Appendix 20 – Economic Impact Assessment

APPENDIX 20 – ECONOMIC IMPACT ASSESSMENT

STANMORE IP SOUTH PTY LTD ISAAC DOWNS PROJECT ISAAC DOWNS PROJECT ECONOMIC IMPACT ASSESSMENT STANMORE IP SOUTH PTY LTD OCTOBER 2019 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

DOCUMENT CONTROL

Job ID: J001178

Job Name: Isaac Downs Project – Economic Impact Assessment Client: Stanmore IP South Pty Ltd

Client Contact: Richard Oldham

Project Manager: Kieron Lacey

Email: [email protected]

Telephone: 07 3831 0577

Document Name: Isaac Downs Project EIA Final

Last Saved: 3/10/2019 1:18 PM

Version Date Reviewed Approved Draft v1 22/07/2019 KL KL Draft v2 13/08/2019 KL KL Draft v3 23/09/2019 KL KL Final 3/10/2019 KL KL

Disclaimer:

Whilst all care and diligence have been exercised in the preparation of this report, AEC Group Pty Ltd does not warrant the accuracy of the information contained within and accepts no liability for any loss or damage that may be suffered as a result of reliance on this information, whether or not there has been any error, omission or negligence on the part of AEC Group Pty Ltd or their employees. Any forecasts or projections used in the analysis can be affected by a number of unforeseen variables, and as such no warranty is given that a particular set of results will in fact be achieved.

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EXECUTIVE SUMMARY

BACKGROUND

Stanmore Coal (Stanmore) is a mining company with interests in operational and prospective coal projects and mining assets within Queensland’s Bowen and Surat Basins. Stanmore IP South Pty Ltd (IP South), a wholly owned subsidiary of Stanmore Coal Ltd (Stanmore), is the proponent for the Isaac Downs Project (the Project).

IP South is proposing to develop an open cut metallurgical coal project which is expected to mine approximately 35 million tonnes of Run of Mine (ROM) coal over a mining life of 16 years. The Project is located in the Bowen Basin coal field, Central Queensland, around 145 kilometres (km) south west of Mackay and 10 km south-east of Moranbah. IP South intents to apply for mining leases (MLs) and an environmental authority (EA) to enable the development of the Project.

Stanmore IP Coal Pty Ltd (IP Coal) another subsidiary of Stanmore, currently operates the Isaac Plains Mine (IPM) on granted ML 70342, ML 700016, ML 700017, ML 700018 and ML 700019, subject to an existing EA.

As IPM’s coal production declines, mining is planned to transition to the Isaac Downs Project. IPM operations will recommence once production from Isaac Downs declines in the later seven years of Isaac Downs operations. The Project will continue to support local suppliers and contractors as is the case for operations at IPM, providing additional security and longevity of employment in the region.

PROJECT SCENARIO AND CONSEQUENCES OF NOT PROCEEDING

Stanmore, through its subsidiary IP Coal, currently operates the IPM on granted ML 70342, ML 700016, ML 700017, ML 700018 and ML 700019, subject to an existing EA. Isaac Downs will be located adjoining the IPM, to the south. Stanmore also has a potential future underground mine (Isaac Plains Underground (IPU)) within the IPM. The Project will thereby provide Stanmore with an additional resource adjoining the existing IPM from which to undertake extraction activities.

A key outcome of the Project will be extending the period for operations of Stanmore’s assets by providing an additional resource. Staging and production for the Project, as well as continued open cut and underground extraction from the existing IPM will be determined based on approvals, market conditions and which resources provide the most economic outcomes. Isaac Downs is expected to be the most economic resource for Stanmore and thereby be developed as soon as practical following approval.

With Project Scenario

For the economic analysis, the following scenario of development timing is adopted:

• Mining activity continues at the existing IPM through to (and including) 2021/22.

• Construction of the Project (Isaac Downs) occurs over an approximately 12-month period finishing in 2021/22, with construction occurring concurrently with extraction activities in the IPM.

• Mining activity switches from the IPM to Isaac Downs once construction activity is complete. Mining activity at the IPM is assumed to cease at this point.

• Mining activity at Isaac Downs produces on average approximately 3.4 million tonnes per annum (ROM) through to 2029/30.

• From 2030/31, ROM coal production from Isaac Downs is expected to decline as the strip ratio increases. At this point, extraction activities at the IPM are assumed to recommence to supplement the reduced coal production from Isaac Downs.

• In 2035/36, construction activity at the IPU commences, as open cut deposits at Isaac Downs and IPM near depletion.

• In 2036/37, open cut coal production at both Isaac Downs and the IPM are assumed to cease as resources at these sites are depleted. Coal production at the IPU commences midway through 2036/37.

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• Extraction activities at the IPU continue until 2046/47.

Without Project Scenario

If the Project does not proceed, Stanmore would likely continue to operate the IPM until this resource is depleted, including bringing forward the development of the IPU. For this analysis, the scenario without the Project assumes:

• IPM open cut operates until 2027/28.

• Development of IPU commences in 2026/27, with operations starting partway through 2027/28.

• IPU operates until 2036/37, at which point Stanmore’s mining activity would be expected to cease within the region.

EXISTING ECONOMIC ENVIRONMENT

The Project is located in the Isaac local government area (LGA) approximately 10 km south-east of Moranbah. The mining workforce will largely be sourced from the Mackay LGA and all coal will be exported through the Dalrymple Bay Coal Terminal. The most appropriate catchment area for the economic impact assessment has therefore been identified as encompassing the regional catchment of the Isaac and Mackay LGAs.

The regional catchment is heavily reliant on the mining industry, in particular Moranbah and the surrounding area where the Project will be located. Mining contributes over 80% of total Gross Regional Product (GRP) in the Isaac LGA, and over 60% of jobs. Isaac LGA is highly reliant on a non-resident mining workforce, with only 42.9% of its workforce living within the LGA. The mining industry in particular employs a mainly non-resident workforce, with 74.2% of mining labour living outside Isaac LGA. This highlights the importance of drive-in drive-out (DIDO) and fly-in fly-out (FIFO) workforce arrangements to supplement Isaac LGA’s resident mining workforce. GRP growth in both Moranbah and Isaac LGA was strong between 2006/07 and 2009/10, but contracted in 2010/11 as the global financial crisis and economic downturn adversely impacted mining activity, alongside the destructive impacts of flooding across Queensland in December 2010 and January 2011. GRP then grew moderately to 2013/14 as mining activity in the region recovered, before dipping in 2013/14 and 2014/15 as demand from China eased and coal prices fell. This coincides with a spike in unemployment in Moranbah and the wider regional catchment throughout 2013 to 2015. The contraction in activity and softening economic conditions saw population growth in the regional catchment stagnate and decline between 2013 and 2017.

GRP and unemployment have since improved as mining projects such as the Grosvenor mine have come online and by the end of 2018 unemployment had returned to levels similar to those prior to 2013 in Moranbah and the regional catchment, though the overall labour force in the regional catchment remained below 2013 levels.

House sales and rental prices in Moranbah and the regional catchment grew strongly during the mining boom, as demand for housing to support the rapidly rising mining workforce and population placed considerable upward pressure on prices. However, in 2010/11 the region experienced a dip in production and mining employment, which resulted in housing sales and rental prices peaking in 2011/12 before falling significantly in the following years in both Moranbah and the regional catchment. By 2015/16, the average house sales price in Moranbah had fallen to approximately one quarter of the average sales price at its peak in 2011/12, while median weekly rents for houses had fallen to around one-fifth of their peak rental values. While median house sale prices remain below their peak in 2011/12, sales and rental data indicates the property market has somewhat recovered to 2017/18. More recently, there has been anecdotal evidence suggesting rising house prices and a tighter rental market.

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ECONOMIC IMPACTS OF THE PROJECT

Potential Beneficial Impacts

Key beneficial impacts arising from the Isaac Downs Project are outlined in Table ES.1, including assessment of anticipated level of associated benefit. Beneficial impacts are examined in consideration of what would otherwise occur if the Project does not proceed (i.e. in consideration of the “With Project” scenario compared to the “Without Project” scenario, as described above). These impacts are examined during a risk assessment framework described in Appendix D.

Table ES.1. Assessment of Beneficial Impacts of the Isaac Downs Project Overall Impact Description Likelihood Consequence Impact Economic Growth The Project will contribute to economic growth directly and indirectly through increased industry output and GRP during construction and operation compared to what would occur without the Project. Including both direct and flow-on impacts, the Project is estimated to support an additional: • $29.3 million in GRP in the regional catchment during construction • $170.1 million per annum through mining activity between 2021/22 and 2029/30 compared to what would otherwise occur $57.4 million per annum through mining activity between 2030/31 • Very High Moderate High and 2036/37 compared to what would otherwise occur • $71.2 million per annum through mining activity between 2037/38 and 2046/47 compared to what would otherwise occur The above includes mine-site rehabilitation. Activity will also be supported through post-mining decommissioning/ rehabilitation of other assets such as the CHPP in 2047/48. In consideration of current GRP in the region, this impact is estimated to be of moderate consequence, with a very high likelihood of occurring (i.e. expected to occur), providing an overall impact rating of high. Employment and Incomes The Project will support additional employment and household incomes during construction and operation, compared to what would occur without the Project, flowing from both direct and indirect impacts. Including both direct and flow-on (supply chain) impacts, the Project is estimated to support an additional: • 233 FTE jobs for residents of the regional catchment during construction • 50 to 70 FTE jobs for residents of the regional catchment annually on average from mining activity (above what would otherwise occur) between 2021/22 and 2028/29 • 210 FTE jobs for residents of the regional catchment annually on average from mining activity (above what would otherwise occur) between 2029/30 and 2036/37 Very High Moderate High • 300 FTE jobs for residents of the regional catchment annually on average from mining activity (above what would otherwise occur) between 2037/38 and 2045/46 A small amount of employment for residents of the regional catchment will also be supported in 2046/47 and 2047/48 for winding up mining activity and decommissioning mining assets. While in the short term (to 2028/29) the number of additional jobs supported by the Project will be relatively small (barring construction in 2021/22), in consideration of current employment in the region and the longer term support for jobs in the region the Project will provide, this impact is estimated to be of moderate consequence with a very high likelihood of occurring (i.e. expected to occur), providing an overall impact rating of high.

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Overall Impact Description Likelihood Consequence Impact Support for Local Business The Project will support demand for goods and services for a number of businesses within the regional catchment, including local worker accommodation villages, businesses within the construction and mining supply chains, as well as providers of export infrastructure. In total, regional construction businesses and the supply chain are estimated to receive revenue of approximately $64.2 million through construction phase activity, while mining supply chain businesses in High Moderate Medium the regional catchment are estimated to receive an additional $22.1 million in business revenue per annum between 2021/22 and 2046/47 that would not occur without the Project, providing additional security and longevity of business incomes. This benefit to local businesses is estimated to be of moderate consequence with a high likelihood of occurring (i.e. will probably occur), providing an overall impact rating of medium. Government Revenue The project will provide a lift in local, state and Australian government taxation revenues through a variety of taxes and duties. Overall, the Isaac Downs Project is estimated to deliver between 2019/20 and 2047/48 an annual average of: • $16.8 million in additional revenue to the Australian Government, through personal income tax, fringe benefits tax, company tax and GST, compared to what would occur without the Project. • $16.2 million in additional revenue to the Queensland Very High Moderate High Government compared to what would occur without the Project, primarily through royalty payments. These additional revenues can be used by government to provide additional infrastructure and services to support business and households throughout Australia. This impact is estimated to be of moderate consequence, with a very high likelihood of occurring (i.e. expected to occur), providing an overall impact rating of high. Source: AEC.

Potential Adverse Impacts

Key adverse impacts arising from the Isaac Downs Project are outlined in Table ES.2, including assessment of anticipated level of associated impact. Impacts are examined in consideration of what would otherwise occur if the Project does not proceed (i.e. in consideration of the “With Project” scenario compared to the “Without Project” scenario, as described above). This table also includes assessment of impacts on local property values and the Australian dollar/ exchange rates, which can provide both beneficial consequences for some stakeholders and adverse consequences for others. These impacts are examined during a risk assessment framework described in Appendix D.

Table ES.2. Assessment of Adverse Impacts of the Isaac Downs Project Overall Impact Description Likelihood Consequence Impact Impacts on Local Businesses from Competition for Resources The Project may (moderate likelihood) increase competition for labour and resources, leading to inflationary pressure and increased costs to businesses as well as potential difficulties for local businesses attracting and retaining staff. However, given the scale of the Project and that it will primarily result in an extension of Moderate Very Low Low existing mining and supply chain activity with only a modest lift compared to existing levels, the contribution of the Project to competition for resources is estimated to be relatively minor and unlikely to be noticeable against baseline/ existing levels (very low consequence), providing a low overall impact rating.

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Overall Impact Description Likelihood Consequence Impact Impacts on Agricultural Production The Project is located in an area which is currently primarily used for cattle grazing. Based on a Project disturbance area of approximately 1,117 ha, there could be approximately $55,850 in potential value lost in cattle grazing each year during Project operation. The mine site will progressively be rehabilitated and post-Project the site (other than any residual void area) is expected to be returned to grazing activities. Assuming the site returns to approximately 50% of original productivity post mining as a result of site rehabilitation, over a 100-year period the impact of the Project on agricultural production equates to a total net present value of $757,615 (using a High Very Low Low 7% discount rate). This assumes the land disturbed would otherwise provide a value of grazing production of approximately $50 per ha (in line with regional averages in 2010/11 and 2015/16) and all of this value would be lost as a result of the project during operations. In consideration of overall regional agricultural production and the proposed progressive rehabilitation of the site, this impact is assessed as having a high likelihood (will probably occur) with a very low consequence (small but noticeable reduction in agricultural production relative to overall regional production), providing an overall impact rating of low. Impacts on Local Property Values There is potential that demand for local property from workers associated with the Project may increase pressures on the local property market. During construction, the Project is anticipated to source the majority of its workers from outside the local area, operating on a drive-in drive-out (DIDO)/ fly-in fly-out (FIFO) basis and accommodated at existing nearby worker accommodation villages. The remaining 20% are assumed to be sourced locally (within one-hour drive) and therefore not require accommodation. During operations an increase in demand for local property of up to around 20 dwellings may occur. It is considered that of the existing IPM workforce the proportion living locally may increase gradually over time from 10% to approximately 15% (i.e. 11 additional workers Low Low Low living locally). Of the 80 net additional workers at peak production (2025 to 2030), approximately 25% are anticipated to be sourced locally and therefore not require accommodation. Of the remainder, nine workers (15%) are assumed to choose to move to the local area and place demand on the local housing market, with the rest accommodated in worker accommodation villages. While the property market has recently begun to show some signs of an increase in housing demand and sales/ rental prices, in consideration of current conditions in the local property market it is assessed the potential increase in demand for housing of around 20 dwellings has a low likelihood of placing upward pressures on residential property prices, and any impact is likely to be small (low consequence), with an overall impact rating of low.

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Overall Impact Description Likelihood Consequence Impact Impacts on Industry from AUD and Exchange Rates The Project has the potential to support the Australian dollar and exchange rates through demand for imported goods and services as well as production of coal for export. This could adversely impact on trade-exposed sectors of the Australian economy (i.e., sectors that compete in global markets such as agriculture, manufacturing and tourism) by increasing the cost of domestic goods and services to foreign buyers. Industries such as agriculture, manufacturing and tourism are strong contributors to the Queensland and national economy, though the Low Very Low Very Low contribution of these industries can fluctuate due to a number of macro-economic factors (including exchange rates). The significance of these industries to Queensland and Australia, and their susceptibility to changes in exchange rates, suggests a moderate sensitivity. However, considering the total export value of the Project relative to total national exports, the Project is anticipated to result in a relatively immaterial impact on state and domestic trade balances, and thereby have a negligible impact on factors such as exchange rates and the value of the Australian dollar.

COST BENEFIT ANALYSIS

A Cost Benefit Analysis (CBA) for the Project shows that, assuming a discount rate of 7%, the Net Present Value (NPV) of the Project to the Queensland economy is estimated at $421.1 million. Even at a discount rate of 10%, the Project is estimated to result in a net benefit to Queensland of around $327.8 million.

Table ES.3. Summary CBA Results of Isaac Downs Coal Project Impacts to Queensland Real Discount Rate NPV ($M) 4% $554.7 7% $421.1 10% $327.8 Source: AEC. The CBA identifies that the Project is economically desirable for Queensland with the benefits outweighing the costs across all discount rates examined. The Project has an Internal Rate of Return (IRR) of 98.2%.

Sensitivity analysis across key variables highlighted a 90% probability of the Project returning an NPV between $175.3 million and $662.2 million. Sensitivity testing returned a positive NPV across all of the 5,000 iterations run in Monte Carlo analysis. Sensitivity analysis indicates the project is not sensitive to any of the assumptions examined.

CUMULATIVE IMPACT ASSESSMENT

Projects included for consideration in the cumulative impact assessment are outlined in Table ES.4 below. In undertaking the cumulative impact assessment, it has been assumed that all projects identified proceed in accordance with timelines outlined in Appendix A (based on existing information in the public domain); for projects in which timelines are not known or are currently on hold, specific timings have not been adopted but it has been assumed these will occur at some time over the next decade (though not all will occur concurrently). This is considered a cautious scenario (i.e. an extreme scenario that is unlikely to be realised) as it is highly unlikely that all projects proposed will proceed to development, or that all proposed timelines will be achieved. As such, it is highly likely that impact ratings assessed in this cumulative impact assessment are overstated.

vii ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT these projects will effectively result in a continuation of jobs and economic activity rather than a genuine lift in activity (outside of short-term construction impacts).

Table ES.4. Projects Included for Consideration in the Cumulative Impact Assessment Isaac LGA • Red Hill • Olive Downs • Eagle Downs • Winchester South Project • Moranbah South Project • Saraji East • Lake Vermont-Meadowbrook Project

The following table provides a summary of the potential cumulative adverse impacts of the Project in consideration of other major projects in the region. In interpreting this analysis, note the cumulative impact assessment ratings (likelihood, consequence and overall impact ratings) are based on the potential for cumulative development to exacerbate the impacts of the Isaac Downs Project (as outlined above) and to what degree. The impact assessment does not assess the aggregate impacts of all developments in combination, but rather the relative implications of developing the Isaac Downs Project should other projects also be undertaken concurrently.

Table ES.5. Assessment of Cumulative Adverse Impacts Overall Impact Description Likelihood Consequence Impact Impacts on Local Business from Competition for Resources The development of the Isaac Downs Project as well as other proposed projects for the region will result in additional demand and competition for labour and other inputs to supply these projects. This may erode the viability of some businesses, in particular smaller businesses operating near the margin or lower income paying industries that may struggle to attract and retain labour. However, High Low Medium the contribution of the Isaac Downs Project to competition for resources is expected to be considerably smaller than most of the projects included for consideration within the cumulative impact assessment, given the Project’s size and that it will primarily result in a continuation of demand for goods and services by Stanmore in the region. The combination of high likelihood with low consequence provides an overall impact rating of medium. Impacts on Agricultural Production Some of the other developments considered in the cumulative impact assessment are also likely to impact on agricultural production through disruption or take-up of land. As with the Isaac Downs Project, most of the mining-related projects will be developed on land that is currently primarily used for agricultural activities, some of which will have a larger footprint than the Isaac Downs Project. The cumulative impacts on land availability for agricultural production of all proposed projects proceeding is considered to be very highly likely to exacerbate the adverse impacts on agricultural production that may be delivered by the Project alone, through a combination of Very High Low Medium reduced capacity to replace this activity elsewhere in the regional catchment and overall contraction of land available for agricultural purposes. The cumulative consequence of these projects on agricultural production in the regional catchment is assessed to be low in consideration of the substantial land currently available for agricultural production in Isaac LGA (the regional catchment had approximately 15 million hectares of land used for grazing in 2015/16). With a very high likelihood of occurring, this provides an overall impact rating of medium.

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Overall Impact Description Likelihood Consequence Impact Impacts on Local Property Values The cumulative development of the Isaac Downs Project as well as the other projects will increase overall labour requirements in the region which has the potential to increase demand for residential property both locally (i.e. Moranbah and surrounding areas) and in nearby major centres such as Mackay. While it is likely most workers will operate on a DIDO/ FIFO basis, in consideration of the large workforces for projects such as Red Hill, Olive Downs and Eagle Downs, Winchester South and Moranbah South the additional demand for residential property that may be generated by the Isaac Downs Project has a moderate likelihood of placing upward pressure Moderate Low Low on property prices in these centres. Demand for housing from the Project is also expected to be low (increase in demand for housing of nine dwellings at peak production as well as an additional 11 dwellings gradually over time as some of the existing workforce transitions to the local area), and while this may increase if competition for local labour from other projects results in the Isaac Downs Project sourcing more labour from outside the local area than anticipated, the impact generated by the Isaac Downs Project is still expected to be relatively small (low consequence) even where other projects result in the local property market tightening, providing an overall impact rating of low. Impacts on Industry through Exchange Rate Affects Some projects considered in the cumulative impact assessment will directly result in increased exports over and above what would be achieved by the Project alone. The combination of these projects is likely to place upward pressure on exchange rates in consideration of national trade balances, and thereby adversely affect trade- exposed industries, and it is possible the contribution of the Isaac Moderate Low Low Downs Project’s exports to exchange rate impacts may be exacerbated (moderate likelihood). The impact on exchange rates (and thereby trade-exposed industries) is assessed to be higher than the impact of the Isaac Downs Project in isolation, though the marginal impact of the Isaac Downs Project on exchange rates will still be small (low consequence), providing an overall impact rating of low. Source: AEC.

MITIGATION STRATEGIES

Assessment of the economic impacts of the Project identified the primary issues, risks and impacts that need to be monitored and addressed include:

• Securing suitably skilled local labour to support the Project.

• Retention of Project benefits locally through supporting local businesses secure supply contracts.

• Potential impacts to agricultural production from disturbance of grazing land.

• Potential impacts on availability and affordability of housing resulting from increased temporary and permanent population in the region.

To assist in addressing the issues identified above, the following overarching strategies to mitigate impacts are proposed:

• Provide appropriate opportunity to source labour locally where possible and provide training opportunities where needed.

• Provide appropriate opportunity for local business to secure supply contracts.

• Minimise adverse impacts on agricultural production in the local region.

• Minimise impacts on the local property market and housing affordability.

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Additional details regarding proposed mitigation measures and management is provided in the Social Impact Management Plan.

RESIDUAL IMPACT ASSESSMENT

An assessment of residual adverse impacts of the Isaac Downs Project (for those impacts originally assessed as having an impact greater than very low) assuming the proposed mitigation strategies above are adopted is presented in the table below.

Table ES.6. Assessment of Adverse Impacts of the Isaac Downs Project Following Mitigation Original Residual Relevant Mitigation Residual Residual Impact Impact Impact Measures Likelihood Consequence Rating Rating Impacts on Local Support local business Business from secure supply contracts; Low Low Very Low Very Low Competition for Support local Resources employment and training Impacts on Minimise disruption of Agricultural Low Low Very Low Very Low agricultural practices Production Impacts on Local Minimise Impacts on the Low Low Very Low Very Low Property Values Local Property Market Source: AEC.

