appreciable impacts to downstream water users are expected. 4. It is considered unlikely that the Project will result in impacts to the local groundwater resources. 5. It is considered that the project will not result in appreciable cumulative impacts to the local water environment. 6. No additional water licences are required for the proposed works14.

Modelling indicates that the Project will cause no additional impact on the immediate environment and/or water users in the vicinity, with management strategies adopted.

Nil anticipated Soil and water management recommendations detailed in Section1.5, Water Impact Assessment (GHD 2015) Monitoring and reporting requirements detailed in Section 6, Water Impact Assessment (GHD 2015)

14 Further explanatory commentary is included in Section 5, Water Impact Assessment (GHD 2015)



33

Impact Environmental Assessment Commentary

Benefits Costs Mitigation/treatment

Biodiversity/ecology Consultant: RPS Australia East Pty Ltd

1. No threatened flora species or ecological communities listed under the TSC Act 1995 and/or EPBC Act 1999 were detected within the site during numerous RPS targeted surveys. 2. Three threatened fauna species listed under the TSC Act 1995 and/or EPBC Act 1999 were detected during RPS surveys. 3. Assessments have concluded that the Project is unlikely to have a significant impact on non-cryptic threatened species or ecological communities.

Cost estimate is conservative (high) as impacts are not expected to be significant.

Notional cost (upper bound): PV ≈ $280K

Avoidance, Mitigation and Management recommendations detailed in Flora & Fauna Report, Section 10 pp. 58-59 (RPS 2015a).

Heritage Consultant: RPS Australia East Pty Ltd

1. Five (5) Registered Aboriginal Sites and one possible Scarred Tree (although assessed as unlikely to be a cultural scar) identified in Project Area. 2. No historic cultural heritage items reported.

Heritage items to be preserved as per Archaeological Recommendations.

Notional cost (upper bound): PV ≈ $38K

RPS Archaeological Recommendations, in AHIA Report, Section 9, pp.34-35 (RPS 2015b)

Air Consultant: SLR Consulting Australia Pty Ltd

1. It was concluded from the dispersion modelling exercise that annual average levels of dust and TSP, PM10 and PM2.5 concentrations are unlikely to exceed the relevant air quality criterion at any of the identified sensitive receptors. 2. The 24-hour average PM2.5 concentrations are predicted to be below the relevant advisory reporting standard at all identified sensitive receptors during construction of the Project. 3. Overall, it is concluded that in regards to the air quality impacts, there are no limiting factors for the construction of the Project.

Neutral impact expected Not assessed

Additional dust management, such as watering of access roads should be considered around construction activities when in close proximity to receptors. AQIA Report, (SLR 2015b)



34



GHG Centennial Mandalong Pty Ltd

Costs relate to operation of plant and machinery in construction phase (2017/2018) only.

Nil assessed

Notional cost: ≈ $28K

Not applicable

Noise Consultant: Global Acoustics Pty Ltd

11 receptors predicted to receive construction noise levels greater than the affected criteria during the day period. All receptors are predicted to receive construction noise levels less than the highly affected criteria. Cumulative construction noise results indicate; 16 receptors predicted to receive construction noise levels greater than the affected criteria during the day period; 5 receptors predicted to receive a noticeable increase in received noise levels due to the addition of TL24 construction activities; all receptors predicted to receive cumulative construction noise levels less than the highly affected criteria; 3 receptors predicted to receive less than the affected criteria. TL24 operational noise will be unchanged.

Nil assessed Notional cost: ≈ $39K

Impacts are relatively short-term as they principally relate to the construction phase. Refer to Operational Controls, Section 6 (p.17), Noise Impact Assessment

Traffic and transport Consultant:

Intersect Traffic Pty Ltd

The Project can be supported as it will not adversely impact on the local road network.

Nil identified No costs anticipated in relation to impacts on traffic volumes and road capability. Notional and actual costs to community captured in noise, air, and GHG emissions estimates

Development and implementation of a Construction Traffic Management Plan recommended in Section 10, Traffic Impact Assessment (Intersect 2015).



35



Visual Consultant: Green Bean Design Pty Ltd (GBD)

The VIA concludes that overall the key Project activities and operations will have a negligible to low visual impact on people living in or travelling through the landscape within and surrounding the Project Application Area. Views toward the relocated TL24 line will be predominantly contained by existing tree planting within and surrounding the Project Application Area.

One residential receptor (R11) has been determined to have a residual beneficial predicted impact as the line is being moved further away from the residence.

Notional cost to community: (2016 estimate). ≈ $172K

Mitigation measures detailed in Visual Impact Assessment Section 9 (GBD 2015).

Electromagnetic Field Consultant: Aurecon

The typical magnetic and electric field contribution at 1m above ground level is lower overall for the new section of Line 24 than for the existing, primarily due to the fact that it has been designed with greater conductor clearance to ground level. At the crossing of Line 25/26, the new line now crosses over the top of it instead of under it. 2. Even under peak or emergency load conditions, the magnetic fields are still predicted to remain well within the relevant guideline reference level. 3. Even if the line were to be operated at a voltage 10% greater than the nominal voltage, the electric field contribution of the proposed line deviation is still predicted to remain well within the relevant guideline reference level.

