PAC misled over Mt Thorley-Warkworth expansion

Economic analysis of the Mt Thorley-Warkworth expansion was called into question after it was revealed the Department of Planning misled the Planning and Assessment Commission by saying it had tested Rio Tinto’s claims about the economic benefits of the mine when it had not.

Both Rio Tinto and the Department of Planning have said the project’s economic benefits would outweigh environmental impacts, claiming the expansion would ensure employment for 1200 people, $567 million in royalties and spending of $1.34 billion into the NSW economy.

However, as the final decision by the Planning and Assessment Commission looms, The Australia Institute has tried to access copies of the testing, only to discover that the only economic testing conducted was that submitted by Rio Tinto.

A department spokesperson said they had “assessed the cost benefit analysis” provided by Rio Tinto.

Advisors to the department Deloitte said standards for economic analysis should be higher as Rio Tinto had been allowed to do the “minimum” to justify the mine expansion, and had not provided “analysis that is useful for decision makers”, Newcastle Herald reported.

A report from the Department of Planning provided to PAC said it had “tested the sensitivity” of Rio’s own estimates of changes in the price of coal, with the conclusion that project benefits would remain positive even with significant changes in price.

Documents from Deloitte showed they had not tested for changes in the price of coal.

Deloitte also said Rio Tinto’s cost-benefit analysis did “the minimum required” because it saw “little reason in surpassing these standards”.

Deloitte suggested the rigour of analysis expected by the department did not meet up to best practice, and that their approach had supplied minimal information which would increase the risk of economically inefficient decisions being made.

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