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TABLE OF CONTENTS

DOCUMENT CONTROL ...... I EXECUTIVE SUMMARY ...... II TABLE OF CONTENTS ...... XI 1. INTRODUCTION ...... 1 1.1 BACKGROUND ...... 1 1.2 PURPOSE OF THIS REPORT ...... 1 2. ASESSMENT APPROACH ...... 2 2.1 ADDRESSING THE EIS TERMS OF REFERENCE ...... 2 2.2 METHOD OF ASSESSMENT ...... 3 3. PROJECT OVERVIEW AND ASSUMPTIONS ...... 5 3.1 PROJECT DESCRIPTION ...... 5 3.2 REGIONAL CATCHMENT ...... 5 3.3 PROJECT COSTS, REVENUE AND WORKFORCE ASSUMPTIONS ...... 8 3.4 WORKFORCE ACCOMODATION ...... 12 3.5 CONSEQUENCES OF NOT PROCEEDING WITH PROJECT ...... 12 4. EXISTING ECONOMIC ENVIRONMENT ...... 18 5. REGIONAL IMPACT ASSESSMENT ...... 20 5.1 CONTRIBUTION TO THE ECONOMY ...... 20 5.2 CONTRIBUTION TO EMPLOYMENT AND WAGES ...... 24 5.3 IMPACTS TO BUSINESS ...... 28 5.4 CONTRIBUTION TO GOVERNMENT ...... 30 5.5 IMPACT ON LOCAL PROPERTY VALUES ...... 32 5.6 IMPACTS ON BALANCE OF PAYMENTS ...... 33 5.7 SUMMARY OF IMPACTS ...... 35 6. COST BENEFIT ANALYSIS ...... 39 6.1 APPROACH ...... 39 6.2 QUANTIFICATION AND VALUATION OF COSTS AND BENEFITS ...... 39 6.3 SENSITIVITY ANALYSIS ...... 45 7. CUMULATIVE IMPACT ASSESSMENT ...... 47 7.1 CUMULATIVE IMPACT ASSESSMENT FRAMEWORK ...... 47 7.2 POTENTIAL CUMULATIVE IMPACTS ...... 47 7.3 SUMMARY OF CUMULATIVE ADVERSE IMPACTS ...... 51 8. MITIGATION AND ENHANCEMENT STRATEGIES ...... 53 8.1 KEY ISSUES, RISKS AND IMPACTS TO BE ADDRESSED ...... 53 8.2 MITIGATION STRATEGIES ...... 53 8.3 RESIDUAL IMPACT ASSESSMENT ...... 56 REFERENCES...... 57 APPENDIX A: SOCIO-ECONOMIC OVERVIEW ...... 60 APPENDIX B: INPUT-OUTPUT METHODOLOGY ...... 79 APPENDIX C: INPUT-OUTPUT RESULTS ...... 82 APPENDIX D: LIKELIHOOD-CONSEQUENCE ASSESSMENT FRAMEWORK ...... 94 APPENDIX E: CBA METHODOLOGY ...... 95

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1. INTRODUCTION

1.1 BACKGROUND

IP South is proposing to develop an open cut metallurgical coal project which is expected to mine approximately 35 million tonnes of coal over a mining life of 16 years. The Project is located in the Bowen Basin coal field, Central Queensland, around 145 kilometres (km) south of Mackay and 10 km south-east of Moranbah. IP South intents to apply for mining leases (MLs) and an environmental authority (EA) to enable the development of the Project.

IP South will, subject to agreement with IP Coal, utilise existing approved infrastructure at IPM for coal processing, rejects management, coal railing, power supply and water management. This will minimise the infrastructure required for the Project and reduce the Project’s impacts.

As IPM’s coal production declines, mining is planned to transition to the Isaac Downs Project.

1.2 PURPOSE OF THIS REPORT

This report is developed as a background technical document for use in preparing the Environmental Impact Statement (EIS). The report quantifies the expected beneficial and adverse economic impacts of the Project on the regional and state economies. The report also recommends mitigation strategies to ensure regional economic values are enhanced or, at least, maintained if the project proceeds.

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2. ASESSMENT APPROACH

2.1 ADDRESSING THE EIS TERMS OF REFERENCE

The economic impact assessment (EIA) report (this report) is designed to meet the requirements for assessing economic impacts of the Project as set out in the Terms of Reference (ToR) for the Isaac Downs Project.

This report is required to meet the components set out in section 8 of the ToR, as they pertain to economic values and impacts, as well as section 9.13 (Economic) of the ToR. Section 7.4 of the ToR also outlines a requirement to discuss the economic consequences of not proceeding with the Project.

Additional detail of the requirements and how these are addressed is outlined in the table below.

Table 2.1. Project Terms of Reference for Assessing Economic Impacts ToR ToR Requirement Where Section Addressed 8.1 Requires the identification and description of the economic values that must be Section 4, protected for all relevant economic matters. Appendix A 8.2, 9.13 Identify the potential adverse and beneficial economic impacts of the project Section 5 on the local and regional area and the state. 8.2, 9.13 Estimate the costs and benefits and economic impacts of the proposal using Sections 5 and 6 both regional impact analysis and cost-benefit analysis. 8.2, 9.13 Undertake the analysis in accordance with the Queensland Government’s Sections 5 and 6 Economic Impact Assessment (EIA) Guideline (Department of State Development, 2017). 8.2, 9.13 Separately address each major stage of the Project. Sections 3.3, 5.1 and 5.2 8.2, 9.13 Analyse the economic costs to agricultural activities on land including any Section 5.3.2 impacts to supply chains. and Section 6 8.3 Requires assessment of the cumulative impacts of the Project on economic Section 7 values, in consideration of other known major projects or developments. Ways in which the cumulative impacts could be managed through a collective and/ or collaborative approach with other stakeholders are also to be identified. 8.4 Requires avoidance, mitigation and management strategies be proposed and Section 8 described for addressing identified impacts and protecting/ enhancing economic environmental values. 7.4 Requires the discussion of economic consequences of not proceeding with the Sections 3.5, 5, Project. and Appendix B

As per the Queensland Government’s EIA Guidelines, the economic impact assessment is required to include a regional impact analysis, using one of the following accepted modelling approaches for assessing economic impacts:

• Input-output (IO) modelling.

• Partial equilibrium analysis.

• Computable general equilibrium (CGE) analysis.

For this study, IO modelling has been used for modelling economic impacts. This approach has been agreed with the Department of State Development, Manufacturing, Infrastructure and Planning (DSDMIP), in consideration of the size and scale of the Project, and acknowledgement that the Project will deliver a continuation of an existing activity rather than a tangible change in the structure of the regional economy (see section 3 for additional details regarding the Project and section 4 for a description of the regional economy). Additional details regarding the assessment method used is provided in Appendix B.

The regional impact assessment is required to examine:

• The level of stimulus to the regional and state economy.

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• The level and location of employment change through:

o Direct labour inputs.

o Indirect labour inputs.

o The projected effects on the local economy, including housing, labour costs and services.

The EIA Guidelines also outline a cost-benefit analysis should be undertaken for all major complex projects that are anticipated to wide-ranging and detailed economic impacts.

2.2 METHOD OF ASSESSMENT

2.2.1 Existing Economic Environment

The existing economic environment section provides an overview of the existing economic profile of the Project study area and provides a current baseline for assessment of the significance of potential impacts of the proposed development. Regional economic data collected during this stage is used to develop economic models and informs the ‘base case’ (or baseline scenario) against which the Project’s impacts are assessed. A summary of the existing economic environment is presented in section 4, with supporting data and analysis in Appendix A.

The existing economic environment provides an assessment and overview of the prevailing conditions of the economy based on available data sets at time of writing. Some data sets such as Census of Population and Housing data provide an indication of the economic environment at a point in time that may no longer reflect the existing conditions. AEC has sought to use more recent data wherever possible, however, recent developments and investment decisions may not be fully reflected in the statistics and data presented as the collation and release of data sets often lag by months and even years.

2.2.2 Regional Impact Assessment

The regional impact assessment section uses economic impact modelling results as well as information from the existing environment and desktop research to analyse, assess and discuss the economic impacts of the Project.

The regional impact assessment includes input and information from:

• Economic modelling using IO modelling techniques (a description of IO modelling is provided in Appendix B, with results presented in Appendix C).

• Interpretation of modelling output in the context of the regional and state economies, and analysis of other, non-quantified changes to the economic environment.

• Evaluation of the significance of impacts in relation to economic resources.

• A summary assessment of the magnitude of key identified impacts based on the above analysis and using a risk assessment framework as outlined in Appendix D.

The assessment identifies the economic impacts specific to the Project compared to what would be anticipated if the Project does not proceed. The regional impact assessment is presented in section 5.

2.2.3 Cost Benefit Analysis

The cost benefit analysis (CBA) has been conducted in line with Queensland and Australian Government guidelines, examining the stream of socio-economic costs and benefits anticipated from the project. Additional details regarding the CBA assessment method used is provided in Appendix E. The results of the CBA are presented in section 6 of this report.

3 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

2.2.4 Cumulative Impact Assessment

The cumulative impact assessment in section 7 qualitatively examines the potential impacts on the local/ regional economy should a large number of currently planned projects for the Study Area (including the Project) proceed. Cumulative impacts have been assessed using the risk assessment framework described in Appendix D.

The assessment of cumulative impacts has been undertaken based on input and information from:

• Desktop review of other projects planned for the region and the impacts identified in relevant documentation.

• Considered evaluation by the project team of the likely consequences of identified impacts.

Projects considered in the cumulative impact assessment are outlined in section 7.

2.2.5 Development of Mitigation and Enhancement Strategies

The mitigation strategies section identifies strategies to avoid, reduce or mitigate the negative economic impacts and enhance and facilitate the capture of the positive impacts identified in the economic impact assessment. This includes:

• Defining and describing the objectives of the task/ strategy.

• Identifying practical methods to protect and/ or enhance economic values.

• Identifying practical monitoring measures.

Mitigation and enhancement strategies are presented in section 8.

A residual impact assessment is also undertaken utilising the risk assessment framework outlined in Appendix D to qualitatively describe the anticipated magnitude of identified impacts where mitigation measures are appropriately implemented.

4 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

3. PROJECT OVERVIEW AND ASSUMPTIONS

3.1 PROJECT DESCRIPTION

The Project is a proposed open cut metallurgical coal mine located approximately 10 km south east of Moranbah, central Queensland, within the Isaac Regional Council area, as outlined in section 3.2 below.

The Project will extract approximately 3.2 million tonnes per annum (Mtpa) run of mine (ROM) coal over the first 9 years, with a steady state production profile of 3 - 4 Mtpa, and then approximately 1 Mtpa over the next 7 years, as the strip ratio increases. The Project comprises a single open cut mining pit, run of mine (ROM) coal haul road, linear infrastructure, access road, ROM coal pad, levee and mine infrastructure area (MIA).

ROM coal will be hauled on a purpose built, dedicated haul road to the adjoining IPM to the north, where it will be processed at the IPM coal handling and preparation plant (CHPP), before loading onto the IPM rail loop for railing to the Dalrymple Bay Coal Terminal for export. The Project will utilise approved capacity at the CHPP. Coal mined at Isaac Downs will transition from coal mined at IPM, with mining equipment and a similar workforce transferred from IPM to Isaac Downs. IPM operations will recommence once production from Isaac Downs declines in the later seven years of Isaac Downs operations. The Project will continue to support local suppliers and contractors as is the case for operations at IPM, providing additional security and longevity of employment in the region.

Post mining, overburden dumps will be rehabilitated and a residual void will remain outside of the floodplain of the Isaac River. The proponent’s proposed use options for the residual void area are presented in the EIS. A permanent levee will not be required post mining.

Should there be a shortfall of water at the Project, IPM will supply water to the Project from existing supplies such as the existing long term water supply from SunWater or water in mine voids. All rejects from the CHPP will be managed under the existing approved rejects management plan for IPM. Mine affected water from the Project will either be stored and released from the Project site or transferred to the existing, approved water management system at IPM.

The proposed Project footprint within the Project mining leases is approximately 1,097 ha, with an additional 20 ha of land impacted within the existing IPM mining lease that will only occur as a result of the Project.

3.2 REGIONAL CATCHMENT

The regional catchment for examining the economic impacts of the Project has been based on the mine location, export location and in consideration of the likely sources of labour, goods and services that will be utilised by the Project, as this represents the regional economy most likely to be directly and/ or indirectly affected by the Project. The Regional Impact Assessment (section 5) focuses on the impacts within this region.

The proposed mine will be located in the Bowen Basin coal field, Central Queensland, approximately 145 km south- west of Mackay and 10 km south-east of Moranbah with a population of 9,028 in 20171. The area around the mine itself is sparsely populated and all elements of the mine itself are located within the Isaac Local Government Area (LGA).

The coal product will be transported to Dalrymple Bay Coal Terminal for export which is located within the Mackay LGA. Construction and operating workers are likely to be sourced from the existing IPM with the majority of the workforce residing in existing, local mining village accommodation. Stanmore, through IP Coal and IP South, is committed to maximising the proportion of the workforce sourced from ‘nearby regional communities’, particularly those located within one-hour commute to the work site. As Stanmore provides incentives for the uptake of local accommodation, some workers will reside in local towns such as Moranbah, Dysart and Coppabella. The majority of the workforce is expected to permanently reside in the region around Mackay and drive-in drive-out (DIDO) on a roster basis.

1 The population for the Moranbah Statistical Area Level 2 was 9,028 in 2017 (QGSO).

5 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

The most appropriate catchment area for the economic impact assessment has therefore been identified as encompassing the regional catchment of the Isaac and Mackay LGAs2. A map showing the regional catchment and mine site location is provided in Figure 3.1 on the next page.

The CBA (section 6) focuses on the impacts of the Project to the State of Queensland, rather than the regional economy specifically.

The regional profile presented in section 4 focuses on the existing economic environment in the Moranbah SA2, where localised impacts of the Project are expected to primarily be felt, as well as the regional catchment which includes Isaac LGA and Mackay LGA. Comparisons to Queensland are also provided where relevant.

2 The Regional Catchment used for the purposes of this Economic Impact Assessment is aligned with the Social Impact Assessment (SIA) study areas with the exception of the two towns in the Central Highlands Region LGA (Capella and Tieri). This difference is due to the SIA being required to assess all urban centres within 125km radius of the mine to align with the Strong and Sustainable Resources Act 2017. It was deemed that including Capella and Tieri as part of the EIA would not be necessary as the impact is considered to be negligible.

6 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

Figure 3.1. Regional Catchment and Mine Site Location

7 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

3.3 PROJECT COSTS, REVENUE AND WORKFORCE ASSUMPTIONS

Note: All dollar values presented in this section are in Australian dollar terms unless otherwise specified.

3.3.1 Construction

3.3.1.1 Construction Costs and Timing

The proponent intends to commence construction activities for the Isaac Downs Project in early 2021 (anticipated start approximately March 2021), subject to obtaining all required approvals, and take approximately 12 months to complete. Construction of the Project comprises development of:

• A single open cut mining pit.

• ROM coal haul road.

• Linear infrastructure.

• Access road.

• ROM coal pad.

• MIA comprising workshops and offices.

• A levee to protect the open cut mining operations from flood inundation from the Isaac River.

The above works are anticipated to cost approximately $52.7 million to complete.

In addition to the above construction activity, development the Project will involve the following capital investment:

• Preliminary scoping works, investigations and approvals (planned to be undertaken in 2019/20) of approximately $5.8 million.

• Planned purchase of mining machinery and equipment to support operational activities in 2023/24 of approximately $38.4 million.

In total, capital investment of $96.9 million is anticipated for the Project. The capital investment has been split across years as per the table below, based on current planning for investment (though external factors may alter the actual timing of investment).

Table 3.1. Capital Spend by Year Year Ended June Capital Spend ($M) 2020 $5.8 2021 $9.7 2022 $43.0 2023 - 2024 $38.4 Total $96.9 Source: Stanmore Coal (unpublished).

8 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

3.3.1.2 Source of Goods/ Services

For modelling purposes, the construction costs above have been allocated to their respective ANZSIC industries. This breakdown was developed based on assumptions by AEC regarding the most appropriate ANZSIC industries for each activity.

Table 3.2. Construction Costs by Industry Industry Cost ($M) Heavy and Civil Engineering Construction $52.7 Specialised and other Machinery and Equipment Manufacturing $38.4 Professional, Scientific and Technical Services $5.8 Total $96.9 Source: Stanmore Coal (unpublished), AEC. It has been assumed that:

• Approximately 80% of direct expenditure on construction labour and activity will be sourced from within regional catchment, with the rest from elsewhere in Queensland (primarily Brisbane).

• Approximately 20% of direct expenditure on professional, scientific and technical services activity will be sourced from within the regional catchment, with the rest from elsewhere in Queensland (primarily Brisbane).

• Approximately 10% of specialised machinery and equipment is assumed to be sourced from within the regional catchment, with the remainder imported from overseas.

3.3.1.3 Construction Labour

Construction activity (i.e. activity related to the $52.7 million in construction costs outlined above) is estimated to provide jobs for approximately 250 people over the 12 month construction period. On a financial year, full time equivalent (FTE) basis, this has been allocated as follows:

• 20% (i.e. 50 FTE jobs) in 2020/21.

• 80% (i.e. 200 FTE jobs) in 2021/22.

Of these jobs, 200 FTE in total are assumed to be sourced from within the regional catchment with the remainder sourced from elsewhere in Queensland.

In addition to the above, employment will be supported through the professional services activity in 2019/20 and for manufacturing activity in 2023/24. IO transaction tables were used to estimate the quantum of employment (in FTEs) supported by this activity in the region and Queensland, as follows:

• 24 FTE jobs supported in the professional, scientific and technical services in Queensland, five of which are located in the regional catchment.

• 15 FTE jobs supported in the specialised and other machinery and equipment manufacturing industry in the regional catchment (and none elsewhere in Queensland).

3.3.2 Operations

3.3.2.1 Production and Timing

Operations are anticipated to commence in early 2022 (or on a financial year basis, in the second half of the 2021/22 financial year). The Project will extract approximately 3.2 Mtpa run of mine (ROM) coal over the first 9 years, with a steady state production profile of 3 – 4 Mtpa, and then approximately 1 Mtpa over the next 7 years, as the strip ratio increases. The following figure outlines the anticipated annual ROM coal production over the 16 years of operation, on a financial year basis, as well as an estimate of total product coal. A ratio of approximately 70% for ROM coal to product coal is anticipated.

9 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

Figure 3.2. Annual ROM and Saleable Coal Production (Mt), Isaac Downs Project (Year Ended June)

4.5

4.0

3.5

3.0

2.5

2.0

Coal Production (Mt)ProductionCoal 1.5

1.0

0.5

0.0

2029

2028

2027

2020 2022 2024 2026 2031 2033 2035 2037 2021 2023 2025 2030 2032 2034 2036

ROM (Mt) Product Coal Source: Stanmore Coal (unpublished).

3.3.2.2 Coal Prices and Revenue

Coal prices and revenue will vary based on the quality and type of coal extracted. The Isaac Downs Mine is anticipated to produce a mix of semi-hard coking coal (SHCC) and coal for pulverised coal injection (PCI). Future coal prices have been estimated based on data from Statista (2019) which indicates that while coking coal prices are anticipated to remain high, they will soften from the prices experienced in 2018 of USD190/t – USD210/t to below USD140/t by 2021. For the purposes of this assessment an assumed long-term average price of approximately A$175/t has been used. This value has been applied to the annual estimates of product coal above.

3.3.2.3 Operating Expenditure

Estimates of operating expenditure are commercial in confidence. However, the Project is not proposing any novel or unproven resource extraction process, technology or activity, and operating expenditures are thereby anticipated to be relatively consistent with most coal mining operations in the region. IO transaction tables have been used to approximate the operating structure and expenditure resulting from the Project, based on the expenditure profile for the coal mining industry in AEC’s IO model for the Mackay and Isaac LGAs. Some minor adjustments were made as appropriate to reflect specific commercial in confidence estimates of expenditure provided by Stanmore Coal (unpublished).

3.3.2.4 Operations Labour

At full production the Project is estimated to support 240 operational mining jobs. From 2031, as coal production from Isaac Downs declines, operational mining jobs at Isaac Downs are expected to decline (with some jobs effectively transferring to the IPM as extraction activities at the IPM are assumed to recommence to supplement the reduced coal production from Isaac Downs).

An additional 60 jobs will be associated with processing activities at the existing CHPP at the IPM. Jobs at the CHPP have been allocated to the Project based on the Project’s overall share of total mining revenue generated from coal produced within the overall IPM and Isaac Downs.

A summary of total operational employment each financial year is presented below, including the proportion of employment at the CHPP attributed to the Project.

10 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

Figure 3.3. Operational Employment, Isaac Downs Project (Year Ended June)

350

300

250

200

150

100 Operational Employment (Jobs) Employment Operational 50

2034

2033 2026

2032 2025 2029 2037 2022

2031 2024 2036 2021 2028

2023 2030 2020 2027 2035 Mining Processing Source: Stanmore Coal (unpublished). Following completion of mining operations in 2036/37, approximately 10 jobs are anticipated to be retained for a period of five years for post mine life rehabilitation.

3.3.2.5 Source of Goods/ Services

The Isaac Downs Project will enable maintenance of the existing core IPM operations workforce of 220 employees (160 IPM mining operations and 60 IPM Infrastructure operations). The source of this labour is initially anticipated to be approximately in line with existing IPM staffing, with approximately 10% living ‘locally’ in communities within one-hour commute of the mine site and the remainder being DIDO workers primarily from Mackay. Over time, the extended period of operation along with incentives such as the existing ‘Live Local’ initiative will likely further promote employees to live in the local area. For the purposes of this study it is assumed the proportion of the current workforce living locally may increase to 15%, in line with assumptions outlined in the Social Impact Assessment (SMEC, 2019).

At peak (2025 to 2030), the Project will create an additional 80 operations positions (for a total of 300 operational jobs – see Figure 3.3 in section 3.3.2.4 above).

As outlined in the Social Impact Assessment (SMEC, 2019) appended to the EIS, the Proponent’s first priority for recruitment will include personnel from ‘nearby regional communities’, particularly those located within a one-hour commute to the work site (including Moranbah, Dysart, Nebo, and Coppabella). In consideration of skills availability and unemployment in these ‘nearby regional communities’ and Stanmore’s standing in the community, the Social Impact Assessment indicates that 25% (20 employees) of the additional 80 operations workforce at peak could be sourced from ‘nearby regional communities’. The remainder is assumed to either choose to move to the area and live locally (approximately 15%) or represent DIDO workers primarily from Mackay.

The source of other goods and services used in mining activities has been modelled based on the expenditure profile for the coal mining industry in AEC’s IO model for the Mackay and Isaac LGAs. Refer to Appendix B for details regarding how AEC developed the regional IO model.

3.3.3 Decommissioning and Rehabilitation

Rehabilitation activities will be undertaken on an ongoing basis throughout the Project life, with expenditure of approximately $0.25 million per annum from 2023/24 to 2030/31, increasing to $4.25 million per annum from 2031/32 to 2035/36 and $2.0 million in 2036/37. This activity has been included within the operational activities

11 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT above, with ongoing rehabilitation labour incorporated in the operational employment estimates. An additional $3.1 million per annum for five years has been estimated for mine decommissioning and post mine life rehabilitation between 2037/38 and 2041/42.

Decommissioning activity at IPM will be associated with the closure and dismantling of infrastructure at the IPM (e.g. the CHPP), but this will occur irrespective of the Project.

3.4 WORKFORCE ACCOMODATION

Workforce accommodation arrangements will be similar to those for IPM, being a mix of existing mine accommodation villages and residences in Moranbah and other local or regional towns.

Accommodation for the 220 IPM jobs retained as a result of the Project is anticipated to be in line with existing accommodation arrangements for IPM workers, with approximately 10% anticipated to be living in ‘local’ communities within one-hour commute of the mine site initially while the remainder are expected to be DIDO workers primarily from Mackay (in line with existing IPM workforce). Over time, the extended period of operation along with incentives such as the existing ‘Live Local’ initiative will likely further promote employees to live in the local area. For the purposes of this study it is assumed the proportion of the current workforce living locally may increase to 15%, in line with assumptions outlined in the Social Impact Assessment (SMEC, 2019).

During peak operations, of the additional 80 operational jobs it is assumed approximately 75% will be DIDO and stay within mine accommodation villages with the remaining 25% residing within Moranbah and other local or regional towns within one-hour commute. During construction, the majority of the workforce is expected to be accommodated in the existing mine accommodation villages (e.g. the Civeo accommodation facility at Coppabella).

3.5 CONSEQUENCES OF NOT PROCEEDING WITH PROJECT

While this EIS examines the impacts of the Isaac Downs Project, it is important to understand the role the Isaac Downs Project will play within the broader portfolio of Stanmore’s mining assets within the Isaac Plains area. Stanmore currently operates the IPM on granted ML 70342, ML 700016, ML 700017, ML 700018 and ML 700019, subject to an existing EA. Isaac Downs will be located adjoining the IPM, to the south. Stanmore also has a potential future underground mine (Isaac Plains Underground (IPU)) within the IPM. The Project will thereby provide Stanmore with an additional resource adjoining the existing IPM from which to undertake extraction activities.

An overview of the overall consequences on staging and activity of Stanmore’s operations with and without the Project are outlined below.

In terms of assessing economic impacts:

• The Regional Impact Assessment (section 5) includes analysis of the impacts of the Isaac Downs Project in isolation, but also in consideration of the net change in Stanmore’s overall mining activity in the region with and without the Project.

• The CBA (section 6) focuses on the net impact of the Project in consideration of Stanmore’s overall mining activity in the region with the Project (the project scenario) and without the Project (the base case).

3.5.1 Description of Scenarios

3.5.1.1 With Project Scenario

For the economic analysis, the following scenario of development timing is adopted:

• Mining activity continues at the existing IPM through to (and including) 2021/22.

12 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

• Construction of the Project (Isaac Downs) occurs over an approximately 12 month period finishing in 2021/22, with construction occurring concurrently with extraction activities in the IPM.