Despite some uncertainty around realisation of benefits, prudent avoidance principles have been employed on the project. Possible beneficial aspects are: 1. Reduction in electromagnetic field contribution at 1 metre above ground level. 2. Centennial Mandalong/TransGrid have sited the electrical infrastructure within the mine property, well away from residences, such that the EMF contribution at residential properties is expected to be negligible.

Nil assessed The relevant Prudent Avoidance Principles observed are detailed in Section 5.2 (Aurecon 2015).



36

4.6 Summary

The chief source of benefit resulting from this Project is the opportunity to maximise

resource recovery (with its associated greater economic benefits), in the context of

constraints recognised in the proposed mine plan, while ensuring the integrity of

TransGrid’s power transmission infrastructure on the mine lease. There will also be

a relatively short-term benefit associated with the incomes earned by workers

engaged on the fabrication and construction of the new section of transmission line,

and demolition and decommissioning of the redundant infrastructure. These will

result in further induced benefit across the regional community, as a result of the ‘pay

packet effect’ of the consumption activity of these employees in local and regional

economies. However, it is noted that these latter benefits might otherwise accrue in

the likely situation that these contractors were otherwise employed. Similarly, the

commercial transactions resulting from supply of goods and services to the Project

will also support further economic activity. It is anticipated that some proportion of

this activity will take place in the immediate region.

5. ADDITIONAL REQUIREMENTS

5.1 Cumulative impacts

The relocation of TL24 may result in beneficial qualitative outcomes for affected

landholders in terms of amenity, as the realigned section of the infrastructure corridor

is further from the nearest residences than the current easement. The existing

corridor is to be returned to landowners and as a result, there is no effective change

in land use that may result in increased impacts. No cumulative impacts on users of

land in the immediate area are anticipated.

The specialist assessments of environmental factors do not identify any ongoing

cumulative effects in relation to the Project, once construction work is complete.

Again, this is because the new infrastructure does not introduce any change in land

use or intensity of use.

5.2 Intra-generational and intergenerational equity

The Project is likely to have a limited, although positive effect on intra-generational

and intergenerational equity. By enabling the co-existence of mining activity and

continued transmission of electricity with reduced risk to infrastructure, the Project

will sustain positive short and longer-term social and economic outcomes.



37

6. CONCLUSION

The Mandalong TL24 Relocation Project will generate the following benefits:

Continued co-existence of mining and electricity generation activities, thus

simultaneously maximising government revenue returns and reducing the risk

of impacts on transmission infrastructure;

Increase in the physical distance between TL24 and certain residential

premises;

Employment for contractors engaged on the 12-month construction program;

Increases in regional and more broadly distributed economic activity related

to the supply of goods and services to the Project.

The Project may also result in some externalised impacts, particularly in relation to a

range of environmental factors (as detailed in Table 11), with the most apparent of

these being principally experienced in the construction phase (as noted above). In

each instance, Centennial Mandalong has received and will implement appropriate

recommendations aimed at mitigating any impacts of these possible outcomes in

circumstances where existing management systems and practices could be

improved.

The results of financially quantifying these impacts indicate that the overall social and

economic impact of the Project is positive. Importantly in the case of such a project,

there are a number of qualitative benefits to be considered, for which positive

outcomes are expected. As a result, it is concluded that the net impact of the project

to the local, regional and NSW communities, and by extension to the national

economy, will also be positive.



38

REFERENCE LIST

Allen Consulting Group (2005): Valuing the Priceless: The Value of Heritage Protection in Australia, Research Report 2, Heritage Chairs and Officials of Australia and New Zealand, Sydney. <http://www.heritage.nsw.gov.au/docs/Research_ValuingthePriceless_2005.pdf > ABS (2015a): Data by Region: <http://stat.abs.gov.au/itt/r.jsp?databyregion#/> ABS (2015b): Census Data 2011. < http://www.abs.gov.au/websitedbs/censushome.nsf/home/Census?opendocument >

Aurecon (2015): Mandalong Transmission Line 24 Deviation, EMF Assessment. Centennial Mandalong Pty Ltd (2015) Mandalong TL24 Powerline Relocation Project Description Cultural Ministers Council (2001): Multipliers for Culture and Related Industries, National Centre for Culture and Recreation Statistics, Australian Bureau of Statistics, November 2011. <http://www.archive.dcita.gov.au/2007/12/cultural_ministers_council/media_releases/multipliers_for_culture_related_