• Mining activity switches from the IPM to Isaac Downs once construction activity is complete. Mining activity at the IPM is assumed to cease at this point.

• Mining activity at Isaac Downs produces on average approximately 3.4 Mtpa (ROM) through to 2029/30.

• In 2035/36, construction activity at the IPU commences, as open cut resource deposits at Isaac Downs and IPM near depletion.

• In 2036/37, open cut coal production at both Isaac Downs and the IPM are assumed to cease as resources at these sites are depleted. Coal production at the IPU commences midway through 2036/37.

• Extraction activities at the IPU continue until 2046/47.

3.5.1.2 Without Project Scenario

• IPM open cut operates until 2027/28.

• Development of IPU commences in 2026/27, with operations starting partway through 2027/28.

• IPU operates until 2036/37, at which point Stanmore’s mining activity would be expected to cease within the region.

3.5.2 Additional Assumptions for the With and Without Project Scenarios

3.5.2.1 Construction

Assumptions for construction activity in the with project scenario are as per the Isaac Downs Project outlined in section 3.3.1. No construction activity is included in the without project scenario.

While some additional construction/ expansion activities will occur at other sites within Stanmore’s IPM and Isaac Downs over time, for simplicity these have not been examined within this analysis on the basis that this activity will occur regardless of the Isaac Downs Project with the only difference being timing of activities.

3.5.2.2 Operations

Production and Timing The following figure presents projections of annual ROM coal production within Stanmore’s IPM and Isaac Downs in consideration of the Isaac Downs Project as well as IPM mining operations.

As can be seen, the highest level of production over the period to 2046/47 will occur during the first nine years of operational life of the Isaac Downs Project, with a steady state production of 3.0 – 4.0 Mtpa (ROM) over this period. This reflects the greater accessibility of coal at this site compared to other resources available to Stanmore.

As the strip ratio increases and production at Isaac Downs falls, mining activity at IPM will recommence to supplement production. Even so, overall coal production is anticipated to fall to between 2.5 Mtpa and 3.0 Mtpa between 2030/31 and 2035/36. As open cut resources at Isaac Downs and IPM are depleted (2036/37), production will switch to IPU with production falling to around 1.5 Mtpa until this resource is depleted in 2046/47.

The amount of product coal recovered from the ROM coal is estimated to be higher for the IPM at around 80% for these operations.

13 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

Figure 3.4. Annual ROM Coal Production (Mt), With Project Scenario (Year Ended June)

4.5

4.0

3.5

3.0

2.5

2.0

1.5 ROM Coal Production (Mt)Production Coal ROM 1.0

0.5

0.0

2047

2046

2045

2044

2043

2042

2041

2040

2039

2038

2037

2036

2035

2034

2033

2032

2031 2025

2030 2024

2029 2023

2028 2022

2027 2021

2026 2020

Isaac Downs IPM IPU Source: Stanmore Coal (unpublished). Without the project, the following production profile is anticipated. Without the Isaac Downs Project Stanmore is expected to continue open cut mining at the IPM until the resource is depleted (2027/28). Production over this period is estimated to average around 2.0 Mtpa (ROM). Production will then switch to the IPU, averaging production of around 1.5 Mtpa until the resource is depleted (2036/37).

Figure 3.5. Annual ROM Coal Production (Mt), Without Project Scenario (Year Ended June)

2.5

2.0

1.5

1.0 ROM Coal Production (Mt)Production Coal ROM

0.5

0.0

2047

2046

2045

2044

2043

2042

2041

2040

2039

2038

2037

2036

2035

2034

2033

2032

2031 2025

2030 2024

2029 2023

2028 2022

2027 2021

2026 2020

IPM IPU Source: Stanmore Coal (unpublished). Figure 3.6 displays the annual additional ROM and saleable coal production delivered as a result of the Isaac Downs Project, based on the above annual coal production estimates for the with and without project scenarios. In total, over the period from 2021/22 to 2046/47, the Isaac Downs Project is estimated to increase Stanmore’s overall coal production by 35.4 Mt ROM coal, and 24.9 Mt product coal. This equates to an average annual increase of 1.36 Mtpa ROM and 0.96 Mtpa product coal.

14 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

A key difference delivered by the Isaac Downs Project will be the extension of coal mining activity within Stanmore’s tenements in the regional catchment for an additional 10 years (to 2046/47 compared 2036/37 without the project).

Figure 3.6. Change in Annual ROM and Saleable Coal Production (Mt), With Isaac Downs Project Compared to Without Isaac Downs Project (Year Ended June)

3.0

2.5

2.0

1.5

Coal Production (Mt)Production Coal 1.0

0.5

0.0

2043

2042

2041

2040

2039

2038

2037

2036

2035

2034

2033

2032

2025 2031

2030 2024

2023 2029 2047

2028 2022 2046

2021 2027 2045

2020 2044 2026

Total Product Coal Source: Stanmore Coal (unpublished).

Coal Prices and Revenue Coal prices and revenue for coal produced at Isaac Downs will be as per that outlined in section 3.3.2.2. The mix of coal produced from the IPM will differ from Isaac Downs, which is expected to produce higher quality coal. As a result a lower price of around A$160/t per annum on average has been used for IPM open cut and around $145/t per annum on average for IPU.

Operations Labour The following figure summarises the annual operational employment within Stanmore’s IPM and Isaac Downs in consideration of the Isaac Downs Project as well as IPM mining operations and the processing plant.

The Isaac Downs Project will see Stanmore transition mining activity (and jobs) from Stanmore’s IPM to Isaac Downs in 2021/22. This will result in a small increase in Stanmore’s operational workforce from the existing 220 workers at IPM to around 300 workers between 2022/23 and 2029/30. As production declines at Isaac Downs and activity at IPM open cut recommences, Stanmore’s overall workforce will increase slightly to around 340 workers until 2035/36, then fall to around 200 workers as activity transitions to IPU.

15 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

Figure 3.7. Operational Employment, With Project Scenario (Year Ended June)

400

350

300

250

200

150

100 Operational Employment (Jobs) Employment Operational 50

2037 2024 2027 2034 2044 2047 2022 2029 2032 2039 2042

2020 2023 2026 2030 2033 2036 2040 2043 2046 2021 2025 2028 2031 2035 2038 2041 2045

Mining - Isaac Downs Mining - IPM Mining - IPU Processing Source: Stanmore Coal (unpublished). Without the project, the Stanmore’s operational workforce is anticipated to remain at around 220 workers until the IPM open cut is depleted, except for a period of two years when IPU activities commence. The IPU will see a small contraction in the workforce to around 200 workers until 2036/37. Approximately 10 employees are estimated in 2037/38 for post mine rehabilitation.

Figure 3.8. Operational Employment, Without Project Scenario (Year Ended June)

350

300

250

200

150

100 Operational Employment (Jobs) Employment Operational 50

2037 2024 2027 2034 2044 2047 2022 2029 2032 2039 2042

2020 2023 2026 2030 2033 2036 2040 2043 2046 2021 2025 2028 2031 2035 2038 2041 2045

Mining - IPM Mining - IPU Processing Source: Stanmore Coal (unpublished). Figure 3.9 displays the annual additional operational employment delivered as a result of the Isaac Downs Project, based on the above annual employment estimates for the with and without project scenarios.

16 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

Over the period from 2021/22 to 2046/47, the Isaac Downs Project is estimated to increase operational employment by approximately:

• 70 FTE jobs3 on average per annum compared to what would otherwise occur between 2021/22 and 2029/30.

• 130 FTE jobs on average per annum compared to what would otherwise occur between 2030/31 and 2036/37.

• 210 FTE jobs on average per annum compared to what would otherwise occur between 2037/38 and 2045/46. This figure drops to 110 in 2046/47, reflecting a half year of operation.

The vast majority of the additional employment is delivered from 2030/31 onwards, reflecting the important impact the Project will deliver in extending mining activity and employment in the regional catchment.

Figure 3.9. Change in Annual Operational Employment, With Isaac Downs Project Compared to Without Isaac Downs Project (Year Ended June)

250

200

150

100

Operational Employment (Jobs) Employment Operational 50

2037 2024 2027 2034 2044 2047 2022 2029 2032 2039 2042

2020 2023 2026 2030 2033 2036 2040 2043 2046 2021 2025 2028 2031 2035 2038 2041 2045

Mining Processing Source: Stanmore Coal (unpublished).

3.5.2.3 Decommissioning and Rehabilitation

As with the Isaac Downs Project, ongoing rehabilitation activity is captured in the operational activities above.

With the project, decommissioning and closure expenditure of $9.1 million is anticipated in 2047/48 once all mining activity within Stanmore’s IPM and Isaac Downs is complete. Without the project, the decommissioning and closure expenditure of $9.1 million is anticipated to occur in 2037/38.

This activity has been allocated to the construction services sector in the regional IO model to estimate direct employment requirements from rehabilitation and closure activities, supply chain impacts, as well as the source of goods and services. Approximately 30 FTE jobs are estimated to be associated with decommissioning activity, based on the regional IO transaction tables for the regional catchment produced by AEC for this study (see Appendix B for details).

3 Where one FTE is equivalent to one person working full time for a period of one year.

17 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

4. EXISTING ECONOMIC ENVIRONMENT

This section provides a summary of the current economic environment of the Moranbah Statistical Area 2 (SA2), where localised impacts of the Project are expected to primarily be felt, as well as the regional catchment which includes Isaac LGA and Mackay LGA. Comparisons to Queensland are also provided where relevant. Additional details of the existing economic environment are provided in Appendix A.

The following are key attributes of the regional economy:

• The Moranbah SA2 is heavily reliant on the mining industry, with mining contributing 91.4% to Moranbah’s total industry Gross Value Add (GVA). The industry is also Moranbah’s highest employer, with 60.9% of total jobs in this industry, by Place of Work.

• The reliance of Moranbah on mining is consistent with the entire Isaac LGA, which is a key mining region of both Queensland and Australia. Mining contributes 90.6% of industry GVA across the LGA and provides 60.7% of total jobs. Mining is also an important contributor to Mackay LGA, which is a key mining service centre for Isaac LGA and the broader Bowen Basin. While the mining industry is only the ninth highest employing industry in Mackay, the mining industry supply chain is significant and mining activity is one of the pillars of economic activity in the LGA.

• Gross Regional Product (GRP) growth has generally trended upwards in both Moranbah and the regional catchment as a whole; Moranbah has grown at an average annual rate of 7.3% since 2006/07, and the regional catchment at 4.2%. Both of these growth rates are well above that of Queensland. GRP growth in both Moranbah and Isaac LGA was strong between 2006/07 and 2009/10, but contracted in 2010/11 as the global financial crisis and economic downturn adversely impacted mining activity, alongside the destructive impacts of flooding across Queensland in December 2010 and January 2011. GRP has since grown year on year in both Moranbah and the regional catchment, with periods of strong growth recorded in 2011/12 and 2012/13 (as strong demand from China drove mining investment and exploration), as well as in 2015/16 and 2016/17 with projects such as the Grosvenor mine coming online.

• The 2013/14 dip in GRP corresponds with an end of the “mining boom”, as demand from China eased and coal prices fell. This led to widespread cost and job cuts in the mining industry, which coincides with a spike in unemployment in Moranbah and the wider regional catchment throughout 2013 to 2015.

• In general, unemployment in Moranbah is low, remaining well below half the unemployment rate of Queensland from 2010 to March 2019. In the past eight years, the highest the unemployment rate reached was 2.9% in December 2015. By comparison, Queensland’s unemployment rate has been above 6% since June 2014. The low unemployment rate is a reflection of Moranbah primarily being a mining town with a relatively transient population (i.e. few people choose to remain in Moranbah when jobs are unavailable).

• Unemployment in the regional catchment has also been generally low, reaching 3.7% in March 2019. Isaac LGA is the primary contributor to the low rate, averaging an unemployment rate of 1.8% between 2010 and March 2019. Much like Moranbah, Isaac LGA’s population is largely mining based and relatively transient, resulting in low unemployment rates. The unemployment rate in Mackay LGA was much higher between 2010 and March 2019, averaging 4.9% over the period.

• The Moranbah SA2 experienced significant population growth during the mining boom in the 2000s. Population in the SA2 increased from 6,507 residents in 2001 to 9,202 in 2011. However, since 2011 the resident population has declined year on year to be 9,028 residents in 2017. Despite the population decline, 2018 has seen a reverse, with population increasing by 0.7%. This increase is likely to continue to increase with the rental market suggesting a significant tightening with more people moving to the region. This decline in 2011 was likely a result of the flooding events in December 2010 and January 2011, which negatively impacted mining activity in the area. Following 2011, mining experienced strong growth whilst the population continued to decline. This was a result of higher reliance on non-resident workers undertaking construction and exploration activity.

18 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

• The regional catchment population exhibited a similar trend, with significant population growth during the mining boom. The regional catchment had a population of 127,044 in 2007, which grew to a peak of 142,162 in 2013. However, population has since declined to 137,473 in 2018. In the Isaac region, non-resident population peaked in 2011 to 2013.

• The transition towards a mainly non-resident mining workforce in Moranbah is supported by the low self- sufficiency of the area. Only 46.4% of those who work in Moranbah both live and work within the SA2. The mining industry employs mainly non-resident labour, with 69.7% of mining labour living outside Moranbah. Similarly, the construction industries employ more non-resident than local labour.

• The regional catchment is largely self sufficient, with 87% of the workforce living within the region. This is due to the self-sufficiency of Mackay, with 96.2% of workers working and living within the region. Mackay is a large exporter of its labour force, providing a significant number of mining labour to its neighbouring regions. Of those living within Mackay, almost 4,500 mining labourers work outside the region. Isaac, however, is similar to Moranbah and relies mainly on non-resident workers. Only 42.9% of its workforce lives in Isaac, which is largely driven by Isaac’s mining industry relying on non-resident workers, with 74.2% of the workforce being non- resident. This highlights the importance of drive-in drive-out (DIDO) and fly-in fly-out (FIFO) workforce arrangements to supplement Isaac LGA’s resident mining workforce.

• House sales and rental prices in Moranbah and the regional catchment grew strongly during the mining boom, as demand for housing to support the rapidly rising mining workforce and population placed considerable upward pressure on prices. However, in 2010/11 the region experienced a dip in production and mining employment, which resulted in housing sales and rental prices peaking in 2012 before falling significantly in the following years in both Moranbah and the regional catchment. This property market crash was likely a result of a mix of a significant drop in coal prices, leading to reductions in development, and mining companies heavy use of FIFO workers who stay in worker’s camps. By 2016, the average house sales price in Moranbah had fallen to approximately one quarter of the average sales price at its peak in 2011/12, while median weekly rents for houses had fallen by approximately 80%.

• Property prices in Moranbah have seen a small recovery in recent years, with positive growth in both sales and rental prices the last two years. Rental prices have grown strongly in 2018-19 at 14.3% for flats and 9.4% for houses showing an improvement in the rental market which could be due to population increasing in the region. This is a sign the property market may be stabilising, with the number of sales in the regional catchment also increasing from 2015 to 2018. This likely reflects some new resources projects being developed and commencing operations in recent years and may indicate an expectation for growth in the local resources sector. Anecdotal evidence in Moranbah suggests rental and housing markets have continued to tighten following the most recent data.

19 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

5. REGIONAL IMPACT ASSESSMENT

This section examines the economic impacts of the Project within the regional catchment and the state of Queensland in response to the EIS ToR. Impacts within more localised geographic regions are also examined where relevant and appropriate.

This analysis uses economic modelling as well as findings from the literature review and existing environment to inform the assessment of economic impacts as appropriate. All modelling outcomes are presented in 2019 dollar values and in financial years unless otherwise specified.

A complete summary of economic modelling results using IO modelling is presented in Appendix C, including modelling for the regional catchment and Queensland.

Modelling results used in this section present both direct (i.e. the initial stimulus from the Project) and indirect (i.e. production-induced) flow-on impacts of the Project. Only the production-induced flow-on impacts are included (i.e. type I flow-on), which reflects the support activity resulting from demand for goods and services from the mine and associated infrastructure manufacturing and development activity. Household consumption induced flow-on impacts (i.e. type II flow-on impacts) are excluded from this analysis to provide a more conservative estimate of impacts.

Sections 5.1 (Contribution to the Economy) and 5.2 (Contribution to Employment and Wages) of the Regional Impact Assessment examine both:

• The impacts of the Isaac Downs Project in isolation (see section 3.3 for details of the Project).

• The impacts of the Project in consideration of the net change in Stanmore’s overall mining activity in the region with and without the Project (see section 3.5 for details of Stanmore’s mining activity in the region with and without the Project).

All other sections of the Regional Impact Assessment focus on the net change in economic outcomes resulting from the Isaac Downs Project in consideration of Stanmore’s overall mining activity in the region with and without the Project.

5.1 CONTRIBUTION TO THE ECONOMY

The Project will generate economic activity directly through the construction of the mine, extraction and export of mined product during operations, and through onsite rehabilitation/ decommissioning activities. Economic activity will also be supported indirectly for the supply of goods and services to support the Project across all these phases. Impacts of the Project on gross product across construction, operation and ongoing site rehabilitation, and post- mine rehabilitation and decommissioning phases are examined in this section. The analysis disaggregates impacts between:

• Gross Regional Product (GRP) for impacts accruing in the regional catchment.

• Gross State Product (GSP) for impacts accruing in the rest of Queensland (or when referring to the total Queensland impact, this includes the regional catchment and rest of Queensland impact in aggregate).

5.1.1 Isaac Downs Project

5.1.1.1 Construction Phase Impacts

The construction phase of the Project is expected to commence in the 2019/20 financial year (preliminary scoping works, investigations and approvals) and be completed by 2023/24 (purchase of capital equipment), with mine site construction activity occurring over an approximate 12-month period during the 2020/21 and 2021/22 financial years. The Project is estimated to generate a total of $29.3 million in GRP in the regional catchment during the construction phase, including $21.7 million through direct activity and $7.7 million through supply chain impacts.

An additional $18.5 million in GSP is estimated to be generated in the rest of Queensland, $8.1 million of which will be supported by direct activity and $10.4 million through flow-on activity.

20 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

The following figure (Figure 5.1) outlines the quantum of GRP/ GSP supported in total during the construction phase, broken down by industry. Queensland’s construction industry is estimated to receive just over 50% of total GSP impacts from construction, with professional, scientific and technical services (16%) and manufacturing (7%) as the other main beneficiaries.

Figure 5.1. GRP/ GSP ($M) Supported Through Isaac Downs Project Construction Activity, Aggregate Impacts 2019/20 to 2023/24

5.1.1.2 Operations Phase Impacts

The Project is anticipated to operate for a period of 16 years following completion of construction activities (to 2037/38), producing an average of 2.3 million tonnes per annum (Mtpa) of product coal for export over the first nine years of operation (2021/22 to 2029/30) and an average of 0.6 Mtpa during the final seven years of operation (2030/31 to 2036/37).

During peak production (2021/22 to 2029/30) the Isaac Downs Project is estimated to support an average of $242.3 million in GRP in the regional catchment per annum, $217.6 million of which will be supported by direct activity of the mine and $24.8 million through flow-on activity in the supply chain. An additional $37.3 million in GSP per annum is estimated to be supported in the rest of Queensland, through flow-on activity.

The following figure (Figure 5.2) outlines the quantum of GRP and GSP supported each year of operation on average during peak production (2021/22 to 2029/30), broken down by industry. Queensland’s mining industry is estimated to record over 70% of total GSP impacts during operation.

21 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

Figure 5.2. GRP/ GSP ($M) Supported Through Isaac Downs Project Operations, Average Annual Impacts 2021/22 to 2029/30

Mining Professional, scientific and technical services Transport, postal and warehousing Financial and insurance services Manufacturing Rental, hiring and real estate services Construction Administrative and support services Wholesale trade Electricity, gas, water and waste services Accommodation and food services Public administration and safety Other services Information media and telecommunications Retail trade Agriculture, forestry and fishing Education and training Initial - RC Arts and recreation services Production Induced - RC Initial - RoQ Health care and social assistance Production Induced - RoQ Ownership of dwellings $0.0 $50.0 $100.0 $150.0 $200.0 $250.0

Gross Regional/ State Product ($M) Note: RC = Regional Catchment. RoQ = Rest of Queensland. Sources: ABS (2012a; 2017a; 2018f; 2019a), Stanmore Coal (unpublished), AEC. Over the final seven years of operation (2030/31 to 2036/37), as production winds down, the Project is estimated to support a total of $51.6 million in GRP in the regional catchment, $41.9 million directly and $9.6 million through flow-on activity in the supply chain. A further $14.5 million in GSP per annum is estimated to be supported in the rest of Queensland, through flow-on activity.

5.1.1.3 Post-Mine Rehabiliation/ Decommissioning Phase Impacts

Rehabilitation of the mine site will be undertaken on an ongoing basis throughout the mine life. This activity is incorporated within the operational impacts above.

Post-mine site rehabilitation/ decommissioning will also occur over a five-year period following completion of operational activity (2037/38 to 2041/42). The expenditure and activity for post-mine rehabilitation is estimated to support $1.9 million in GRP in the regional catchment per annum each year during the five year post mine rehabilitation/ decommissioning phase, $1.1 million of which is due to direct activity and $0.8 million through supply chain (flow-on) impacts. An additional $0.4 million per annum in GSP is estimated to be supported in the rest of Queensland through flow-on activity.

5.1.1.4 Annual Impacts

Annual estimates of GRP (regional catchment) and GSP (rest of Queensland) supported by the construction, operation and ongoing site rehabilitation, and post-mine rehabilitation and decommissioning phases of the Project are presented in Figure 5.3, based on the anticipated timings for these phases outlined in the project overview and description (section 3.3).

The largest contribution to GRP will be experienced between 2021/22 and 2029/30, reflecting peak mining production. The contribution to GRP tails considerably from 2030/31 as the strip ratio increases and mine production decreases. During these years, mining activity at the IPM is anticipated to recommence to supplement production of the Isaac Downs mine.

In total, between 2019/20 and 2041/42, the Isaac Downs Project is estimated to deliver $2.58 billion in GRP for the regional catchment (including direct and flow-on activity), with a further $457.9 million in GSP in the rest of

22 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

Queensland. This equates to $112.2 million in GRP per annum on average in the regional catchment and $19.9 million in GSP per annum in the rest of Queensland.

Figure 5.3. Annual GRP (Regional Catchment) and GSP (Rest of Queensland) Impacts by Phase ($M)

$400

$350

$300

$250

$200

$150

$100

$50 Gross Regional/ State Product ($M) Product StateGross Regional/

Initial - RC Production Induced - RC Initial - RoQ Production Induced - RoQ

Note: RC = Regional Catchment. RoQ = Rest of Queensland. Sources: ABS (2012a; 2017a; 2018f; 2019a), Stanmore Coal (unpublished), AEC.

5.1.2 Net Change in GRP/ GSP Resulting from the Project Compared to What Would Otherwise Occur

Section 5.1.1 examines the impacts of the Isaac Downs Project specifically, without consideration of what would otherwise be expected to occur if the Project does not proceed. This section examines the net change in economic activity that is anticipated to result from the Isaac Downs Project proceeding compared to a scenario where it does not proceed. Descriptions of these scenarios is provided in section 3.5.

The figure below provides a summary of the GRP/ GSP supported in the regional catchment and rest of Queensland each year by the Isaac Downs Project and IPM mines, compared to what would be delivered by the IPM alone (i.e. if the Isaac Downs Project does not proceed). This includes all phases of mining-related activity (construction, operations and post-mine rehabilitation). The largest contribution to GRP will be experienced between 2021/22 and 2029/30, reflecting peak mining production at Isaac Downs Project.

As noted above, from 2030/31 production at the Isaac Downs Project decreases, and activities are transitioned to the IPM open cut and then to the less productive IPU mine in 2037/38. This is reflected in the lower contribution to GRP/GSP over this period.

In some years there are negative values for some direct or flow-on impacts (though the overall impact including direct and flow-on activity is positive in every year). These instances are a factor of the timing of anticipated peaks and troughs of mining output and operating costs between scenarios where the Project does or does not proceed.

In aggregate, the net change in GRP within the regional catchment and GSP within the rest of Queensland between 2019/20 and 2047/48 resulting from the Isaac Downs Project compared to what would occur without the project is estimated to be approximately in line with the GRP/ GSP delivered by the Isaac Downs Project itself outlined in section 5.1.1.4. This result reflects that the difference in activity between the two scenarios, outside of timing of the IPM, is the Isaac Downs Project itself.

23 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

Figure 5.4. Additional Annual GRP/ GSP ($M) Supported by Isaac Downs Project $300.0

$250.0

$200.0

$150.0

$100.0

$50.0

Gross Regional/ State Product ($M) Product State Gross Regional/ $0.0

-$50.0

2035

2034

2033

2048 2032

2047 2031

2046 2030

2045 2029

2044 2028

2043 2027

2042 2026

2041 2025

2040 2024

2039 2023

2038 2022

2037 2021

2036 2020 Initial - RC Production Induced - RC

Initial - RoQ Production Induced - RoQ Note: RC = Regional Catchment. RoQ = Rest of Queensland. Sources: ABS (2012a; 2017a; 2018f; 2019a), Stanmore Coal (unpublished), AEC.

5.2 CONTRIBUTION TO EMPLOYMENT AND WAGES

This section examines the modelled impacts of the Project on employment across the construction, operation and ongoing site rehabilitation, and post-mine rehabilitation and decommissioning phases of the Project, including direct and type I flow-on impacts. It also outlines modelled estimates of incomes (i.e. wages and salaries) paid to employees. Full details of modelling results across construction, operation and ongoing site rehabilitation, and post- mine rehabilitation and decommissioning phases of the Project are presented in Appendix C.

5.2.1 Isaac Downs Project

5.2.1.1 Construction Phase Impacts

Estimates of the direct workforce required for construction phase activity of the Project are based on a mix of data from Stanmore Coal (unpublished) and IO multipliers, as outlined in section 3.3. Flow-on estimates of employment during construction were developed using assumptions of construction activity outlined in section 3.3 and IO multipliers.

Overall, the construction phase is estimated to directly support:

• 250 construction workers over the 12-month construction period starting March 2021, 200 of which are estimated to be sourced from the regional catchment and 50 sourced from elsewhere in Queensland.

• 24 FTE jobs supported in the professional, scientific and technical services in Queensland in 2019/20, five of which are assumed to reside in the regional catchment.

• 15 FTE jobs supported in the specialised and other machinery and equipment manufacturing industry in Queensland in 2023/24, with all of these workers assumed to reside in the regional catchment.

For construction phase impacts, workers sourced from Queensland but outside the regional catchment have not been included in the regional catchment impacts (but are included in the rest of Queensland and Queensland total impact).

24 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

Including direct (initial stimulus) and flow-on (production-induced) activity, the construction phase of the Project is estimated to provide 273 full time equivalent (FTE) jobs4 in the regional catchment in total over the course of the construction phase (2019/20 to 2023/24), 220 of which will be supported directly by the Project with a further 53 FTE jobs supported in the supply chain through flow-on activity. This is estimated to support a total of $21.7 million in wages and salaries in the regional catchment (including direct and flow-on activity).

An additional 178 FTE jobs are estimated to be supported by construction phase activity in the rest of Queensland, including 109 FTE jobs directly and 69 FTE jobs through supply chain impacts. These jobs will pay an additional $13.8 million in wages and salaries. It is anticipated 50 of these jobs will reflect construction workers directly employed by the Project and working on-site but sourced from outside the regional catchment. As these workers are assumed to only temporarily be within the regional catchment for construction activity they have been excluded from the regional catchment impact.

A breakdown of construction phase impacts on employment across industries in the regional catchment and rest of Queensland is presented in Figure 5.5. As is to be expected, the majority of jobs during construction in the regional catchment and rest of Queensland are expected to be employed in the construction industry.

Figure 5.5. Employment (FTEs) Supported Through Isaac Downs Project Construction Activity, Aggregate Impacts 2019/20 to 2023/24

Construction Professional, scientific and technical services Manufacturing Administrative and support services Transport, postal and warehousing Rental, hiring and real estate services Wholesale trade Public administration and safety Accommodation and food services Other services Financial and insurance services Electricity, gas, water and waste services Information media and telecommunications Mining Retail trade Agriculture, forestry and fishing Arts and recreation services Initial - RC Education and training Production Induced - RC Initial - RoQ Health care and social assistance Production Induced - RoQ Ownership of dwellings 0 50 100 150 200 250 300 Employment (FTEs) Note: RC = Regional Catchment. RoQ = Rest of Queensland. Sources: ABS (2012a; 2017a; 2018f; 2019a), Stanmore Coal (unpublished), AEC.

5.2.1.2 Operation Phase Impacts

Estimates of the direct operations workforce are based on information provided by Stanmore Coal, as outlined in section 3.3. Flow-on estimates of employment during operations were developed using assumptions of operational activity outlined in section 3.3 and IO multipliers.

During peak production (2021/22 to 2029/30) the Isaac Downs Project is estimated to support an average of 435 FTE jobs annually in the regional catchment, 281 of which will be supported by direct activity of the mine and the remainder through flow-on activity in the supply chain. This is estimated to support a total of $55.6 million in wages and salaries for residents the regional catchment (including direct and flow-on activity).

4 Where one FTE is equivalent to one person working full time for a period of one year.

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An additional 229 FTE jobs per annum are estimated to be supported in the rest of Queensland during peak operational activity, all through flow-on impacts in the supply chain. These jobs are estimated to support an average of $20.9 million in employee incomes each year.

The mining industry will account for the majority of jobs supported during peak operations (Figure 5.6).

Figure 5.6. Employment (FTEs) Supported Through Isaac Downs Project Operations, Average Annual Impacts 2021/22 to 2029/30

Mining Professional, scientific and technical services Transport, postal and warehousing Construction Manufacturing Accommodation and food services Administrative and support services Other services Public administration and safety Wholesale trade Rental, hiring and real estate services Financial and insurance services Electricity, gas, water and waste services Retail trade Information media and telecommunications Education and training Arts and recreation services Initial - RC Agriculture, forestry and fishing Production Induced - RC Initial - RoQ Health care and social assistance Production Induced - RoQ Ownership of dwellings 0 100 200 300400

Employment (FTEs) Note: RC = Regional Catchment. RoQ = Rest of Queensland. Sources: ABS (2012a; 2017a; 2018f; 2019a), Stanmore Coal (unpublished), AEC. Over the final seven years of operation (2030/31 to 2036/37), as production winds down, the Project is estimated to support a total of 170 FTE jobs in the regional catchment each year on average, 109 directly and the remainder through flow-on activity in the supply chain. An average of $21.7 million in employee incomes will be supported during this period each year.

Flow-on impacts in the supply chain will support a further 89 FTE jobs per annum in the rest of Queensland between 2030/31 and 2036/37, paying $8.1 million in wages and salaries.

5.2.1.3 Post-Mine Rehabiliation Phase Impacts

Rehabilitation of the mine site will be undertaken on an ongoing basis throughout the mine life. This activity is incorporated within the operational impacts above.

Post-mine site rehabilitation and decommissioning will also occur over a five-year period following completion of operational activity (2037/38 to 2041/42), directly supporting 10 FTE jobs each year in the regional catchment, paying $0.6 million in employee incomes each year. An additional nine FTE jobs are estimated to be supported through flow-on activity in the supply chain paying $0.7 million in total per annum; seven of these jobs will be in the regional catchment and two in the rest of Queensland.

5.2.1.4 Annual Impacts on Employment

In line with impacts to GRP/ GSP outlined in section 5.2.1.4, FTE employment supported by the Isaac Downs Project (including direct and flow-on FTE employment) is expected to peak between 2021/22 and 2029/30 (see Figure 5.7 below), corresponding with peak mine production. Between 2030/31 and 2036/37 employment supported by the Project is anticipated to decline as mining activity at the Isaac Downs mine winds down and IPM recommences, with some mining labour transferred back to the IPM.

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Figure 5.7. Annual Employment (FTEs) Supported Through Isaac Downs Project Activity

800

700

600

500

400

300 Employment (FTEs) Employment 200

100

Initial - RC Production Induced - RC Initial - RoQ Production Induced - RoQ

Note: RC = Regional Catchment. RoQ = Rest of Queensland. Sources: ABS (2012a; 2017a; 2018f; 2019a), Stanmore Coal (unpublished), AEC.

5.2.2 Net Change in Employment Resulting from the Project Compared to What Would Otherwise Occur

This section examines the net change in employment that is anticipated to result from the Isaac Downs Project proceeding compared to a scenario where it does not proceed. Descriptions of these scenarios is provided in section 3.5.

• The Project is anticipated to support increased employment in the regional catchment and the rest of Queensland: Between 2019/20 and 2028/29, employment supported by Stanmore’s mining assets in the regional catchment is estimated to increase modestly compared to what would otherwise occur without the Project, with an average of around 50 to 70 additional FTE jobs supported through direct and flow-on activity (not including a one year spike in 2021/22 during peak construction of the Isaac Downs Project). This reflects that even without the Isaac Downs Project, Stanmore will continue to operate its IPM with a similar labour requirement, and the IPM will also support flow-on activity through purchases of goods and services.

• As production at the Isaac Downs Project winds down and operational activity overlaps with the IPM (2029/30 to 2036/37), the number of additional jobs supported by Stanmore’s mining assets due to the Project increases significantly compared to what would occur without the Project, due to the extension of IPM mine life. During this period, including direct and flow-on activity, the Project is estimated to support an additional 210 FTE jobs in the regional catchment per annum on average (with an additional 130 FTE jobs per annum on average in rest of Queensland). This reflects that without the Isaac Downs Project, Stanmore’s operations would transition to the lower employing and supply chain supporting IPU earlier.

• From 2037/38 to 2045/46, including direct and flow-on activity, the Project will result in an additional 300 FTE jobs per annum on average in the regional catchment (with an additional 150 in rest of Queensland) than would occur without the Project. This reflects operations of the IPU in these later years that would otherwise occur earlier without the Project.

In some years there are negative values for some direct or flow-on impacts (though the overall impact including direct and flow-on activity is positive in every year except 2027/28). These instances are a factor of the timing of anticipated peaks and troughs of mining output and operating activity between scenarios where the Project does or does not proceed.

27 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

Figure 5.8. Additional Annual Employment (FTEs) Supported by Isaac Downs Project

600

500

400

300

200 Employment (FTEs) Employment 100

-100

2034 2024 2029 2039 2046

2031 2041 2023 2028 2033 2038 2043 2048 2021 2026 2036 2045

2022 2027 2032 2037 2042 2047 2020 2025 2030 2035 2040 2044 Initial - RC Production Induced - RC Initial - RoQ Production Induced - RoQ

Note: RC = Regional Catchment. RoQ = Rest of Queensland. Sources: ABS (2012a; 2017a; 2018f; 2019a), Stanmore Coal (unpublished), AEC.

5.3 IMPACTS TO BUSINESS

5.3.1 Benefical Impacts

5.3.1.1 Benefits to Worker Accommodation Villages

The Isaac Downs Project will require a largely non-local workforce which will support the ongoing operations of existing worker accommodation villages in Moranbah. As outlined in section 3.3.2.5, the Project will enable maintenance of the existing core IPM operations workforce of 220 employees (160 IPM mining operations and 60 IPM Infrastructure operations). It is anticipated this operational labour will all be sourced from within the regional catchment, with approximately 10% anticipated to be living in ‘local’ communities within one-hour commute of the mine site initially while the remainder are expected to be DIDO workers primarily from Mackay. This is consistent with the existing workforce at the IPM. Over time, the extended period of operation along with incentives such as the existing ‘Live Local’ initiative will likely further promote employees to live in the local area. For the purposes of this study it is assumed the proportion of the current workforce living locally may increase to 15%, in line with assumptions outlined in the Social Impact Assessment (SMEC, 2019).

At peak production (2025 to 2030), the Project will create an additional 80 operations positions (for a total of 300 operational jobs, In consideration of skills availability and unemployment in these ‘nearby regional communities’ and Stanmore’s standing in the community, the Social Impact Assessment (SMEC, 2019) indicates that 25% (20 employees) of the additional 80 operations workforce at peak could be sourced from ‘nearby regional communities’. The remainder is assumed to either move to the local area to live (15% assumed) or represent DIDO workers primarily from Mackay.

The mine site construction workforce will also primarily be DIDO and FIFO workers, which will further support the operations of existing worker accommodation villages in Moranbah.

The demands for accommodation within the accommodation villages from both construction and operations workers will also provide benefits to other businesses in the region who supply goods and services to the accommodation camps.

28 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

5.3.1.2 Benefits to Other Business in the Supply Chain

The Project will create opportunities to secure new contracts and increase sales to supply and service the needs of the Project through flow-on impacts in the supply chain, during all phases of the Project. Much of the flow-on impacts are expected to be realised within the regional catchment, boosting businesses in surrounding regions of the Project site.

Approximately 80% of construction activity and workforce will be sourced from businesses and sub-contractors within the regional catchment, and approximately 20% of direct expenditure on professional, scientific and technical services activity will be sourced from within the regional catchment. The direct activity of construction is estimated to support 180 FTE jobs locally in the regional catchment, the majority within the construction, manufacturing and professional, scientific and technical services industries. These construction businesses are estimated to receive revenue of approximately $47.1 million through construction. Flow-on supply chain impacts during construction are estimated to support an additional $17.1 million in business revenue in the regional catchment.

The Project will also result in Stanmore continuing to support local suppliers and contractors through operational activities of the Isaac Downs mine as well as the extended operational activity of Stanmore’s overall mining assets in the region the Project will enable, providing additional security and longevity of business incomes (and employment) in the region. On average, between 2021/22 and 2046/47, the Isaac Downs Project is estimated to result in an additional $22.1 million in business revenue in the regional catchment per annum through supply chain impacts, that would not occur without the Project.

5.3.1.3 Benefits to Export Infrastructure Providers

All the coal produced by the Project will be transported via rail to, and exported through, the Dalrymple Bay Coal Terminal. The Project will utilise approved capacity at the CHPP. In total, the Project will deliver an additional 24.9 Mt of product coal for export between 2021/22 and 2046/47 than would be produced without the Project (or approximately 1.0 Mtpa on average). A summary of annual additional coal exports as a result of the Project compared to what would otherwise occur is presented in Figure 3.6 (section 3.5.2.2). The additional coal exports will support the ongoing activities of impacted infrastructure providers.

5.3.2 Adverse Impacts

5.3.2.1 Impacts on Business from Competition for Resources

While the Project will provide opportunities for businesses within the mining supply and value chain, some businesses and industries may be adversely impacted by the Project. For instance, mining Projects typically compete with industries such as manufacturing and construction for labour as these industries have similar skill sets, which can drive up costs for labour in these industries. The Project can also lead to increases in other costs of business as competition for goods and services drives input prices up.

The flow-on impacts of the Project presented in the economic modelling do not account for potential adverse impacts on business and industry due to the above factors. However, given the relatively small scale of the Project and that it will primarily result in an extension of existing mining and supply chain activity with only a modest lift compared to existing levels, it is anticipated any adverse impacts of the Project on other businesses will be minor and unlikely to be noticeable relative to broader market activity.

5.3.2.2 Impacts on Industry from Exchange Rates

The Project will also result in the export of an additional 24.9 Mt of coal that would not otherwise occur without the Project (or approximately 1 Mtpa on average between 2021/22 and 2046/47). There is some potential for this export activity to result in an increase in exchange rates as a result of Project’s impacts on balance of payments, which would make Australian exports less competitive, while imported goods and services would cost comparatively less). This primarily impacts industries that operates in global markets competing with international producers, such as

29 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT agriculture and manufacturing. The potential impacts on balance of payments is examined in more detail in section 5.6 and identifies any impact from the Project is anticipated to be negligible.

5.3.2.3 Impacts on Agricultural Production

The Project is located on land that is currently primarily used for cattle grazing. It is estimated that a total around 1,117 ha of land will be disturbed if the Project proceeds (including the MLA of 1,097 ha and approximately 20 ha outside the MLA).

The value of production per hectare for grazing area in the regional catchment was approximately $35.20/ha in 2015/16 (ABS, 2018d), while in the Moranbah SA2 this value was just $13.10/ha. However, this was considerably lower than the value of grazing production per hectare in 2010/11 of $42.70/ha in the regional catchment and $60.90/ha in Moranbah SA2. For the purposes of this assessment, an average annual value per hectare of approximately $50/ha has been assumed. Based on a Project disturbance area the value of $50 per ha noted above, this equates to approximately $55,850 in potential value lost in cattle grazing every year during the Project life.

Stanmore is committed to progressivity rehabilitating the disturbed land as a result of mining activity on the mine site. For the purposes of this analysis it has been assumed that rehabilitation will gradually (over a 10-year period) return the land’s productive characteristics to 50% of its original production level post-mining. Over a 100-year period, and assuming land is returned to 50% of original productive use post mining, the impact to agriculture from the Project is estimated to have a net present value of $757,615 (using a 7% discount rate).

This assumes the land disturbed would otherwise provide a value of grazing production equal to the average of approximately $50 per ha and that all of this value would be lost as a result of the project. This may be an overestimate of the value lost given that cattle grazing in the area may be able to be intensified or activities currently undertaken in the disturbance area potentially located elsewhere.

5.4 CONTRIBUTION TO GOVERNMENT

5.4.1 Approach

Estimates of taxation revenue to the Queensland and Australian Government have been developed based on benchmarks of taxation revenue received compared to relevant Queensland and Australian measures and applied to results from IO modelling for Queensland5 (presented in Appendix C). The following benchmarks were applied by taxation item:

• Personal income tax (Australian Government): total income tax received (ABS, 2019b) compared to total wages and salaries paid to Australian employees (ABS, 2019c; ABS, 2019d) between the financial years of 2008-09 and 2017-18. This was applied to estimates of incomes paid in Queensland from the IO modelling.

• Fringe benefits tax (Australian Government): total fringe benefits tax received (ABS, 2019b) compared to total wages and salaries paid to Australian employees (ABS, 2019c; ABS, 2019d) between the financial years of 2008-09 and 2017-18. This was applied to estimates of incomes paid in Queensland from the IO modelling.

• Company income tax (Australian Government): total company tax received (ABS, 2019b) compared to total gross profit of businesses in Australia (i.e. total GDP less total wages and salaries paid to employees) (ABS, 2018g; ABS, 2019c; ABS, 2019d) between the financial years of 2008-09 and 2017-18. This was applied to estimates of GSP less incomes paid in Queensland from the IO modelling.

• Goods and Services Tax (GST) (Australian Government): total GST received (ABS, 2019b) compared to total Australian GDP (ABS, 2018) between the financial years of 2008-09 and 2017-18. This was applied to estimates of GSP for Queensland from the IO modelling.

5 Modelling results for Queensland were used for Australian Government revenue impacts as modelling for Australia was not undertaken. As the Project is not anticipated to directly source any goods and services from other states of Australia the vast majority of impacts are anticipated to occur within the Queensland economy and as such the Queensland results are considered a reasonable approximation for the national impact.

30 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

• Payroll tax (Queensland Government): total payroll tax received (ABS, 2019b) compared to total wages and salaries paid to Queensland employees (ABS, 2019c; ABS, 2019d) between the financial years of 2007-08 and 2017-18. This was applied to estimates of incomes paid in Queensland from the IO modelling.

Both the initial (direct) and production induced (type I flow-on) impacts are included in the estimation of the above taxation revenues. In addition to the above, Stanmore Coal will also pay the Queensland Government royalties for the extraction of coal resources. Anticipated royalty payments were provided by Stanmore Coal (unpublished).

In developing estimates of taxation revenue, the difference in revenue between what would occur with the Isaac Downs Project compared to what would occur without the Isaac Downs Project has been examined. Descriptions of the with and without Project scenarios are presented in section 3.5, with IO modelling results for these scenarios presented in Appendix C.

5.4.2 Tax Revenues

Annual estimates of additional taxation revenue for the Australian Government resulting from the Isaac Downs Project proceeding (i.e. the additional taxation revenue compared to what would otherwise occur if the Project does not proceed) are presented in Figure 5.9 below. Overall, the Isaac Downs Project is estimated to deliver a total of $488.0 million in additional revenue to the Australian Government through personal income tax, fringe benefits tax, company tax and GST compared to what would occur without the Project.

Annual Australian Government revenues are estimated to be highest during the first four years of the Isaac Downs Project at around $25 to $30 million but are then estimated to average around $15 million per annum between 2025/26 and 2036/37 and around $20 million per annum from 2037/38 to 2045/46. Company taxes will be the largest contributor to Australian Government revenues during peak production of the Isaac Downs Project. By comparison, the contribution of personal income tax increases as the Isaac Downs Project winds down, reflecting that in both the with and without Project scenarios there is anticipated to be a relatively similar workforce employed by Stanmore in the region in the early years of the assessment period, but without the Isaac Downs Project Stanmore would provide less employment in the region from 2029/30 onwards. The contribution to GST is estimated to hold relatively steady throughout the assessment period.

Figure 5.9. Annual Additional Australian Government Taxation Revenue Due to Isaac Downs Project ($M)

$35.0

$30.0

$25.0

$20.0

$15.0

$10.0

$5.0 Australian Government Revenue ($M) Revenue Government Australian

$0.0

2027 2043 2024 2048 2030 2037 2040 2022 2032 2035 2045

2020 2023 2026 2029 2033 2036 2039 2042 2046 2021 2025 2028 2031 2034 2038 2041 2044 2047

Income Tax Fringe Benefits Tax Company Tax GST Source: ABS (2012a; 2017a; 2018f; 2018g; 2019a; 2019b; 2019c; 2019d), Stanmore Coal (unpublished), AEC. Annual estimates of additional Queensland Government revenue through payroll tax and royalties resulting from the Isaac Downs Project proceeding (i.e. the additional taxation revenue compared to what would otherwise occur if the Project does not proceed) are presented in Figure 5.10 below. Overall, the Isaac Downs Project is estimated

31 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT to deliver a total of $470.6 million in additional revenue to the Queensland Government, primarily through royalty payments.

Additional royalty revenues are estimated to be vary year to year, but generally average between $15 to $20 million per annum. As with personal income taxes to the Australian Government, payroll tax revenues for the Queensland Government are estimated to increase in the latter portion of the projection period, reflecting the Isaac Downs Project will extend mining activity and employment opportunities in the region more so than lift employment in the short term.

Figure 5.10. Annual Additional Queensland Government Payroll Tax and Royalty Revenue Due to Isaac Downs Project ($M)

$40.0

$35.0

$30.0

$25.0

$20.0

$15.0

$10.0

Queensland Government Revenue ($M) Revenue Government Queensland $5.0

$0.0

2026 2036 2039 2042 2023 2034 2045 2048 2028 2031

2020 2022 2025 2029 2032 2035 2038 2041 2044 2047 2021 2024 2027 2030 2033 2037 2040 2043 2046

Payroll Tax Royalties Source: ABS (2012a; 2017a; 2018f; 2018g; 2019a; 2019b; 2019c; 2019d), Stanmore Coal (unpublished), AEC.

5.5 IMPACT ON LOCAL PROPERTY VALUES

Property demand and values in Moranbah peaked in 2011/12 before easing considerably through to 2015/16 with dwelling sales prices in Moranbah falling by more than 70%, while rental prices fell by 26% for flats/ apartments and 84% for separate houses. This was largely a result of a considerable fall in coal demand and prices, alongside mining companies operating a mainly FIFO workforce in temporary worker’s camps (Australian Mining, 2016a). While property sales and rental prices have shown evidence of an upturn in 2017/18 and 2018/19, prices remain well below the peaks experienced leading up to 2011/12.

While the Isaac Downs Project will provide additional jobs in Moranbah, the contribution of the Project to property demand (and thereby impact on property prices and availability) is anticipated to be small for the following reasons:

• Workforce accommodation arrangements for the Isaac Downs Project will be similar to those for the IPM, being a mix of existing mine accommodation villages and residences in Moranbah and other local or regional towns. The following mix has been assumed in this analysis:

o During construction, the majority (approximately 80%) of the workforce is expected to be DIDO/ FIFO workers accommodated in the existing mine accommodation villages. The remaining 20% is anticipated to be local workers and therefore would not require accommodation.

o During operations, the Project will enable maintenance of the existing core IPM operations workforce of 220 employees (160 IPM mining operations and 60 IPM Infrastructure operations) with approximately 10% anticipated to be living in ‘local’ communities within one-hour commute of the mine site initially while the remainder are expected to be DIDO workers primarily from Mackay (in line with existing IPM workforce).

32 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

Over time, the extended period of operation along with incentives such as the existing ‘Live Local’ initiative will likely further promote employees to live in the local area. For the purposes of this study it is assumed the proportion of the current workforce living locally may increase to 15%, in line with assumptions outlined in the Social Impact Assessment (SMEC, 2019).

o As a highly regarded existing employer, it is anticipated that approximately 25% of the net additional operational workforce of 80 workers supported by the Project during peak production (2025 to 2030) will be sourced ‘locally’ in communities within one-hour commute of the mine site. Of the remainder around 15% are assumed to move the area and live locally with the rest being DIDO workers primarily from Mackay.