industries_2001#Output,20added20employment%20multipliers> Curtis I.A. (2004): “Valuing Ecosystem Goods and Services: A New Approach Using a Surrogate Market and the Combination of Multiple Criteria Analysis and a Delphi Panel to Assign Weights to Attributes”. EVRI reference number: 0663 - 1365 <https://www.evri.ca/Global/Splash.aspx > Day B, Bateman I & Lake I (2010): “Estimating the Demand for Peace and Quiet Using Property Market Data” EVRI reference number: 06153-105312 <https://www.evri.ca/Global/Splash.aspx > DEC NSW (2005): “Health Costs of Air Pollution in the Greater Sydney Metropolitan Region” EVRI reference number: 07200-41439 <https://www.evri.ca/Global/Splash.aspx > Engenicom Pty Ltd (2012): Centennial Coal Limited, Neubeck Project, Pre-Feasibility Study – Owner Option. Environmental Valuation Reference Inventory. <https://www.evri.ca/Global/Splash.aspx > GHD (2015): Water Impact Assessment; Mandalong Transmission Line TL24 Relocation Project. Global Acoustics Pty Ltd (2015): Transmission Line TL24 Relocation Project Noise Impact Assessment. Green Bean Design (2015): Mandalong Transmission Line TL24 Relocation Project; Visual Impact Assessment. GSS Environmental (2013): Mandalong Southern Extension Project; Environmental Impact Statement.

http://www.heritage.nsw.gov.au/docs/Research_ValuingthePriceless_2005.pdf

http://stat.abs.gov.au/itt/r.jsp?databyregion#/

http://www.abs.gov.au/websitedbs/censushome.nsf/home/Census?opendocument

http://www.archive.dcita.gov.au/2007/12/cultural_ministers_council/media_releases/multipliers_for_culture_related_industries_2001#Output,20added20employment%20multipliers

http://www.archive.dcita.gov.au/2007/12/cultural_ministers_council/media_releases/multipliers_for_culture_related_industries_2001#Output,20added20employment%20multipliers

https://www.evri.ca/Global/Splash.aspx






39

Intersect Traffic (2015): Traffic Impact Assessment; Mandalong TL24 Relocation Project, Centennial Mandalong. Jakobsson K. & Dragun A. (2001) The worth of a possum: valuing species with the contingent valuation method. Environmental and Resource Economics 19, 211-227. James Marshall & Co (2013b): Social Impact Assessment; Mandalong Southern Extension Project. Land & Water Australia (2005): Making Economic Valuation Work for Diversity Conservation: Australian Government Department of Environment & Heritage <http://www.environment.gov.au/biodiversity/publications/economic-valuation/pubs/economic-valuation.pdf> New South Wales Department of Planning and Infrastructure (2012): Guideline for the use of Cost Benefit Analysis in mining and coal seam gas proposals. Sydney, NSW Government. New South Wales Department of Trade, Investment, Regional Infrastructure & Services (2012): The Contribution of Primary Industries to the NSW Economy, Key Data 2012. DTIRIS, NSW Government 2012. New South Wales Treasury (2007): Economic Appraisal Principles and Procedures Simplified, Policy and Guidelines Paper TPP 07-6, Office of Financial Management, NSW Treasury, Sydney. Planning NSW (2002): Guideline for economic effects and evaluation in EIA. Planning NSW , 2002. RPS Australia East Pty Ltd (2015a): Mandalong Powerline Relocation Flora & Fauna Assessment RPS Australia East Pty Ltd (2015b): Mandalong Transmission Line (TL24) Relocation Project Aboriginal Heritage Impact Assessment SLR Consulting Australia Pty Ltd (2015a): Biophysical Strategic Agricultural Land Assessment,TL24 Relocation Project, Mandalong South Extension Project SLR Consulting Australia Pty Ltd (2015b): Mandalong Transmission Line TL24 Relocation Project Air Quality Impact Assessment Streever WJ, Callaghan-Perry M, Searles A, Stevens T & Svoboda P (1998): “Public Attitudes and Values for Wetland Conservation in New South Wales, Australia” EVRI reference number 02309-0732 <https://www.evri.ca/Global/Splash.aspx >

http://www.environment.gov.au/biodiversity/publications/economic-valuation/pubs/economic-valuation.pdf




40

Appendix 1: Comparative economic analysis of project alternative differentials - Mandalong TL24 Relocation Project 2016-202415

Assessment component TL24 Relocation as proposed (PVs) $‘00016

Retention of current TL24 (PVs) $’000

Royalties 172,157 165,414

Total assessed Social, Economic and Environmental benefit

≈ 172,000 ≈165,000

Noise 39.1 -

BSAL & water - -

Air - -

GHG emissions 27.7 -

Aboriginal & historic heritage 37.5 -

Biodiversity 277.7 -

Visual amenity 171.8 -

Electromagnetic field - -

Net (unmitigated) Social, Economic and Environmental cost

≈ 55017 -

NET ASSESSED SOCIAL, ECONOMIC AND ENVIRONMENTAL BENEFIT

≈ 171,500 ≈ 165,000

15 Representing the period in which mining will be conducted in the vicinity of TL24.Full environmental effects associated with mining under the MSEP were considered in the approved application for the ‘parent’ project. 16 As discussed in Section 3.3, consistent with the assumptions for MSEP, relocation of TL24 is considered as the base or ‘BAU’ case. 17 Minor differences in the totals in this table are attributable to rounding.

centennial mandalong pty limited …...mandalong southern extension project (msep) were in part...

Documents