• The net increase in operational jobs resulting from the Project is modest relative to what would occur without the Project and Stanmore’s existing workforce. The Isaac Downs Project is estimated to support approximately 80 more operational jobs in the region at peak production than Stanmore currently employs and would continue to employ in the region should the Project not proceed. The primary impact of the Project is to extend Stanmore’s mining activity locally rather than significantly increase mining activity and employment locally in the near term.

Based on the above it is estimated that no additional demand for property locally will be driven through the construction phase as this labour will be accommodated in worker villages. During operations it is assumed:

• The proportion of the current workforce living locally may increase from 10% to 15%, resulting in an increase in demand for housing of 11 dwellings, with this demand occurring gradually over time.

• Around 20 of the additional 80 workers during peak production are anticipated to be sourced from the within one-hour drive of the Project – as these workers are assumed to already live in the local area they are not expected to place additional pressure on the property market.

• Of the remaining 60 additional workers, 15% are assumed to relocate to the local area to live, equating to an increase in local property demand of around nine dwellings, with the remainder representing DIDO workers staying in a worker accommodation camp during rostered periods.

This would result in additional demand for approximately 20 houses is not considered a substantial effect on housing demand, with more than half of this increase anticipated to occur gradually over time.

5.6 IMPACTS ON BALANCE OF PAYMENTS

The Project will primarily impact on Queensland and Australia’s balance of payments through the export of coal. Imports of goods and services will also increase overall as a result of the Project through an increase in demand for goods and services to supply the Project.

Estimates of the level of imports and exports were developed based on the assumptions outlined in section 3.3 and section 3.5, and were compared to the 2017/18 value of imports from overseas and exports to overseas for Queensland and Australia, to provide an indication of the relative change in overall imports and exports in Queensland and Australia resulting from the Project. The net change in activity with and without the Project was used in estimating the impacts on imports and exports.

The annual percent change in Queensland’s imports from overseas and exports to overseas is presented in Figure 5.11. The Project is anticipated to result in a mild increase in exports averaging around 0.2% per annum between 2021/22 and 2045/46. Queensland imports are estimated to increase marginally during peak Isaac Downs Project activity (2021/22 to 2029/30), but then gradually increase to around 0.1% increase in Queensland’s imports between 2030/31 and 2045/46.

33 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

Figure 5.11. Annual Change in Queensland Imports and Exports Compared to 2017/18 Due to Isaac Downs Project

0.35%

0.30%

0.25%

0.20%

0.15%

0.10%

0.05%

0.00% Percent Change in QLD Imports/Exports QLD in PercentChange

-0.05%

2029 2039 2044 2024 2034

2021 2023 2026 2028 2031 2033 2036 2038 2041 2043 2046 2048 2020 2022 2025 2027 2030 2032 2035 2037 2040 2042 2045 2047

% Increase in Imports from Overseas % Increase in Exports Overseas Source: ABS (2012a; 2017a; 2018f; 2019a), QGSO (2019), Stanmore Coal (unpublished), AEC. The impacts on Australian imports and exports is estimated to be below 0.1% of 2017/18 levels. Exports are estimated to increase by an average of 0.04% per annum between 2021/22 and 2045/46, while imports are estimated to experience a negligible change between 2021/22 and 2029/30, rising to around 0.01% between 2030/31 and 2045/46.

Figure 5.12. Annual Change in Australian Imports and Exports Compared to 2017/18 Due to Isaac Downs Project

0.08%

0.07%

0.06%

0.05%

0.04%

0.03%

0.02%

0.01%

0.00% Percent Change in Australian Imports/ Exports Imports/ Australian in Percent Change

-0.01%

2029 2039 2044 2024 2034

2021 2023 2026 2028 2031 2033 2036 2038 2041 2043 2046 2048 2020 2022 2025 2027 2030 2032 2035 2037 2040 2042 2045 2047 % Increase in Imports from Overseas % Increase in Exports Overseas

Source: ABS (2012a; 2017a; 2018f; 2019a; 2019e), Stanmore Coal (unpublished), AEC. Compared to existing levels of Queensland and Australian imports and exports, the Project is anticipated to result in a relatively immaterial impact on state and domestic trade balances, and thereby have a negligible impact on factors such as exchange rates and the value of the Australian dollar.

34 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

5.7 SUMMARY OF IMPACTS

The following summary distils the wide range of impacts down into the key beneficial and adverse impacts arising from the Project. These impacts are examined during a risk assessment framework described in Appendix D.

5.7.1 Potential Beneficial Impacts

Key beneficial impacts arising from the Isaac Downs Project are outlined in Table 5.1, including assessment of anticipated level of associated benefit. Beneficial impacts are examined in consideration of what would otherwise occur if the Project does not proceed (i.e. in consideration of the “With Project” scenario compared to the “Without Project” scenario, as described in section 3.5).

Table 5.1. Assessment of Beneficial Impacts of the Isaac Downs Project Overall Impact Description Likelihood Consequence Impact Economic Growth The Project will contribute to economic growth directly and indirectly through increased industry output and GRP during construction and operation compared to what would occur without the Project. Including both direct and flow-on impacts, the Project is estimated to support an additional: • $29.3 million in GRP in the regional catchment during construction • $170.1 million per annum through mining activity between 2021/22 and 2029/30 compared to what would otherwise occur • $57.4 million per annum through mining activity between 2030/31 Very High Moderate High and 2036/37 compared to what would otherwise occur • $71.2 million per annum through mining activity between 2037/38 and 2046/47 compared to what would otherwise occur The above includes mine-site rehabilitation. Activity will also be supported through post-mining decommissioning/ rehabilitation of other assets such as the CHPP in 2047/48. In consideration of current GRP in the region, this impact is estimated to be of moderate consequence, with a very high likelihood of occurring (i.e. expected to occur), providing an overall impact rating of high. Employment and Incomes The Project will support additional employment and household incomes during construction and operation, compared to what would occur without the Project, flowing from both direct and indirect impacts. Including both direct and flow-on (supply chain) impacts, the Project is estimated to support an additional: • 233 FTE jobs for residents of the regional catchment during construction • 50 to 70 FTE jobs for residents of the regional catchment annually on average from mining activity (above what would otherwise occur) between 2021/22 and 2028/29 • 210 FTE jobs for residents of the regional catchment annually on average from mining activity (above what would otherwise occur) between 2029/30 and 2036/37 Very High Moderate High • 300 FTE jobs for residents of the regional catchment annually on average from mining activity (above what would otherwise occur) between 2037/38 and 2045/46 A small amount of employment for residents of the regional catchment will also be supported in 2046/47 and 2047/48 for winding up mining activity and decommissioning mining assets. While in the short term (to 2028/29) the number of additional jobs supported by the Project will be relatively small (barring construction in 2021/22), in consideration of current employment in the region and the longer term support for jobs in the region the Project will provide, this impact is estimated to be of moderate consequence with a very high likelihood of occurring (i.e. expected to occur), providing an overall impact rating of high.

35 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

5.7.2 Potential Adverse Impacts

Key adverse impacts arising from the Isaac Downs Project are outlined in Table 5.2, including assessment of anticipated level of associated impact. Impacts are examined in consideration of what would otherwise occur if the Project does not proceed (i.e. in consideration of the “With Project” scenario compared to the “Without Project” scenario, as described above). This table also includes assessment of impacts on local property values and the Australian dollar/ exchange rates, which can provide both beneficial consequences for some stakeholders and adverse consequences for others.

Table 5.2. Assessment of Adverse Impacts of the Isaac Downs Project Overall Impact Description Likelihood Consequence Impact Impacts on Local Businesses from Competition for Resources The Project may (moderate likelihood) increase competition for labour and resources, leading to inflationary pressure and increased costs to businesses as well as potential difficulties for local businesses attracting and retaining staff. However, given the scale of the Project and that it will primarily result in an extension of Moderate Very Low Low existing mining and supply chain activity with only a modest lift compared to existing levels, the contribution of the Project to competition for resources is estimated to be relatively minor and unlikely to be noticeable against baseline/ existing levels (very low consequence), providing a low overall impact rating.

36 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

Overall Impact Description Likelihood Consequence Impact Impacts on Agricultural Production The Project is located in an area which is currently primarily used for cattle grazing. Based on a Project disturbance area of approximately 1,117 ha, there could be approximately $55,850 in potential value lost in cattle grazing each year during Project operation. The mine site will progressively be rehabilitated and post-Project the site (other than any residual void area) is expected to be returned to grazing activities. Assuming the site returns to approximately 50% of original productivity post mining as a result of site rehabilitation, over a 100-year period the impact of the Project on agricultural production equates to a total net present value of $757,615 (using a High Very Low Low 7% discount rate). This assumes the land disturbed would otherwise provide a value of grazing production of approximately $50 per ha (in line with regional averages in 2010/11 and 2015/16) and all of this value would be lost as a result of the project during operations. In consideration of overall regional agricultural production and the proposed progressive rehabilitation of the site, this impact is assessed as having a high likelihood (will probably occur) with a very low consequence (small but noticeable reduction in agricultural production relative to overall regional production), providing an overall impact rating of low. Impacts on Local Property Values There is potential that demand for local property from workers associated with the Project may increase pressures on the local property market. During construction, the Project is anticipated to source the majority of its workers from outside the local area, operating on a DIDO/ FIFO basis and accommodated at existing nearby worker accommodation villages. The remaining 20% are assumed to be sourced locally (within one-hour drive) and therefore not require accommodation. During operations an increase in demand for local property of up to around 20 dwellings may occur. It is considered that of the existing IPM workforce the proportion living locally may increase gradually over time from 10% to approximately 15% (i.e. 11 additional workers Low Low Low living locally). Of the 80 net additional workers at peak production (2025 to 2030), approximately 25% are anticipated to be sourced locally and therefore not require accommodation. Of the remainder, nine workers (15%) are assumed to choose to move to the local area and place demand on the local housing market, with the rest accommodated in worker accommodation villages. While the property market has recently begun to show some signs of an increase in housing demand and sales/ rental prices, in consideration of current conditions in the local property market it is assessed the potential increase in demand for housing of around 20 dwellings has a low likelihood of placing upward pressures on residential property prices, and any impact is likely to be small (low consequence), with an overall impact rating of low.

37 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

38 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

6. COST BENEFIT ANALYSIS

6.1 APPROACH

The following CBA to assess the net impact of the Project has been conducted at the state (Queensland) level. The analysis examines the impacts resulting from the Project compared to the base case (or ‘without project’ scenario) to present a net stream of benefits and costs.

For this study, the base case scenario (i.e., the Project does not proceed) is as per the scenario outlined in section 3.5.1.2. The Project case scenario (i.e. the Project does proceed) is as per the Project description in section 3.5.1.1. The base case and Project case scenarios were developed in consideration of activity anticipated to occur within the IPM and Isaac Downs Project with and without the Project. Key assumptions regarding what would be anticipated to occur with and without the Project are outlined in section 0.

Other key considerations for the CBA include:

• Modelling has been undertaken starting from the financial year ending June 2020, with impacts examined over 100 years. While the Project itself is only anticipated to occur over a 16 year period, and activity within the IPM and Isaac Downs Project assumed to be completed by 2048 (where the Project proceeds), 100 years has been included in modelling to account for the long term impacts from removing land from productive (and environmental) uses.

• A base discount rate of seven percent has been used for demonstration purposes, with additional discount rates also examined (4% and 10%). As all values used in the CBA are in real terms, the discount rate does not incorporate inflation (i.e., it is a real discount rate, as opposed to a nominal discount rate).

• All values are expressed in 2019 Australian dollars.

The methodology used in conducting the CBA is outlined in Appendix E.

Decision Criteria:

The Net Present Value (NPV) and Benefit Cost Ratio (BCR) will be the primary decision criteria for the economic appraisal. The NPV of a project expresses the difference between the present value (PV) of future benefits and PV of future costs, i.e.: NPV = PV Benefits – PV Costs. The BCR provides the ratio between the PV of benefits and PV of costs, i.e., BCR = PV Benefits / PV Costs.

Where the economic appraisal results in a:

• Positive NPV and BCR above 1: the project will be deemed as being desirable.

• NPV equal to zero and BCR of 1: the project will be deemed neutral (i.e., neither desirable nor undesirable).

• Negative NPV and BCR below 1: the project will be deemed undesirable.

The Internal Rate of Return (IRR), which indicates the discount rate which would return an NPV of $0 and a BCR of 1, is also reported.

6.2 QUANTIFICATION AND VALUATION OF COSTS AND BENEFITS

6.2.1 Costs

6.2.1.1 Construction Costs of the Project

Construction expenditure for developing the Project is estimated to cost of total of $96.9 million and assumed to occur in 2019-20. Further details are outlined in section 3.3.1.

39 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

6.2.1.2 Operating Costs of the Project

As noted in section 3.3.2.3, estimates of operating expenditure are commercial in confidence. However, the Project is not proposing any novel or unproven resource extraction process, technology or activity, and operating expenditures are thereby anticipated to be relatively consistent with most coal mining operations in the region.

Total royalty payments of $470.6 million are also anticipated over the life of the Project. However, this has been excluded from the assessment as it represents a transfer payment6.

6.2.1.3 Rehabilitation/ Decommisioning Costs of the Project

Estimates of expenditure on rehabilitation/ decommissioning are summarised in section 3.3.3. It was estimated that rehabilitation would cost about $25.3 million over the life of the mine. In addition, it has been estimated that a total expenditure of $15.4 million will be spent on mine decommissioning and post mine life rehabilitation over a five year period.

6.2.1.4 Value of Foregone Agricultural Production

The Project is likely to impact on agricultural production within the development footprint. Approximately 1,117 ha is estimated to be impacted by the Project (see section 5.3.2). The land area impacted is not anticipated to be returned to a productive land-use at Project completion.

With an average value of $50/ha, this would result in approximately $55,850 of lost value on agriculture per annum both during and post Project, with the full value assumed to be lost upon commencement of on-site construction activity in 2020/21. Stanmore is committed to progressivity rehabilitating the disturbed land as a result of mining activity on the mine site. For the purposes of this analysis it has been assumed that rehabilitation will gradually (over a 10-year period) return the land’s productive characteristics to 50% of its original production level post- mining.

6.2.1.5 Impact on Ecosystem Value

In addition to the agricultural value of the land the Project will be located on, the site also provides habitat for a number of terrestrial species and is part of a broader ecosystem. The topography in the vicinity of the Project is characterised by hills and outcrops in the east, that then drain gently sloping terrain to the Isaac River. The vegetation is a mosaic of remnant vegetation (the majority which is associated with the Isaac River), open pasture grasses, tree and shrub regrowth.

6 A common pitfall to be avoided in cost benefit analysis is including monetary exchanges which are actually transfer payments. Transfer payments represent transactions where money is exchanged without anything of economic value being created or consumed. Royalty payments to government (and taxes) are considered a fiscal impact and transfer payment in which the cost to the producer or consumer is offset by the benefit to government and should be excluded from a cost benefit analysis.

40 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

In assessing the ecosystem value provided by the site, estimates of ecosystem value per hectare for grass/ rangelands7 from Costanza et al (2014) have been applied to the 1,117 ha Project site (excluding food production, as this is captured in the value of agricultural production above), converted to Australian dollars (RBA, 2019) and inflated to 2019 prices (ABS, 2019). This provides an estimated ecosystem value of $4,940/ha per annum.

While IP South will rehabilitate the mine site progressively (as well as post mining), to be conservative the lost annual ecosystem value has been assumed to be removed in full on an ongoing basis throughout construction and operations of the Project, as well as the five year decommissioning and rehabilitation post mining. Following the decommissioning and rehabilitation phase (completed in 2041/42) the ecosystem value is assumed to gradually (over a ten-year period) return to a long term value approximately half that of its original pre-mining ecosystem value. For the purposes of the CBA the long term reduction in ecosystem value has been examined over 100 years in the modelling.

6.2.1.6 Cost of Greenhouse Gas Emissions

Estimates of total greenhouse gas emissions generated by the Project are outlined in the relevant Air Impacts section of the EIS, and the relevant supporting technical appendix. The Project is estimated to produce approximately (Katestone, 2019):

• 6,016 tonnes of CO2-equivalent (tCO2-e) emissions during the 12-month on-site construction activity in 2020/21.

• An annual average of 133,841 tCO2-e during the 16 years of operational activity

• 6,016 tonnes of CO2-equivalent (tCO2-e) emissions during decommissioning.

In applying the operational greenhouse gas emissions, the CBA has considered what would occur with and without the Project. Without the Project, emissions would alternatively be produced at the IPM during this 16 year period.

Operational emissions were converted to a tCO2-e per tonne of ROM coal production, indicating approximately

0.0605 tCO2-e will be produced per tonne of ROM coal produced by the Project. This has been applied to the net additional ROM coal produced in the Project case scenario compared to the base case scenario, in consideration of production at the IPM and Isaac Downs Project with and without the Project8. Decommissioning emissions were included over a five year period from 2037/38 to 2042/43, reflecting an anticipated five year timeframe for decommissioning of the Isaac Downs project.

In valuing the cost of emissions, the spot price for Australian Carbon Credit Units (ACCUs) has been used, from the Emissions Reduction Fund (ERF). A study from May 2019 indicates an average spot price over the 12 months to May 2019 of up to $15.5 per tonne CO2-e (RepuTex Connect, 2019). A price of $15.5 per tonne CO2-e has been used in this study.

6.2.1.7 Costs from Increased Travel

The Project will generate additional transport movements (in comparison to the Without Isaac Downs Project scenario) for the movement of labour to the mine site, as well as transport associated general freight, movement of fuel and supplies. This will result in increased fuel and maintenance costs, as well as increase the risk of accidents due to increased travel.

Estimates of road traffic volumes generated by the Project were developed by GTA Consultants (2019) and are summarised in the table below for construction and operations (peak) phases.

7 The grass/ rangelands ecosystem has been used as this is the category presented in Costanza et al (2014) that most closely resembles the ecosystem within the land area to be impacted by the Project.

8 This approach results in the same overall tonnes of greenhouse gas emissions as estimated by Katestone (2019), but spreads the production of greenhouse gas emissions over a longer time frame in line with the anticipated net difference in ROM coal production between the Project case and base case. While other Stanmore coal operations in the Isaac Plains Complex may produce different levels of greenhouse gas emissions per tonne of ROM coal produced, this approach is considered to be a suitable approximation of the overall net difference in greenhouse gas emissions produced between the two scenarios.

41 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

Table 6.1. Traffic Generation Summary, Trips per Day to/ from the Mine Site Phase Moranbah Mackay Toowoomba Coppabella Construction Workforce - Buses 0 0 0 24 Heavy Vehicles 80 60 0 0 Construction Total 80 60 0 24 Operations (Peak) Workforce - Light Vehicles 60 0 0 0 Workforce - Buses 0 0 0 40 Heavy Vehicles 28 20 4 0 Operations Total 88 20 4 40 Source: GTA Consultants (2019) In addition to the above traffic estimates, DIDO workers are estimated to comprise 85% of the operational workforce and will be employed on a 7 day on/ 7 day off roster. These workers will travel to/ from their place of residence and the accommodation camp at the start and end of their seven-day rostered on period. These workers are thereby assumed to travel 52 times a year (26 rostered shifts per annum, travelling each way). It has been assumed an average of 1.2 workers will occupy a vehicle per trip. The majority of these DIDO workers are anticipated to reside in Mackay and the surrounding area.

As outlined in section 6.1, the assessment has included consideration of anticipated activity at the IPM and Isaac Downs Project with and without the Project, and the net annual difference in traffic generation between these two scenarios has been applied. Information from GTA Consultants (2019) examines the Isaac Downs Project in isolation, and this data has been adapted to the with and without Project scenario based on the following:

• Construction-related traffic has been used as per provided by GTA Consultants (2019).

• Operations workforce related traffic has been adapted by identifying the volume of traffic (light vehicles and buses) per worker at peak operations (300 workers), and this ratio applied to the net difference in workers between the with and without Project scenarios.

• Operations heavy vehicle related traffic has been adapted by identifying the volume of heavy traffic per tonne of overburden produced by the Project during peak production (2025 to 2030), and this ratio applied to the net difference in overburden produced between the with and without Project scenarios. Overburden produced at the mine site was used as the driver for the net difference in heavy vehicle traffic movement to be consistent with the approach adopted by GTA Consultants (2019) in estimating total heavy vehicle traffic movements for the Project during operations.

Daily traffic counts were converted to annual estimates assuming the mine operates for 365 days a year, and estimates of the total vehicle kilometres travelled each year were developed based on the following assumptions:

• Light vehicle movements between the mine site and Moranbah: 26 km each way.

• Bus movements between the mine site and accommodation camp in Coppabella: 25 km each way.

• Light vehicle movements for DIDO workers at the start/ end of their rostered-on period: 145 km each way (assumes an approximate average distance of Mackay to Coppabella).

• Heavy vehicles movements between:

o The mine site and Moranbah: 26 km each way.

o The mine site and Mackay: 177 km each way.

o The mine site and Toowoomba: 927 km each way.

The cost of increased travel due to the Project is has been measured through:

• Additional fuel and vehicle maintenance costs.

• Road safety costs due to increased travel.

42 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

These costs are examined below.

Additional Fuel and Vehicle Maintenance Costs The estimated fuel saving was based on an average price in Moranbah for diesel (used for heavy vehicles and buses) of approximately 143.70c/L and average price for unleaded petrol (used for light vehicles) of approximately $138.70c/L (PetrolSpy, 2019). GST of 10% and fuel excise rate of 41.8c/L (ATO, 2019) were subtracted from these prices to provide the resource cost for diesel. Average kilometres travelled per litre of diesel were estimated at 0.40 for heavy vehicles and 0.18 for buses, with 0.11 kilometres per litre of unleaded for light vehicles (ABS, 2018e).

Additional maintenance costs were estimated at 29.27 c/km for heavy vehicles, 13.95 c/km for buses and 6.71 c/km for light vehicles, accounting for inflation between 2013 and 2019 (ATAP, 2016, ABS, 2018).

These rates were applied to the travel distances as estimated above.

Road Safety Costs The increase in travel will likely provide a road safety cost through an increase in crashes. Data from Austroads (2012) and ATAP (2016) indicates that for every 100 million vehicle kilometres on sealed divided roads there are 52 crashes resulting in injury, comprised of:

• 0.6 crashes resulting in a fatality, with a value (including medical costs, insurance, workplace production losses, legal costs, vehicle and property repair costs, and other costs such as travel delays and emergency service provision) of approximately $2.53 million per crash (in 2019-dollar terms).

• 19.4 crashes resulting in serious injury, with a value of approximately $0.6 million per crash (in 2019-dollar terms).

• 32 crashes resulting in minor injuries/ property damage, with a value of approximately $21,392 per crash (in 2019-dollar terms).

These crash rates and values per crash were applied to the travel distances as estimated above.

6.2.2 Benefits

6.2.2.1 Revenue from Operations

Assumptions and data used for estimating Project revenues are summarised in section 3.3 and 3.5.

Stanmore Coal Ltd is an ASX listed company with a share ownership which includes a mix of institutional, corporate, private equity, employee and directors and general public investors. For the purposes of this assessment the analysis has accounted for some repatriation of profits overseas for ownership (based on commercial-in-confidence information on ownership structures). Annual operating and rehabilitation costs, as well as royalty payments, were subtracted from revenue to identify gross profits for which the Queensland share and overseas share of profits was estimated. Profits repatriated overseas were excluded from the analysis.

6.2.2.2 Employee Benefits

The Project will provide employment for Queenslanders through both operational activity and for rehabilitation and decommissioning activity. As outlined in section 6.1, the assessment has included consideration of anticipated activity at the IPM (including IPU) and Isaac Downs Project with and without the Project, and the net annual difference in employment (and the incomes these jobs provide) between these two scenarios has been applied.

It has been assumed that only 50% of the direct wages and salaries supported by the Project during operation, decommissioning and rehabilitation represents a net economic benefit. This reflects that not all employment supported would represent net new incomes and that people employed due to the project that would otherwise be unemployed would still contribute to economic activity without the Project.

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6.2.2.3 Biodiversity Offset Benefits

Mining operations within the proposed mine site are expected to lead to a loss of biodiversity. The loss in biodiversity and value of this is examined as part of the ‘Impact on Ecosystem Value’ outlined in section 6.2.1.5. Biodiversity offsets may be used as a mechanism to assist in achieving the aim of development and biodiversity conservation. This offset will be used to achieve a ‘no-net-loss’ of biodiversity within the identified mining-affected area.

The majority of the Project site is paddock used for grazing. However, it has been identified that approximately 310ha of the Project site provides potential existing remnant vegetation ecosystem and/ or habitat for endangered species. To offset the impacts on these ecosystems IP South expects to provide a biodiversity offset equivalent to 310ha to establish and/ or enhance the ecological integrity of another habitat.

In assessing the benefit of this biodiversity offset, a similar methodology has been used as for assessing the impact on ecosystem value in Section 6.2.1.5, with estimates of the value per hectare for grass/ rangelands from Costanza et al (2014) applied to the 310ha of the impacted area, converted to Australian dollars (RBA, 2019) and inflated to 2019 prices (ABS, 2019). This provides an estimated ecosystem value of $4,940/ha per annum.

The establishment of this biodiversity offset is expected to commence at the start of mine operations, with the ecological improvement anticipated to increase over a period of 20 years until the full ecological equivalent of the affected area has been restored.

6.2.3 Impacts that Have Not Been Quantified

The following potential benefits and costs of the Project have not been quantified for inclusion in the CBA due to data limitations:

• Potential impacts on business profitability and viability due to increased competition for labour and other resources. However, as outlined in section 5.3.2.1 these impacts are anticipated to be relatively minor given the relatively small scale of the Project and that it will primarily result in an extension of existing mining and supply chain activity.

• Potential social amenity impacts from the development and operation of the Project, such as noise and dust. The potential impacts of the Project from noise and dust are examined in the relevant separate technical studies attached to the EIS, which demonstrates that noise and dust emissions are not predicted to result in exceedances of relevant criteria at sensitive receptors. Compensation agreements will be entered into with all landholders whose properties are within the mining leases.

• Potential from increased traffic volumes in terms of impacts on travel times for local traffic or impacts to road safety. The Traffic Impact Assessment (GTA Consulting, 2019) outlines that impacts to road safety due to increased traffic volumes and temporary diversions as a result of the Project are anticipated to be negligible and unlikely to significantly impact overall journey times for users of the Peak Downs Highway.

• Potential impacts on groundwater and surface water are examined in the Groundwater Impact Assessment (AGE, 2019) and Surface Water Assessment (WRM, 2019). These impacts have not been quantified and valued for inclusion in the CBA because, with mitigation strategies, these impacts are anticipated to be localised and not alter access to water resources.

• Potential impacts on vegetation related to drawdown of groundwater. It has been estimated in relevant separate technical studies attached to the EIS that around 50ha of vegetation along the Isaac River may within a zone of potential drawdown of groundwater in the alluvium as a result of the Project. In particular, the majority of the vegetation to be impacted has been identified as River Red Gum (Eucalyptus Camaldulensis), a species known to be tolerant and resistant to low levels of water. However, as normal hydrological function of the river system is maintained, predicted impacts to the River Red Gum habitat along the Isaac River GDEs are likely to be minor, therefore this impact has not been quantified or valued in the CBA.

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6.2.4 CBA Results

The table below outlines the present value (PV) of the identified costs and benefits associated with the Project, over 100 years (to account for the long term impacts from removing land from productive and environmental uses) starting in the financial year ended June 2020, at discount rates of 4%, 7% and 10%.

The CBA modelling for the project at the discount rate of 7% is economically desirable, with the following results:

• A Net Present Value (NPV) of $421.1 million over the assessment period with total present value (PV) benefits of approximately $1,350.0 million compared to an aggregated PV costs of approximately $928.9 million.

• A BCR of 1.45, highlighting that the Project is estimated to return $1.45 for every dollar cost.

The CBA identifies that at a 7% discount rate the Project is economically desirable with the benefits outweighing the costs. The Project returns a desirable result across each of the discount rates examined, with the BCR ranging between 1.38 (4% discount rate) and 1.52 (10% discount rate). The CBA is insensitive to the discount rate used with minimal change in BCR across discount rates examined. The Project has an Internal Rate of Return (IRR) of 98.2%.

Table 6.2. Summary CBA Results of the Isaac Downs Project

Impact

4% 4% 7%

10%

– – –

Total Value ($M) ($M) PV Discount Rate ($M) PV Discount Rate ($M) PV Discount Rate

Costs Construction Cost $96.9 $87.7 $81.7 $76.4 Operating Cost $2,428.7 $1,206.5 $742.3 $470.7 Value of Lost Agricultural Production $4.5 $1.2 $0.8 $0.5 Impact on Ecosystem Value $346.2 $112.0 $72.1 $52.9 Increased Cost of Transport $36.7 $23.3 $17.7 $14.1 Cost of Greenhouse Gas Emissions $33.4 $19.8 $14.3 $10.8 Total Costs $2,946.3 $1,450.6 $928.9 $625.3 Benefits Revenue from Operations $3,343.7 $1,841.8 $1,246.7 $882.5 Employee Benefits $261.3 $138.3 $91.7 $64.1 Habitat Offset Benefit $135.5 $25.2 $11.6 $6.5 Total Benefits $3,740.5 $2,005.3 $1,350.0 $953.1 Summary Net Present Value (NPV) - $554.7 $421.1 $327.8 Benefit Cost Ratio (BCR) - 1.38 1.45 1.52 Source: AEC.

6.3 SENSITIVITY ANALYSIS

Sensitivity analysis in this section has been undertaken using a Monte Carlo analysis (see Appendix E for more details regarding Monte Carlo analysis) across the key assumptions used in the CBA modelling (the base assumptions used are outlined in sections 6.2.1 and 6.2.2).

Each of the assumptions has been tested in isolation with all other inputs held constant, with the results reported in terms of the modelled change in NPV resulting from the variance in the base assumptions at a discount rate of 7%. The final row of the table presented in this section examine each assumption simultaneously to provide a ‘combined’ or overall sensitivity of the model findings to the assumptions used. The analysis in this section outlines the distribution of NPV allowing for a 10% confidence interval, with the ‘5%’ and ‘95%’ representing a 90% probability that the NPV will be within the range outlined.

45 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

The table below shows at a discount rate of 7%, there is a 90% probability project will provide an NPV of between $175.3 million and $662.2 million. Sensitivity testing returned a positive NPV across all of the 5,000 iterations run in Monte Carlo analysis. Monte Carlo analysis suggested that the Project’s NPV is primarily driven by the revenue generated by operations followed by operational costs.

Table 6.3. Sensitivity Analysis Summary, Discount Rate 7%, 2019 dollar terms Variable Net Present Value 5% 95% Costs Construction Cost $406.6 $431.7 Operational Cost $299.0 $543.1 Value of Lost Agricultural Production $420.8 $421.3 Impact on Ecosystem Value $397.3 $444.8 Costs of Greenhouse Gas Emissions $416.4 $425.8 Costs from Increased Travel $415.2 $426.9 Benefits Revenue from Operations $215.9 $626.0 Employee Benefits $406.0 $436.1 Biodiversity Offset Benefit $417.3 $424.9 Overall Combined $175.3 $662.2 Notes: The percent distributions used for each variable are provided below: • Construction of the Project: maximum 30% higher, minimum 20% lower. • Operating Costs: normally distributed with standard deviation of 10% from the mean. • Value of Lost Agricultural Production: normally distributed with standard deviation of 20% from the mean. • Impact on Ecosystem value: normally distributed with standard deviation of 20% from the mean. • Costs of Greenhouse Gas Emissions: normally distributed with standard deviation of 20% from the mean. • Costs from Increased Travel: normally distributed with standard deviation of 20% from the mean. • Benefit – Revenue from operations: normally distributed with standard deviation of 10% from the mean. • Benefit – Employee Benefits: normally distributed with standard deviation of 10% from the mean. • Benefit – Biodiversity Offset Benefit: normally distributed with standard deviation of 20% from the mean. Source: AEC.

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7. CUMULATIVE IMPACT ASSESSMENT

This section provides an assessment of the cumulative economic impacts arising from development of a number of projects concurrently with the Isaac Downs Project in the regional catchment. In particular, this section is designed to address the cumulative economic impacts arising from large project workforces associated with proposed major projects being constructed in overlapping timeframes.

7.1 CUMULATIVE IMPACT ASSESSMENT FRAMEWORK

The cumulative impact assessment examines the potential cumulative impact of a large number of major infrastructure and industry projects (including the Isaac Downs Coal Project) being developed concurrently in the regional catchment using a risk assessment framework described in Appendix D.

In interpreting this analysis, note the cumulative impact assessment ratings (likelihood, consequence and overall impact ratings) are based on the potential for cumulative development to exacerbate the impacts of the Isaac Downs Project (as outlined in section 5.7) and to what degree. The impact assessment does not assess the aggregate impacts of all developments in combination, but rather the relative implications of developing the Isaac Downs Project should other projects also be undertaken concurrently.

Projects included for consideration in the cumulative impact assessment are outlined in the table below. Existing operational projects have not been included in the table below, however, these are inherently incorporated in the analysis as they form part of the existing economic conditions in the regional catchment for which the assessment of impacts in section 5 was undertaken.

Table 7.1. Projects Included for Consideration in the Cumulative Impact Assessment Isaac LGA • Red Hill • Olive Downs • Eagle Downs • Winchester South • Moranbah South • Saraji East • Lake Vermont-Meadowbrook

Summary details of these projects are provided in the Major Projects section in Appendix A. The cumulative impact assessment focuses on the potential for impacts identified in section 5 to be exacerbated by the concurrent development of a range of projects in the region. In undertaking this analysis, it has been assumed that all projects identified proceed in accordance with timelines outlined in Appendix A (based on existing information in the public domain); for projects in which timelines are not known or are currently on hold, specific timings have not been adopted but it has been assumed these will occur at some time over the next decade (though not all will occur concurrently). This is considered a cautious scenario (i.e. an extreme scenario that is unlikely to be realised) as it is highly unlikely that all projects proposed will proceed to development, or that all proposed timelines will be achieved. As such, it is highly likely that impact ratings assessed in this cumulative impact assessment are overstated.

It should also be recognised that some of the mining projects, like the Isaac Downs Project, will augment or replace existing mining operations that are nearing completion. Where this occurs, much like with the Isaac Downs Project these projects will effectively result in a continuation of jobs and economic activity rather than a genuine lift in activity (outside of short-term construction impacts).

7.2 POTENTIAL CUMULATIVE IMPACTS

7.2.1 Potential Beneficial Cumulative Impacts

The development of the Isaac Downs Project, in combination with multiple other major projects will result in higher overall output, GRP, employment and household income estimates in the regional catchment and Queensland than those depicted in section 5.7.1 (though flow-on impacts of the Isaac Downs Project specifically may be reduced

47 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT due to competition for resources and a requirements for higher levels of imports if all projects proceed). Other potential beneficial impacts of concurrent development may include:

• Stabilisation and growth in the local and regional population which has seen the Moranbah SA2 region experiencing declines in population since 2011 and the Isaac LGA since 2013. However, Moranbah SA2 population estimates for 2018 an annual increase in resident population for the first time in seven years (ABS, 2019f).

• Additional business activity and population would increase demand for a range of business and household support services. It is expected that the delivery of a suite of projects will provide an important contribution to stabilising and supporting growth in the region in the medium term.

• Increased labour compensation and real wage effects in order to attract constrained labour resources, thereby enhancing some household incomes.

• Development of a “critical mass” of projects to support existing and potentially expand local supply chain networks. In recent years the level of investment in the regional catchment has waned as economic conditions have weakened.

• Increased government revenues through taxation and royalties.

• Coordinated and potentially enhanced use of infrastructure developed to support major projects.

• Enhanced business, consumer and investor confidence arising from greater certainty in demand for goods, services and local infrastructure and assets.

While there are some real and tangible cumulative benefits likely to arise from the concurrent development of a number of projects, with respect to government as well as local community and business investment in the local and regional economy, it is more important to understand the stresses that will be collectively created by multiple projects. As such, the focus of the cumulative impact assessment is on understanding these stresses.

7.2.2 Potential Adverse Cumulative Impacts

Key resources (factors of production) likely to be affected by development of multiple projects in terms of increased demand and competition include:

• Labour.

• Capital.

• Accommodation and land.

• Transport and other infrastructure/ services.

Adverse impacts potentially resulting from increased stresses on the above factors of production have been identified through the preceding analysis, desktop review of other projects proposed for the region and the impacts identified in relevant documentation. The key potential adverse impacts expected to result are assessed below and include:

• Impacts on local/ Queensland business through competition for labour and labour draw.

• Impacts on agricultural production from land disruption and competition for land.

• Impacts on trade exposed industries through Australian dollar and exchange rates affects.

• Impacts on residential property values through increased demand and amenity effects.

Given the limited information available regarding many of these projects, and uncertainty regarding which projects may ultimately be developed and their timing, it is difficult to assess with any confidence the cumulative impacts of multiple projects being developed and operating concurrently.

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7.2.2.1 Impacts on Business from Competition for Resources

Potential impacts of the Project on business as a result of increased competition for and cost of labour are presented in section 5.3.2. The analysis outlines that while the Project will provide opportunities for some businesses within the mining supply chain and value chain, and continuation of demand from Stanmore’s IPM and Isaac Downs, there are some businesses that may be adversely impacted due to a modest increase in competition for resources.

The development of the Isaac Downs Project as well as the projects listed in section 7.1 may exacerbate these impacts as a result of additional demand and competition for labour and other business inputs such as capital, goods and services used in production processes, transport infrastructure and utilities. This may erode the viability of some businesses, in particular

• Smaller businesses already operating on or near the margin and those businesses that are unable to increase final prices of their goods and services to match the increased costs of production (i.e., any good or service that can be readily substituted with a lower cost import).

• Lower income paying services that support business and household activities such as retail trade, government administration, education (in particular primary and secondary) and some health and community services.

The increased competition for resources may also hinder to some degree the region’s capacity to develop local supply chains and secure local supply contracts for these major projects in the short term.

It should be recognised, however, that in terms of project size the Isaac Downs Project is considerably smaller than many of the mining projects included for consideration within the cumulative impact assessment, in particular the proposed Red Hill, Olive Downs, Eagle Downs, Moranbah South and Winchester South projects. While the cumulative impact of the Isaac Downs Project where these other projects proceed will result in some exacerbation of competition for resources, the contribution of the Isaac Downs Project to this would be very small relative to the adverse impacts generated by other proposed projects.

Where the projects considered in this cumulative impact assessment all proceed, the adverse impacts on business will be more likely to occur than the impacts outlined in section 5.7.2. As such, the cumulative impact of competition from resources without appropriate planning is assessed to be of high likelihood, though with a low consequence in consideration of the contribution of the Isaac Downs Project to competition (as it will primarily provide a continuation of Stanmore’s existing demand for labour, goods and services) for resources relative to other proposed projects, providing an overall impact rating of medium.

7.2.2.2 Impacts on Agricultural Production

The Isaac Downs Project is located on an area currently used for cattle grazing and it has been estimated that around 1,117 ha of land will be disturbed if the Project proceeds (including the MLA of 1,097 ha and approximately 20 ha outside the MLA). The Project is estimated to result in an approximate $55,850 in potential value lost in cattle grazing every year during the Project life. The mine site will progressively be rehabilitated and post-Project the site (other than any residual void area) is expected to be returned to grazing activities. Assuming the site returns to approximately 50% of original productivity post mining as a result of site rehabilitation, over a 100-year period the impact of the Project on agricultural production equates to a total net present value of $757,615 (using a 7% discount rate). This assumes the land disturbed would otherwise provide a value of grazing production equal to the average of approximately $50 per ha and that all of this value would be lost as a result of the project.

Some of the other developments considered in the cumulative impact assessment are also likely to impact on agricultural production through disruption or take-up of land. As with the Isaac Downs Project, most of the mining- related projects outlined in section 7.1 will be developed on land that is currently primarily used for agricultural activities, some of which will have a larger footprint than the Isaac Downs Project (although some may be developed underground and hence have lesser impacts on land). The cumulative impacts on land availability for agricultural production of all proposed projects proceeding is considered to be very highly likely to exacerbate the adverse impacts on agricultural production that may be delivered by the Project alone, through a combination of reduced capacity to replace this activity elsewhere in the regional catchment and overall contraction of land available for agricultural purposes.

49 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

While it is considered there would be a very high likelihood of adverse impacts on agriculture, the cumulative consequence on agricultural production in the regional catchment is assessed to be low in consideration of the substantial land currently available for agricultural production in Isaac LGA (the regional catchment had approximately 15 million hectares of land used for grazing in 2015/16 (ABS, 2018b)). This provides an overall impact rating of medium.

7.2.2.3 Impacts on Local Property Values

The cumulative development of the Isaac Downs Project as well as the other projects listed in section 7.1 will result increase the number of workers required in the region overall, which is highly likely to increase the imported (DIDO/ FIFO) labour requirements for each project than would be required if each project were undertaken in isolation. This will increase accommodation requirements to house these imported workers. Some of the mining projects included in the cumulative impact assessment are located in Isaac LGA and near Moranbah, including the larger projects of Red Hill, Olive Downs, Eagle Downs, Winchester South and Moranbah South, and thereby have the potential to exacerbate local property market impacts of the Isaac Downs Project.

As with the Isaac Downs Project, to mitigate impacts on residential property markets, proponents of these major projects will likely utilise accommodation camps/ villages to accommodate FIFO/ DIDO workforces. Moranbah has considerable existing accommodation village capacity to assist in meeting these demands. As a result, impacts on residential property values will primarily be driven by:

• Some workers choosing to permanently migrate to the region, thereby increasing loads on existing housing supply.

• Non-project workers being attracted to the region to back-fill positions vacated as a result of labour draw to the projects, or to support businesses involved in supplying major projects.

It is likely that most workers permanently migrating to the region will choose to reside in Mackay and operate on a DIDO basis (though this may vary depending on the project and its location within the regional catchment). This has the potential to increase demand and prices for housing in Mackay or other nearby regional centres. Some workers, however, will likely seek to relocate to towns such as Moranbah. In consideration of the large workforces for projects such as Red Hill, Olive Downs, Eagle Downs, Winchester South and Moranbah South, the additional demand for residential property that may be generated by the Isaac Downs Project in Moranbah and the surrounding area, as well as Mackay, is assessed as having a moderate likelihood of placing upward pressure on property prices in these markets.

While property sales and rental prices have recently shown signs of recovery in the regional catchment, house prices remain well below their peaks in 2011/12 and housing availability remains high compared to levels in 2011/12. Demand for housing from the Project is also expected to be low (increase in demand for housing of nine dwellings at peak production as well as an additional 11 dwellings gradually over time as some of the existing workforce transitions to the local area), and while this may increase if competition for local labour from other projects results in the Isaac Downs Project sourcing more labour from outside the local area than anticipated, the impact generated by the Isaac Downs Project is still expected to be relatively small (low consequence) even where other projects result in the local property market tightening, providing an overall impact rating of low.

7.2.2.4 Impacts on Industry through Australian Dollar and Exchange Rate Affects

Export-oriented projects have the potential to impact on exchange rates through a small improvement in Australia’s balance of trade, which can adversely affect trade-exposed industries (such as agriculture, many manufacturing businesses and tourism) as their products and services become more expensive to foreign buyers. The impact on exchange rates and trade exposed industries as a result of Isaac Downs Project coal exports is assessed as being very low (see section 5.3.2).

Some projects considered in the cumulative impact assessment will directly result in increased exports such as the Red Hill, Olive Downs, Eagle Downs, Winchester South and Moranbah South projects. The combination of these projects is likely to place upward pressure on exchange rates in consideration of national trade balances, and thereby adversely affect trade-exposed industries, and it is possible (i.e. moderate likelihood) the contribution of the Isaac Downs Project’s exports to exchange rate impacts may be exacerbated. The impact on exchange rates

50 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT is assessed to be higher than the impact of the Isaac Downs Project in isolation, though the marginal impact of the Isaac Downs Project on exchange rates will still be small (low consequence), providing an overall impact rating of low.

7.3 SUMMARY OF CUMULATIVE ADVERSE IMPACTS

The following table provides a summary of the potential cumulative adverse impacts of the Project in consideration of other major projects in the region.

Table 7.2. Assessment of Cumulative Adverse Impacts Overall Impact Description Likelihood Consequence Impact Impacts on Local Business from Competition for Resources The development of the Isaac Downs Project as well as other proposed projects for the region will result in additional demand and competition for labour and other inputs to supply these projects. This may erode the viability of some businesses, in particular smaller businesses operating near the margin or lower income paying industries that may struggle to attract and retain labour. However, High Low Medium the contribution of the Isaac Downs Project to competition for resources is expected to be considerably smaller than most of the projects included for consideration within the cumulative impact assessment, given the Project’s size and that it will primarily result in a continuation of demand for goods and services by Stanmore in the region. The combination of high likelihood with low consequence provides an overall impact rating of medium. Impacts on Agricultural Production Some of the other developments considered in the cumulative impact assessment are also likely to impact on agricultural production through disruption or take-up of land. As with the Isaac Downs Project, most of the mining-related projects will be developed on land that is currently primarily used for agricultural activities, some of which will have a larger footprint than the Isaac Downs Project. The cumulative impacts on land availability for agricultural production of all proposed projects proceeding is considered to be very highly likely to exacerbate the adverse impacts on agricultural production that may be delivered by the Project alone, through a combination of Very High Low Medium reduced capacity to replace this activity elsewhere in the regional catchment and overall contraction of land available for agricultural purposes. The cumulative consequence of these projects on agricultural production in the regional catchment is assessed to be low in consideration of the substantial land currently available for agricultural production in Isaac LGA (the regional catchment had approximately 15 million hectares of land used for grazing in 2015/16). With a very high likelihood of occurring, this provides an overall impact rating of medium.

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52 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

8. MITIGATION AND ENHANCEMENT STRATEGIES

8.1 KEY ISSUES, RISKS AND IMPACTS TO BE ADDRESSED

Assessment of the economic impacts of the Project in section 5 and section 7 identified the primary issues, risks and impacts that need to be monitored and addressed include:

• Securing suitably skilled local labour to support the Project.

• Retention of Project benefits locally through supporting local businesses secure supply contracts.

• Potential impacts to agricultural production from disturbance of grazing land.

• Potential impacts on availability and affordability of housing resulting from increased temporary and permanent population in the region.

8.2 MITIGATION STRATEGIES

To assist in addressing the issues identified above, the following overarching strategies to mitigate impacts are proposed:

• Provide appropriate opportunity to source labour locally where possible and provide training opportunities where needed.

• Provide appropriate opportunity for local business to secure supply contracts.

• Minimise adverse impacts on agricultural production in the local region.

• Minimise impacts on the local property market and housing affordability.

Proposed mitigation strategies are summarised in more detail below, with additional details regarding proposed mitigation measures and management provided in the Social Impact Management Plan, outlined in the Social Impact Assessment (SMEC, 2019).

It is difficult to provide a suite of quantitative standards and indicators that are useful or meaningful for monitoring the effectiveness of the mitigation strategies. Indicators available for assessing economic performance examine an economy as a whole, and this creates considerable interference from the perspective of measuring the performance of mitigation strategies for this particular project in isolation. It is recommended Stanmore Coal provide relevant Queensland Government authorities with annual progress reports, describing measures undertaken in adhering to the following mitigation strategies.

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8.2.1 Mitigation Strategy 1: Support Local Employment and Training

To maximise local benefits derived from the Project, Stanmore IP South Pty Ltd (IP South) and contractors engaged by the proponent should source labour locally where possible, in accordance with the recruitment hierarchy.

Mitigation Strategy: Support Local Employment and Training Issue To maximise the benefits of the project in the region, IP South should use local labour9 for the Project where possible. Objective Maximise amount of labour sourced locally. Recommended Mitigation/ Enhancement Strategies • IP South are committed to sourcing labour required for the project locally to the extent possible and practical. IP South will engage a contractor (or contractors) to develop/ operate the mine. To assist in meeting this objective: o Stanmore has an existing ‘Live Local’ policy which will be promoted as part of the Project. o A Workforce Management Plan (WMP) will be developed and implemented. o A recruitment policy will be developed and implemented outlining goals for local employment, attraction of ‘new local’ personnel, female participation and Indigenous participation. o A clear and efficient process will be implemented for potential employees to seek information about employment opportunities and register their interest in the Project. o Employment opportunities will be promoted widely through community and stakeholder engagement; the Project’s recruitment contact network; the Proponent and major contractors’ websites; and employment agencies. o Workers will be able to access local businesses between shifts. o Training and career development opportunities will be provided to assist in developing the required skills for the Project in the local workforce. Refer to the SIMP regarding additional details on training and development programs. Monitoring/ Management IP South/ mining contractor to maintain records of training for staff and contractors onsite. IP South and contractor will be accountable for the health, safety and environment system. Responsibility IP South and relevant mining contractor(s).

8.2.2 Mitigation Strategy 2: Support Local Business to Secure Supply Contracts

To maximise local benefits derived from the Project, IP South and contractors engaged by the proponent should provide sufficient opportunities and access to information for local businesses to understand the Project’s supply contract arrangements and requirements, and improve their ability to secure supply contracts.

Mitigation Strategy: Support Local Business to Secure Supply Contracts Issue To maximise the benefits of the project in the region, the local supply chain should be encouraged and provided opportunities to supply goods and services to support the project. Objective IP South and the primary mining contractor to provide opportunities for local business to secure supply contracts for the Project.

9 ‘Local’ labour has been defined as workers whom reside within one-hour commute to the work site.

54 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

Mitigation Strategy: Support Local Business to Secure Supply Contracts Recommended Mitigation/ Enhancement Strategies • IP South will engage a contractor (or contractors) to develop/ operate the mine. Contract arrangements will be designed and negotiated to encourage and support the purchase of goods and services from local businesses to the extent possible and practical. • A Local Business and Industry Participation Plan (LBIPP) will be developed and implemented that will: o Give specific consideration to opportunities for small-to-medium enterprises (SMEs), as they are the sub- sector most impacted by changes in the mining industry. o Ensure that contractors have the same commitment to local content as proponents. o Engage with local industry forums and business development programs such as the Major Project Supply Chain Development Program, the Industry Capability Network (ICN), the Regional Industry Network (RIN), the Local Content Leader’s Network, and the Bowen Basin Mining Club. • IP South/ mining contractor(s) will collaborate with Council, economic development organisations, local chambers of commerce and State Government to: o Inform local business of the goods and services required of the project, service provision opportunities and compliance requirements of business to secure contracts. o Collaborate with local business and encourage local business to meet the requirements of the Project for supply contracts. o Develop relevant networks to assist qualified local and regional businesses tender for provision of goods and services to support the Project. Monitoring/ Management • IP South/ mining contractor to progressively monitor uptake of supply contracts by local business. • IP South/ mining contractor will provide opportunities for suppliers to identify issues and difficulties in meeting compliance requirements of supply contracts. • IP South/ mining contractor will provide local employers with business opportunities by offering tenders locally and engaging in communications regarding conditions of tenders. Responsibility IP South/ mining contractor(s) to collaborate with local Council, local chambers of commerce, economic development organisations and local businesses.

8.2.3 Mitigation Strategy 3: Minimise Impacts on Agricultural Production

Some areas of the Project site are currently used for grazing activities. The Project will likely result in the temporary cessation of grazing activity on this land until a grazing final land use is established, which has the potential to adversely impact on agricultural production in the region.

Mitigation Strategy: Minimise Impact on Agricultural Production Issue The Project will result in the cessation of some agricultural production within the project site. Objective Minimise disruption of agricultural practices. Recommended Mitigation/ Enhancement Strategies • IP South is to avoid or minimise disturbance of productive land in any areas not immediately affected by mining activity (e.g., ensure location of stockpiles does not interfere with productive land uses). • Continue to use undisturbed land within the mining lease boundaries for agricultural purposes, to the extent this is safe and practicable. • At project completion, ensure all disturbed land is rehabilitated, other than any residual void area, for a grazing post mine land use to the extent practical, in accordance with the Rehabilitation Management Plan. • Commence grazing trails on rehabilitated mining areas during mining to the extent this is safe and practicable. Monitoring/ Management IP South to liaise with local landholders/ farmers regarding suitability of Project site (undisturbed and rehabilitated) for agricultural purposes where required. Responsibility IP South in consultation with landholders and regulatory bodies.

55 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

8.2.4 Mitigation Strategy 4: Minimise Impacts on the Local Property Market

The Project will support a modest increase in employment compared to what would occur without the Project, and in comparison to Stanmore’s existing employment in the local area. While the property market has weakened significantly since peaking in 2011/12, property sales and rental prices have shown recent signs of increasing. The local property market and impacts of Stanmore’s mining activities on demand should be minimised to ensure housing demand from the Project does not create cost pressures on the local community.

Additional details regarding mitigation strategies to minimise impacts on the property market are provided in the SIMP (SMEC, 2019).

Mitigation Strategy: Minimise Impacts on the Local Property Market Issue The Project has the potential to, either directly or indirectly, increase demand for residential property, which could place upward pressure on prices. Objective Minimise impacts on local property markets and affordability of housing. Recommended Mitigation/ Enhancement Strategies • Increase availability of affordable housing through supporting the that Isaac Affordable Housing Trust with contributions towards the construction of an additional unit of affordable accommodation. • Offer all members of the workforce with the choice of camp style accommodation or permanent housing subsidised through the Live Local Initiative. • Collaborate with the IRC and other stakeholders in the annual review of housing conditions. • Provide support to members of the workforce seeking to reside locally including a housing register, connections advice and support networks. • Reduce stress on the housing market through increasing the permanent housing stock in Moranbah by funding long-term return for a developer to build up to six (6) additional houses. • Accommodate non-resident workforce in established WAVs which have sufficient availability of utilities and services. • Undertake annual reviews of housing conditions and Project related impacts. Collaborate with Isaac Regional Council (IRC) and other stakeholders to present results and consider requirements for corrective actions. • Monitor workforce satisfaction with accommodation and take corrective actions as required. Monitoring/ Management IP South to monitor prices in the local property market. Responsibility IP South and local Council.

8.3 RESIDUAL IMPACT ASSESSMENT

Table 8.1. Assessment of Adverse Impacts of the Isaac Downs Project Following Mitigation Original Residual Relevant Mitigation Residual Residual Impact Impact Impact Measures Likelihood Consequence Rating Rating Impacts on Local Support local business Business from secure supply contracts; Low Low Very Low Very Low Competition for Support local Resources employment and training Impacts on Minimise disruption of Agricultural Low Low Very Low Very Low agricultural practices Production Impacts on Local Minimise Impacts on the Low Low Very Low Very Low Property Values Local Property Market Source: AEC.

56 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

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CCSG (2018). Social and Economic Changes in Queensland’s Gasfield Communities in 2017. Centre for Coal Seam Gas, The University of Queensland, Brisbane.

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DoSDMIP (2018). Moranbah Reservoir and Associated Works. Department of State Development, Manufacturing, Infrastructure and Planning. Available from: https://www.statedevelopment.qld.gov.au/index.php/regional-development/regional-economic- development/building-our-regions/royalties-resource-producing-communities/1325-moranbah-reservoir- and-associated-works. Accessed: 12th February 2019.

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Isaac Region Council (2018a). Moranbah. Available from: https://www.isaac.qld.gov.au/moranbah. Accessed: 5th February 2019

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Isaac Region Council (2019). Clermont cattle set to beef up prices in 2019. Available from: https://www.isaac.qld.gov.au/media-releases/-/asset_publisher/ZY2pN812J8ej/content/clermont-cattle- set-to-beef-up-prices-in-2019?redirect=https%3A%2F%2Fwww.isaac.qld.gov.au%2Fmedia- releases%3Fp_p_id%3D101_INSTANCE_ZY2pN812J8ej%26p_p_lifecycle%3D0%26p_p_state%3Dnor mal%26p_p_mode%3Dview%26p_p_col_id%3Dcolumn-2%26p_p_col_count%3D1. Accessed: 5th February 2019.

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Isaac Region Council (2018d). Annual Operational Plan. Available from: https://www.isaac.qld.gov.au/publications-and-policies. Accessed: 11th February 2019

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APPENDIX A: SOCIO-ECONOMIC OVERVIEW

This appendix provides a socio-economic overview of the Moranbah Statistical Area 2 (SA2), where localised impacts of the Project are expected to primarily be felt, as well as the regional catchment of the Isaac and Mackay LGAs. Comparisons to Queensland are provided where appropriate.

POPULATION

Historical Population and Growth

The Moranbah SA2 experienced significant population growth during the mining boom during the 2000s, with annual population growth reaching above 4% in some years, and as high as 5% in 2006. Population peaked at 9,202 residents in 2011. Population growth has, however, fallen considerably since 2011, with negative growth recorded each year since 2012.

A similar trend was exhibited by the regional catchment. Growth remained high during the mining boom, however, population began to decline from 2014 onwards, falling from a peak of 142,162 in 2013 to 137,473 in 2018. Within the regional catchment, Isaac LGA saw greater population decline than Mackay LGA, with population falling by almost 3% in both 2015 and 2016. This is a reflection of Isaac LGA’s reliance on mining jobs while Mackay’s economy is more diverse.

Figure A.1. Historical Population Growth, 2001 to 2018

160,000 6.0%

140,000 5.0%

120,000 4.0% Population Change Population (%)

100,000 3.0%

80,000 2.0%

60,000 1.0%

Population (No.) Population 40,000 0.0%

20,000 -1.0%

0 -2.0%

2001 2003 2005 2007 2009 2011 2016 2018 2002 2004 2006 2008 2010 2015 2017

2012

2013 2014

Moranbah Rest of Catchment Moranbah Growth Catchment Growth Queensland Growth Source: ABS (2019f). The region experienced significant flooding events in December 2010 to January 2011 which impacted mining activity in 2010/11 and contributed to population decline during the year (QGSO, 2011). The decline in population following 2011 can also partially be attributed to the impacts of the Global Financial Crisis (GFC) and subsequent global economic downturn. However, the Australian coal industry was only temporarily impacted, with coal prices remaining high between 2010 and 2012 on the back of strong demand from China (Trading Economics, 2019). Moranbah and the broader regional catchment experienced considerable investment and exploration activity between 2011 and 2013 as a result. Despite this investment and exploration activity, the resident population in the region did not increase as much of the workforce engaged were primarily non-resident workers (i.e. fly-in fly-out (FIFO) and drive-in drive-out (DIDO)) undertaking the construction and exploration activity (QGSO, 2018b). The table below outlines the number of non-resident workers in Isaac LGA compared to resident population since 2006, highlighting the significant peak in non-resident workers in 2011 to 2013.

60 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

Table A.1. Isaac LGA Resident and Non-Resident Population, 2006-2018 Year Resident Non-Resident Total Service Population Population Population 2006 20,372 7,075 27,447 2007 21,018 7,195 28,213 2008 21,632 9,380 31,012 2009 22,237 8,570 30,807 2010 22,658 9,905 32,563 2011 23,188 13,590 36,778 2012 23,344 17,125 40,469 2013 23,284 14,950 38,234 2014 22,786 11,085 33,871 2015 22,173 10,400 32,573 2016 21,543 9,445 30,988 2017 21,182 10,580 31,762 2018 20,934 12,075 33,009 Source: QGSO (2018b). Mining investment and exploration activity tailed off following 2013 as coal prices declined, which has seen the non-resident workforce fall. However, the resident population in Moranbah and the regional catchment has continued to decline as most new mining projects that have come on line over this period have also primarily used a non-resident labour workforce for mining operations (QGSO, 2018b). This represents a shift from historic practices, with mines in Moranbah typically having a comparatively larger local resident mining workforce (CCSG, 2017).

In 2018, the non-resident workforce in Isaac LGA increased to 12,075 persons, representing the second straight year of increases in non-resident workforce (QGSO, 2018b). Unlike the period between 2011 and 2013, this growth has been driven primarily by additional mining operations workforces at new and reopened mines rather than high levels of construction activity.

Population Projections

Despite recent declines in population, Moranbah is projected to exhibit growth in resident population from 2017 onwards. Population projections estimate an average annual growth of 1.1% from 2017 to 2041, with the population estimated to reach 11,873. This likely reflects an expectation that mining activity in the region will remain strong and grow over the period, and that longer term some of the non-resident workforces being engaged will transition to resident workforce.

The regional catchment is also expected to exhibit growth, with an estimated average annual growth of 1.1% from 2017 to 2041. This is slightly below that of Queensland, which is expected to grow at an average annual rate of 1.4%. Notably, the Isaac LGA is estimated to grow at a lower rate than Mackay, at an average annual rate of 0.8% in comparison to 1.1%.

Table A.2. Resident Population Projections, 2017 to 2041 Region 2018 2021 2026 2031 2036 2041 Avg Ann. Growth Moranbah 9,088 9,244 9,872 10,539 11,216 11,882 1.2% Catchment 137,473 140,828 148,574 157,984 168,195 178,622 1.1% Queensland 5,011,216 5,180,927 5,635,071 6,111,442 6,584,123 7,051,899 1.5% Source: ABS (2019g), QGSO (2018a).

SIZE AND STRUCTURE OF THE ECONOMY

Gross Regional Product

The Moranbah SA2 has generally exhibited Gross Regional Product (GRP) growth over the past ten years, growing at an average annual rate of 7.1%. Moranbah is highly dependent on the mining sector, and spikes in GRP growth

61 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT correspond with the mining boom through the 2000s, and periods of mine construction and exploration activity. Moranbah experienced a large decline in GRP in 2010/11, with GRP falling by 5.5% for the year, as mining activity was temporarily impacted by the global financial crisis and subsequent economic downturn alongside the destructive impacts of the flooding events during the year which peaked in December 2010 and January 2011. GRP recovered and grew strongly between 2011/12 and 2012/13 as strong demand from China drove mining investment and exploration. The following fall in 2013/14 coincides with an end of “the mining boom” as demand from China eased and coal prices fell, resulting in rationalisation in the mining industry to cut costs leading to widespread mining jobs cuts. This contributed to a significant rise in unemployment in Moranbah and the broader regional catchment (Australian Mining, 2016).

In 2015-16, Moranbah’s GRP grew by 18.7%, led by mining production ramping up as construction transitioned to operations at new projects (e.g. the Grosvenor mine) and some existing mines reopened (QGSO, 2016).

Notably, Moranbah’s GRP has experienced considerable overall growth in the years since 2010/11, whilst the resident population has fallen in the region. This can be attributed to the use of mainly FIFO workforce in the area as mining companies have opted to utilise imported labour over local labour (Australia Mining, 2016).

The regional catchment has mirrored Moranbah’s trend in GRP growth over the past ten years, however, has grown at a lower average annual rate of 3.8%. Both areas have grown at a higher average annual rate than Queensland, which grew at 2.3%.

Figure A.2. Gross Regional Product (GRP), $M, 2006-07 to 2017-18

$25,000 30.0%

$22,500 25.0%

$20,000 20.0%

$17,500 15.0% GRP Growth GRP(%) Growth

$15,000 10.0%

$12,500 5.0%

$10,000 0.0%

$7,500 -5.0%

$5,000 -10.0%

Gross Regional Product ($M) Product Gross Regional $2,500 -15.0%

$0 -20.0%

2009-10 2012-13 2015-16

2006-07 2008-09 2011-12 2014-15 2017-18 2007-08 2010-11 2013-14 2016-17 Moranbah Rest of Catchment Moranbah GRP Growth Catchment GRP Growth Queensland GRP Growth Source: AEC (unpublished). The mining industry made up a significant proportion of industry Gross Value Add (GVA) in both Moranbah and the regional catchment in 2017/18. Mining made up 91.4% of total GVA in Moranbah, with the second largest industry (manufacturing) contributing only 1.2% followed by construction with 1.0%. In the regional catchment, mining made up 63.6% of GVA, followed by manufacturing which contributed 3.6% and construction contributing 3.5%. Notably, the Isaac LGA relies more heavily on the mining industry than Mackay does. The mining industry contributed 90.6% to Isaac’s GVA, whilst in Mackay mining only contributed 26.1% of GVA.

62 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

Figure A.3. Industry Share of GRP, 2017/18

Mining Manufacturing Construction Administrative and support services Education and training Ownership of dwellings Transport, postal and warehousing Accommodation and food services Electricity, gas, water and waste services Public administration and safety Wholesale trade Health care and social assistance Retail trade Rental, hiring and real estate services Moranbah Professional, scientific and technical services Catchment Other services Financial and insurance services Queensland Agriculture, forestry and fishing Arts and recreation services 0.0% 20.0% 40.0% 60.0% 80.0% Proportion of GVA (%) Source: AEC (unpublished). The regional catchment has become more reliant on the mining industry between 2006/07 and 2017/18. The mining industry contributed 44.3% to GVA in 2006/07, however this industry continued to grow its contribution to be 63.6% in 2017/18.

Figure A.4. Industry Share of GRP, Regional Catchment

Mining Agriculture, forestry and fishing Construction Manufacturing Ownership of dwellings Transport, postal and warehousing Health care and social assistance Wholesale trade Retail trade Financial and insurance services Education and training Professional, scientific and technical services Administrative and support services Electricity, gas, water and waste services 2017-18 Public administration and safety Other services 2006-07 Accommodation and food services Rental, hiring and real estate services Information media and telecommunications 0.0% 20.0% 40.0% 60.0% 80.0% Proportion of GVA (%) Source: AEC (unpublished).

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Business Counts

The regional catchment had 11,526 businesses operating, with agriculture, forestry and fishing contributing the highest with 24.4%. Construction contributed the second highest, with 14.9%. In Moranbah, agriculture, forestry and fishing had the second highest business count, making up 13.4% of total counts. Construction was the highest in Moranbah, with 15.7% of total business counts.

While mining is the primary contributor to regional GRP (and employment), it provides a relatively small proportion of total business counts. This reflects the large organisational structure of mining companies, with very large employee numbers per company. Business counts data are also impacted by where the registered address of the company is located, and some mining companies are likely registered where corporate headquarters are located rather than at the mine sites themselves.

Table A.3. Business Counts by Industry, 2018 Industry Moranbah Catchment Queensland Agriculture, Forestry and Fishing 13.4% 24.4% 9.3% Construction 2.4% 1.2% 0.4% Rental, Hiring and Real Estate Services 3.3% 3.1% 3.7% Other Services 0.0% 0.2% 0.3% Retail Trade 15.7% 14.9% 17.1% Transport, Postal and Warehousing 2.1% 1.9% 3.0% Financial and Insurance Services 5.8% 4.6% 5.6% Accommodation and Food Services 5.8% 3.2% 4.0% Professional, Scientific and Technical Services 5.5% 5.4% 7.1% Administrative and Support Services 0.7% 0.3% 0.8% Health Care and Social Assistance 6.5% 6.1% 8.5% Manufacturing 10.4% 10.4% 11.5% Wholesale Trade 5.8% 6.7% 11.2% Education and Training 6.9% 3.1% 4.0% Mining 0.0% 0.3% 0.3% Arts and Recreation Services 0.9% 1.2% 1.4% Information Media and Telecommunications 5.8% 4.5% 5.9% Electricity, Gas, Water and Waste Services 0.7% 0.6% 1.2% Public Administration and Safety 8.5% 8.1% 4.7% Total 100.0% 100.0% 100.0% Total Number 445 1,681 448,992 Source: ABS (2019g).

Key Industries

Mining

Mining is the most significant industry in Moranbah in terms of both contribution to GRP and employment. This industry contributed 84.3% to the areas total GVA in 2016 and employed 60.9% of total employment. Within the Moranbah SA2 there are twelve major coal mines operating; Eaglefield, Byerwen, Grosvenor, Broadmeadows, Goonyella Riverside, Peak Downs, Moranbah North, Millennium, Caval Ridge, Carborough Downs and Isaac Plains (Mining Atlas, 2018). The mining industry is also significant to the regional catchment, contributing 54.8% of the area’s total GVA and 22.3% of total employment.

The Bowen Basin contains almost all of Queensland’s hard coking coal and is the most important coal-bearing province in Queensland, producing around 217 million tonnes in 2015-16 (DoNRME, 2017). This level of production represented approximately 90% of Queensland’s total coal production for the year (DoNRME, 2017). Most of the Basin’s mines are located within Isaac, with 27 operating coal mines. The catchment has great accessibility to port facilities through the main rail system that travels through the catchment, the Goonyella railway line. This electrified rail services 24 mines within the Basin and is the is the main route for exports of coal via Dalrymple Bay and Hay

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Point (Aurizon, 2017). This is where the coal mined from Isaac Downs will be exported from. The Dalrymple Bay Coal Terminal (DBCT), in conjunction with the Hay Point Services Coal Terminal, is one of the largest coal exporting ports in the world (DBCT, 2018). Together, these two terminals have a capacity of 129 million tonnes per annum (DBCT Management, 2019).

The regional catchment also has great access to air infrastructure, with regular flights from all major Australian cities to Mackay airport and other regional airports, including Moranbah. This allows for easy servicing of the numerous mines within the regional catchment. The 2014 upgrade to Moranbah has greatly improved the accessibility of the area, with new terminals, parking and road access (Cordell, 2019). Further, the catchment is also connected to major highways, such as the Peak Downs Highway which runs from near to Clermont to Mackay, and the Bruce Highway, which runs along the coastline, from Brisbane to Gympie.

The recent upturn in the coal price has bolstered renewed activity in the resources sector, which has in turn benefited Moranbah and the regional catchment through increased property prices, and greater economic activity (Ludlow, 2018). A number of mining projects are proposed for the Moranbah area (in addition to the Isaac Downs Project) which will support industry growth, as outlined in the table below.

Table A.4. Proposed Mining Developments (In Addition to the Isaac Downs Project), Regional Catchment Project Context Cost Timing Karin Basin New project in Clermont. Expected to employ 130 during the $250 2020 (OC and construction phase, and 150-200 during operations. million UG) Moorlands New open cut project – thermal coal, in Clermont. Expected to $150 NA employ 350 during the construction phase, and 160 during million operations. Dysart East New open-cut coking and thermal coal project. Expected to employ $200 Mining lease Coal Project 200 during construction, and 200 during operations. million granted in 2018. New Lenton New open cut and underground, coking and thermal coal project. NA Mining Lease Expected to employ 250 during construction, and 300 during granted in operation. 2017. Foxleigh Extension to existing open cut coal mine. $180 NA Plains million Project Red Hill A new underground mine and expansion of the existing NA Mining Lease Broadmeadow and Goonyella Riverside sites, this underground granted in coking coal mine is estimated to create 2,000 jobs during the 2016. Currently construction phase, which will drop to 1,500 during operations. in feasibility stage. Olive A metallurgical mine, expected to employ 500-700 during $1 billion Project Downs construction, and 1,300 once operational. expected to commence in 2025. Bluff Proposed to be an open cut coal mine and will create more than 75 NA Mining Lease local jobs once operating. granted in 2016. Eagle New underground project, expected to employ approximately 400 $1.7 Mining Lease Downs people. billion granted in 2014. Winchester New open-cut metallurgical coal mine with a production capacity of $1 billion Expected to South 15 Mtpa (ROM) and expected to employ 500 people during commence Project construction and 450 during operation. operation financial year 2024. Moranbah Potential underground coal mine with peak production of up to 18 $1.95 Conditionally South Mtpa (ROM). Expected to employ over 870 workers during billion approved in Project construction and over 1,300 workers during operation. 2014 but currently on hold Source: DoNRME (2018), CHDC (2018).

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Construction

Construction is a significant industry in both Moranbah and the regional catchment. This sector represents the second greatest contributor to GRP for both regions, contributing 1.5% to Moranbah’s total GVA, and 4.1% to the regional catchment’s total GVA. This sector is also a significant employer, employing 4.4% of Moranbah’s total employment, and 7% of the regional catchment.

Moranbah has been highly dependent on the construction industry, being one of the youngest towns in Queensland. The town was specially created for miners and their families but has developed to become the hub of the Isaac Region (Isaac Region Council, 2018a). The construction industry in Moranbah and the broader regional catchment is heavily influenced by mining activities, supporting the expansion and development of mines, world class port facilities, rail and air infrastructure. In the catchment, construction GVA has typically spiked the year before positive growth was experienced in the mining industry, specifically 2008/09 and 2011/12, highlighting periods in which new mines or mine expansions have occurred.

The construction industry will be impacted by the Isaac Downs Project as well as the development of the proposed mines outlined in the section above, as well as potential additional demand for housing.

Agriculture

While agriculture, forestry and fishing contribute only a small amount to the Moranbah area, it is a significant industry in the regional catchment that is heavily impacted by mining operations. The industry contributes 3.7% of total GRP and makes up 4.4% of employment in the regional catchment. Agriculture is especially key to Isaac, with the local value of Isaac commodities equating to approximately $549.7 million; $480.3 million comes from livestock, and $67.5 million from crops (ABS, 2018b).

The regional catchment contains a variety of agricultural products; however, cattle and calves and sugar cane contribute the greatest to total agricultural production. These two products alone contribute 84.7% of total agricultural production, with cattle and calves contributing 62.1%. The top five agriculture products in the regional catchment consist of; cattle and calves, sugar cane, sorghum, tomatoes and capsicum, which contribute 93% of total agricultural production (ABS, 2018b).

The regional catchment has approximately 15 million hectares (ha) for grazing, of which 1.6 million ha is in Moranbah. In 2015/16, the value of production per hectare for grazing area in the regional catchment was approximately $35.20/ha, whilst in Moranbah it was $13.10/ha (ABS, 2018b). These values are notably lower than the estimated values for 2010/11. The value of production per hectare for grazing in the regional catchment was approximately $42.7/ha in 2010/11, and for Moranbah it was $60.9/ha. The 2010/11 value for Moranbah is significantly higher than the 2015/16, likely due to famers decisions regarding when to sell or hold their cattle (ABS, 2012b). The lower value per hectare in Moranbah may also suggest that farmers in the region are holding less livestock per hectare than in other areas of the Isaac LGA due to the considerable increase in mining activity undertaken in the Moranbah SA2.

Recent years have seen many natural disasters affect Queensland, and its agricultural sector, such as droughts, cyclones and bushfires. These natural disasters can create large pressures on farming costs, such as for water during droughts, and relocation of livestock during cyclones and bushfires. Most recently, Isaac and Mackay have been experiencing dry conditions, however, recent (i.e. 2018/19) summer rain has provided some relief (Isaac Region Council, 2019).

Forecasting by Meat and Livestock Australia estimates that cattle and sheep slaughter will drop in 2019, largely due to dry conditions. It is expected that the national herd of cows is expected to fall to its lowest levels since the mid-1990s, and lamb slaughter is forecast to be its lowest since 2012 (MLA, 2019a; MLA, 2019b).

LABOUR MARKET AND CHARACTERISTICS

This section examines the regional labour market and employment conditions. This section focuses on where jobs are located (i.e. employment by place of work) as this reflects where the demand for employment is, and where economic activity occurs.

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However, not all labour market data is available by place of work, and in some instances an understanding of the amount of resident labour available is important. In these instances, place of usual residence data has been used instead. The type of employment data used is stated in the heading of each sub-section of the labour market below.

Additionally, analysis of journey to work data has been undertaken to understand the relationship between resident versus non-resident workforces and where non-resident workers are sourced from.

Labour Force and Unemployment (Place of Usual Residence)

Moranbah had a labour force of 5,358 people as of March 2019, with an unemployment rate of 1.6%. Moranbah’s unemployment has been consistently low in comparison to Queensland, with unemployment fluctuating between 0.6% and 2.9% since 2010. Comparatively, unemployment has fluctuated between 5.4% and 6.5% in Queensland over the same period. The rising unemployment rate from 2013 to 2015 in Moranbah was likely a result of the widespread mining cuts that occurred during this period (Australian Mining, 2016b).

The regional catchment had a labour force of 79,953 people as of March 2019, with an unemployment rate of 3.7%. The regional catchment has also exhibited, generally, low unemployment, averaging 4.2% from December 2010 to March 2019. Unemployment rose significantly from December 2014, reaching a peak of 7.5% in December 2015.

Notably, within the catchment the Isaac LGA generally has a lower unemployment rate than Mackay, averaging 1.8% from December 2010 to March 2019, whilst Mackay averaged 4.9% over the same period.

Figure A.5. Labour Force and Unemployment

90,000 9.0%

80,000 8.0%

70,000 7.0% Unemployment Rate (%)

60,000 6.0%

50,000 5.0%

40,000 4.0%

30,000 3.0% Persons(No.) 20,000 2.0%

10,000 1.0%

0 0.0%

Jun-11 Jun-12

Jun-17 Jun-18

Jun-14 Jun-13 Jun-15 Jun-16

Mar-11 Mar-12 Mar-17 Mar-18

Mar-13 Mar-14 Mar-15 Mar-16 Mar-19

Dec-12 Dec-13

Dec-10 Dec-11 Sep-11 Sep-12 Sep-13 Dec-14 Dec-15 Dec-16 Dec-17

Dec-18

Sep-17 Sep-18

Sep-16 Sep-14 Sep-15 Moranbah Labour Force Rest of Catchment Labour Force Moranbah Unemployment Rate Catchment Unemployment Rate Queensland Unemployment Rate Source: DoJSB (2019).

Employment by Industry (Place of Work)

Mining is the highest employer in both Moranbah and the catchment. This sector employs 60.9% of Moranbah’s total employment. Accommodation and food services is the second highest employing sector in Moranbah, employing 5.7% of total employment. This likely reflects food and beverage services businesses supporting both the resident and non-resident population, as well as some short stay accommodation primarily supporting demand from business visitors, which have comprised more than three quarters of total visitors to Moranbah for the past ten years (TRA, 2019).

Mining employs 22.3% of total employment in the regional catchment, followed by health care and social assistance, which employed 9.3%. In contrast, this industry only employed 2.8% of Moranbah’s total employment.

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Figure A.6. Share of Employment, 2016 (Place of Work)

Mining Accommodation and Food Services Education and Training Construction Administrative and Support Services Public Administration and Safety Health Care and Social Assistance Retail Trade Manufacturing Moranbah Transport, Postal and Warehousing Other Services Catchment Professional, Scientific and Technical Services Queensland Wholesale Trade Rental, Hiring and Real Estate Services Electricity, Gas, Water and Waste Services Arts and Recreation Services Financial and Insurance Services Agriculture, Forestry and Fishing Information Media and Telecommunications 0.0% 20.0% 40.0% 60.0% 80.0% Proportion of Employment (%) Source: ABS (2017a). The mining industry grew in terms of employment between 2011 and 2016. Health care and social assistance also rose during this period. However, both construction and manufacturing decreased.

Figure A.7. Employment by Industry, 2011 and 2016, Regional Catchment

Mining Health Care and Social Assistance Retail Trade Education and Training Construction Accommodation and Food Services Transport, Postal and Warehousing Manufacturing Other Services Agriculture, Forestry and Fishing Public Administration and Safety Professional, Scientific and Technical Services Administrative and Support Services Wholesale Trade 2016 Rental, Hiring and Real Estate Services Financial and Insurance Services 2011 Electricity, Gas, Water and Waste Services Arts and Recreation Services Information Media and Telecommunications 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%

Proportion of Employment (%) Source: ABS (2017a), ABS (2012).

Journey to Work

This section provides analysis of journey to work data to understand the reliance of Moranbah and the regional catchment on a local workforce versus a non-resident workforce to meet the needs of industry (i.e. the self- sufficiency of the region). Two tables are presented – the first table (Table A.5) outlines where workers in each location are sourced from (i.e. place of work data), while the second table (Table A.6) outlines where residents of each location work (i.e. place of usual residence data).

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Moranbah is only 46.4% self sufficient, meaning that most workers in Moranbah work there but live elsewhere. This is largely due to the mining industry employing a mainly non-resident workforce, with 69.7% of mining labour living elsewhere. Moranbah also employs more non-resident construction labour than residents.

Within the catchment, Isaac employs more non-resident labour than resident, with only 42.9% of workers both living and working within Isaac. Similar to Moranbah, this is largely supported by a significant non-resident mining workforce, with 74.2% of the workforce being non-resident.

Mackay, however, is mainly self sufficient with 96.2% of its workers living and working within the region.

Mackay is also the largest exporter of labour within the regional catchment and is the only area within the regional catchment that has more residents employed than there are jobs locally (i.e. the sum of employment in Table A.6 is greater than the sum of employment in Table A.5). A total of 12.8% of Mackay’s resident workforce lives in Mackay but works elsewhere. Mining is Mackay’s greatest export of labour, with almost 4,500 mining labourers living within Mackay but working elsewhere.

In determining if a town can be determined ‘local’, the SIA notes that reference was made to the DNRME’s Guidance Note or Fatigue Risk Management. It highlights that a commute time of more than one hour (within a 12- hour shift) can overtly influence the opportunity for sleep and other essential daily activities. The SIA noted that, a maximum one-hour drive time from the Project site was adopted to identify town from where residents would be able to live and commute to work on a daily basis.

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Table A.5. Journey to Work by Job Location (Place of Work), 2016 Moranbah Isaac Mackay Catchment Work Work Work Work Industry Live and Live and Live and Live and there, live there, live there, live there, live work there work there work there work there elsewhere elsewhere elsewhere elsewhere Agriculture, Forestry and Fishing 11 10 995 143 1,788 86 2,855 157 Mining 1,470 3,376 3,286 9,442 2,327 274 9,369 5,960 Manufacturing 144 62 259 152 3,352 115 3,679 198 Electricity, Gas, Water and Waste Services 30 21 95 58 491 22 603 64 Construction 152 198 342 491 3,798 193 4,328 495 Wholesale Trade 50 35 101 93 1,964 77 2,121 113 Retail Trade 212 10 486 41 5,316 126 5,834 135 Accommodation and Food Services 342 108 641 290 3,216 117 3,963 301 Transport, Postal and Warehousing 138 46 356 224 3,190 159 3,685 244 Information Media and Telecommunications 4 0 28 5 300 7 332 8 Financial and Insurance Services 14 8 34 4 730 28 768 28 Rental, Hiring and Real Estate Services 65 14 102 42 860 27 975 57 Professional, Scientific and Technical Services 56 45 128 105 2,133 64 2,305 124 Administrative and Support Services 167 145 363 402 1,449 88 1,969 332 Public Administration and Safety 207 32 415 65 2,343 64 2,782 105 Education and Training 293 68 649 143 3,955 81 4,667 160 Health Care and Social Assistance 189 37 376 108 5,761 186 6,174 257 Arts and Recreation Services 24 1 54 7 422 21 479 25 Other Services 129 44 275 156 2,625 86 2,994 149 Total 3,695 4,261 8,985 11,972 46,020 1,820 59,883 8,913 Source: ABS (2017a).

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Table A.6. Journey to Work by Resident Location (Place of Usual Residence), 2016 Moranbah Isaac Mackay Catchment Live there, Live there, Live there, Live there, Industry Live and Live and Live and Live and work work work work work there work there work there work there elsewhere elsewhere elsewhere elsewhere Agriculture, Forestry and Fishing 11 17 995 86 1,788 133 2,855 146 Mining 1,470 456 3,286 590 2,327 4,490 9,369 1,324 Manufacturing 144 19 259 8 3,352 203 3,679 143 Electricity, Gas, Water and Waste Services 30 2 95 3 491 39 603 26 Construction 152 9 342 11 3,798 319 4,328 142 Wholesale Trade 50 12 101 34 1,964 94 2,121 72 Retail Trade 212 2 486 27 5,316 176 5,834 171 Accommodation and Food Services 342 15 641 28 3,216 235 3,963 157 Transport, Postal and Warehousing 138 46 356 54 3,190 287 3,685 201 Information Media and Telecommunications 4 0 28 -12 300 6 332 -10 Financial and Insurance Services 14 6 34 -5 730 -2 768 -11 Rental, Hiring and Real Estate Services 65 -2 102 2 860 57 975 47 Professional, Scientific and Technical Services 56 17 128 26 2,133 132 2,305 113 Administrative and Support Services 167 4 363 1 1,449 151 1,969 -6 Public Administration and Safety 207 -12 415 -4 2,343 76 2,782 48 Education and Training 293 28 649 28 3,955 165 4,667 129 Health Care and Social Assistance 189 10 376 29 5,761 134 6,174 126 Arts and Recreation Services 24 6 54 -1 422 -6 479 -10 Other Services 129 5 275 32 2,625 82 2,994 21 Total 3,695 640 8,985 937 46,020 6,771 59,883 2,829 Source: ABS (2017a).

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Employment by Occupation (Place of Work)

Within the Moranbah SA2, the greatest proportion of employment is within the occupation of machinery operators and drivers, making up 34.3% of total employment. This is followed by 28.5% of employment being technicians and trades workers. These occupations are consistent with the heavy reliance on mining and construction in the area. This trend is also seen within the regional catchment, with 37.6% of employment being machinery operators and drives, and 26.9% being technicians and trades workers.

Table A.7. Employment by Occupation, 2016 Occupation Moranbah Catchment Queensland Managers 6.6% 8.1% 11.3% Professionals 9.5% 7.6% 15.9% Technicians and Trades Workers 28.5% 26.9% 19.0% Community and Personal Service Workers 4.6% 3.9% 9.8% Clerical and Administrative Workers 6.2% 5.1% 13.2% Sales Workers 2.8% 2.5% 10.2% Machinery Operators and Drivers 34.3% 37.6% 9.2% Source: ABS (2017a).

Average Weekly Income by Industry (Place of Work)

Average weekly income in Moranbah is significantly higher than that of Queensland, with the total average across all industries being $1,952.1 per week. In Queensland, the average is only $1,155.5 per week. This is largely driven by the high mining income of $2,411 per week, which makes up a large proportion of total jobs in the area, and high manufacturing income of $2,238 per week.

The regional catchment also has a higher total average income than Queensland, with $1,375.8 per week. Similarly, this is driven by the high weekly income in the mining industry of $2,250.9 per week. The second highest industry income is in the transport, postal and warehousing industry, with an average income of $1,564.9 per week.

Table A.8. Average Weekly Income by Industry of Employment, 2016 Industry Moranbah Catchment Queensland Agriculture, Forestry and Fishing $1,224.5 $1,012.5 $926.9 Mining $2,411.0 $2,250.9 $2,211.9 Manufacturing $2,238.0 $1,371.3 $1,206.7 Electricity, Gas, Water and Waste Services $1,965.4 $1,620.2 $1,761.0 Construction $1,667.9 $1,348.7 $1,299.8 Wholesale Trade $1,857.8 $1,469.4 $1,260.6 Retail Trade $661.6 $688.0 $754.1 Accommodation and Food Services $809.2 $609.7 $612.4 Transport, Postal and Warehousing $1,525.8 $1,564.9 $1,268.5 Information Media and Telecommunications $642.5 $1,056.1 $1,303.2 Financial and Insurance Services $1,128.3 $1,336.4 $1,529.4 Rental, Hiring and Real Estate Services $1,310.9 $1,208.2 $1,266.1 Professional, Scientific and Technical Services $1,537.3 $1,344.5 $1,492.4 Administrative and Support Services $1,308.9 $1,090.0 $909.2 Public Administration and Safety $1,445.1 $1,311.9 $1,452.6 Education and Training $1,204.7 $1,131.7 $1,169.6 Health Care and Social Assistance $1,091.3 $1,143.9 $1,198.0 Arts and Recreation Services $328.6 $660.0 $862.6 Other Services $1,244.5 $1,099.4 $908.4 Total $1,952.1 $1,375.8 $1,155.5 Note: Outside of mining, Moranbah estimates are based on a small number of workers. Source: ABS (2017a).

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PROPERTY MARKET CHARACTERISTICS

Building Approvals

In 2017-18, the total value of residential building approvals was $2.4 million in Moranbah, for just two residential approvals during the year. In the regional catchment residential building approvals was valued at almost $123 million in total, across 310 building approvals.

Residential building approval values and numbers was significantly larger in both Moranbah and the regional catchment in 2012/13. In Moranbah, the value of residential building approvals was almost $108 million, across 364 building approvals. In the regional catchment, the value of residential building approvals was over $754 million across 2,497 building approvals. This was approximately one to two years after the resident population began declining. This delayed impact may be a reflection of a time lag introduced through the approvals process from planning to approval. While a significant number of dwellings were approved in 2012/13, it is expected a large number of these did not proceed to development.

From 2012/13, approval values and numbers in both Moranbah and the regional catchment declined significantly, as global economic factors and declining population in the area adversely impacted on dwelling demand and investor interest in the area. This reflects the significant drop in coal price in 2013 which led to a retraction in project spending and development which, alongside the rise of FIFO workers being accommodated in worker camps, led to a property market crash (see sections below on property sales and rental values). This had a significant impact on the development of residential buildings (Crawford Property Group, 2018).

Of note, despite recent commencement of new mines in the region and projections of population and economic growth, dwelling approvals remained low through July to November 2018. The time lag between building planning and approval may account for this, and it may be expected that residential building approvals will see an uptick in the near term as improved prospects in the region encourage new development.

Table A.9. Residential Building Approvals and Values Year Moranbah Catchment Queensland Residential Values ($M) 2011/12 $28.5 $506.4 $8,092.2 2012/13 $107.9 $754.4 $8,780.0 2013/14 $16.6 $406.1 $11,039.8 2014/15 $0.6 $168.9 $13,074.9 2015/16 $0.2 $108.2 $14,953.4 2016/17 $0.8 $81.5 $14,005.4 2017/18 $2.4 $122.7 $13,867.5 2018/19 (as of March 2019) $0.8 $105.6 $8,944.7 Average Annual Growth (2011/12 to 2017/18) -34.0% -21.0% 9.4% Residential Volumes (No.) 2011/12 96 1,438 27,663 2012/13 364 2,497 30,696 2013/14 51 1,364 39,257 2014/15 1 466 46,686 2015/16 0 302 50,749 2016/17 1 207 43,149 2017/18 1 310 42,970 2018/19 (as of March 2019) 0 251 25,303 Average Annual Growth (2011/12 to 2017/18) -53.3% -22.6% 7.6% Source: ABS (2019h). In Moranbah, the value of non-residential building approvals was $2.1 million in 2017/18. Similar to residential building approvals, value of approvals peaked in 2012/13, with a value of more than $66 million. The regional catchment also saw high values of non-residential building approvals in 2012/13, valuing over $428 million.

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Table A.10. Non-Residential Building Approval Values ($M) Year Moranbah Catchment Queensland Non-Residential Values ($M) 2011/12 $40.0 $299.9 $6,653.7 2012/13 $66.2 $428.3 $8,572.1 2013/14 $3.9 $278.6 $6,475.5 2014/15 $8.1 $111.9 $6,072.9 2015/16 $4.1 $53.6 $7,312.5 2016/17 $0.3 $72.5 $8,146.9 2017/18 $2.1 $105.4 $7,329.0 2018/19 (as of March 2018) $4.0 $87.5 $5,194.2 Average Annual Growth (2011/12 to 2017/18) -39.0% -2.5% 1.6% Source: ABS (2019h).

Dwelling Structure

In 2016, Moranbah had approximately 4,121 occupied dwellings, while the regional catchment had approximately 61,370. The most common form of dwelling in Moranbah was separate house, consisting of 75.1% of total dwellings. This was followed by semi-detached, row or terrace house, or townhouses which made up 15.5% of total dwellings. This trend was similar in the regional catchment, with 81.6% of dwellings being separate houses and semi-detached, row or terrace house, or townhouses accounting for 9%.

Table A.11. Dwelling Structure, 2016 Dwelling Structure Moranbah Catchment Queensland Separate House 75.1% 81.6% 74.1% Semi-detached, row or terrace house, townhouse 15.5% 9.0% 10.8% Flat/unit/apartment 8.3% 6.2% 12.9% Other 1.1% 3.3% 2.2% Total 100.0% 100.0% 100.0% Total Private Dwellings 4,121 61,370 1,987,312 Source: ABS (2017a).

Housing Tenure

Renting was the most common form of housing tenure in Moranbah, accounting for 75.1% of dwellings. This was followed by 12.2% of homes owned with a mortgage. This high proportion of renting is consistent with the largely FIFO and transient nature of the resident workforce. In the regional catchment 35% of dwellings are rented, and 33.7% are owned with a mortgage.

Table A.12. Home Ownership, 2016 Home Ownership Moranbah Catchment Queensland Owned outright 8.5% 28.3% 29.8% Owned with a mortgage 12.2% 33.7% 34.0% Being purchased under a shared equity scheme 0.0% 0.1% 0.1% Rented 75.1% 35.0% 34.0% Being occupied rent-free 3.8% 1.8% 1.0% Being occupied under a life tenure scheme 0.1% 0.6% 0.5% Other tenure type 0.2% 0.6% 0.5% Total 100.0% 100.0% 100.0% Total Private Occupied Dwellings 3,047 51,737 1,791,738 Source: ABS (2017a).

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House and Unit Sales and Values

The average price of residential property sales in Moranbah peaked in 2012, at $677,000. Since then, prices have fallen significantly, to $200,000 in 2018. This was largely a result of a considerable fall in coal demand and prices, alongside mining companies operating a mainly FIFO workforce in temporary worker’s camps, which resulted in this property market crash (Australian Mining, 2016a). The recent rise in prices is largely a result of an uptick in mining activity recently, with several new mines, such as Grosvenor, coming online.

Similarly, the regional catchment average price of residential property sales also peaked in 2012, however, to a lesser extent with $430,300. This area also saw a decline in prices, falling to $319,400 in 2018. Notably, sale prices in Mackay were significantly more stable than Isaac, which fell from $519,000 in 2012 to $170,000 in 2018.

Figure A.8. Average Annual Residential Property Sales Price, 2008-2018

$800,000 35%

$700,000 25%

$600,000 15% Percentage Change Percentage (%) $500,000 5%

$400,000 -5%

$300,000 -15% Sale Price ($)PriceSale $200,000 -25%

$100,000 -35%

$0 -45%

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009 2008

Moranbah Sale Price Catchment Sale Price Moranbah Price Change Catchment Price Change Source: QGSO (2019b). The number of residential property sales fluctuated greatly in Moranbah, however, were similar in trend to residential prices. Sales peaked in 2011, with 363, before falling to 103 in 2018. The regional catchment peaked in 2012, with 3,205 sales, and fell to 1,981 sales in 2018.

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Figure A.9. Annual Residential Property Sales and Growth, 2008-2018

3,500 160%

3,000 120% Percent ChangePercent in Sales (%)

2,500 80%

2,000 40%

1,500 0%

1,000 -40% Number of SalesNumberof 500 -80%

0 -120%

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009 2008

Moranbah Sales Catchment Sales

Moranbah Sales Change Catchment Sales Change Source: QGSO (2019b).

Residential Rental Market

The average rental price in Moranbah was $190/week for a flat in 2018/19, and $340/week for a house. This represents a 17% and 80% fall, respectively, from 2011/12 levels. During the mining boom, flat rental prices were increasing rapidly, however fell dramatically following the peak in 2011/12 due to the significant falls in coal prices and transition to mainly FIFO workforce, contributing to a crash in the property market. Median weekly rents have remained below 2007/08 levels for the past six years. However, house rents have picked up slightly since 2015/16 and has seen considerable growth in 2018/19, growing by 11.8% and 21.4% for flats and houses respectively.

Figure A. 10. Median Weekly Rents, Moranbah

$2,000

$1,800

$1,600

$1,400

$1,200

$1,000

$800

$600

$400

Median Weekly Rents ($) Rents Median Weekly $200

2018-19

2017-18

2016-17

2015-16

2014-15

2013-14

2012-13

2011-12

2010-11

2009-10

2008-09 2007-08

Flats Houses Source: QGSO (2019c).

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A similar trend can be seen in the regional catchment. The average rental price in 2018/19 was $240/week for a flat and $350/week for a house. This represents a 37% and 50% fall, respectively, from 2011/12 levels. Similar to Moranbah, rental prices rose during the mining boom, however fell significantly following the peak in 2011/12. Median weekly rents have remained below 2007/08 levels for the past 4 years. Despite this, 2018/19 has exhibited growth in both flat and house rents growing by 14.3% and 9.4% respectively.

Figure A. 11. Median Weekly Rents, Regional Catchment

$800

$700

$600

$500

$400

$300

$200 Median Weekly Rent ($) Rent MedianWeekly $100

2018-19

2017-18

2016-17

2015-16

2014-15

2013-14

2012-13

2011-12

2010-11

2009-10

2008-09 2007-08

Flats Houses Source: QGSO (2019c).

MAJOR PROJECTS

While the regional catchment has experienced slower economic activity and growth in recent years, there are a number of developments proposed for the region which may foster future growth. The following is a list of identified known developments that may impact on the catchment’s economy.

Table A.13. Major Projects Project Description Cost Timing Isaac LGA Bowen Basin 200km gas pipeline to link Bowen Basin with $500 million TBA Gas Pipeline Gladstone. It will link up with an existing 100km pipeline. Red Hill A new underground mine and expansion of the NA Conditional existing Broadmeadow and Goonyella Riverside approval granted. sites, this underground coking coal mine is Currently awaiting estimated to create 2,000 jobs during the FID. construction phase, which will drop to 1,500 during operations. Olive Downs A metallurgical mine, expected to employ 500- $1 billion Project expected 700 during construction, and 1,300 once to commence in operational. 2025. Eagle Downs New underground project, expected to employ $1.7 billion Mining Lease approximately 400 people. granted in 2014. Winchester New open-cut metallurgical coal mine with a $1 billion Expected to South Project production capacity of 15 Mtpa (ROM) and commence expected to employ 500 people during operation financial construction and 450 during operation. year 2024.

77 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

Project Description Cost Timing Moranbah South Potential underground coal mine with peak $1.95 billion Conditionally Project production of up to 18 Mtpa (ROM). Expected to approved in 2014 employ over 870 workers during construction and but currently on over 1,300 workers during operation. hold. Bowen Gas Development and operation of gas fields in the NA Approved but Project Bowen Basin. At peak construction could employ currently on hold. up to around 1,500 people and during operations a peak of around 600 people. Saraji East Proposed development of a greenfield single- NA Draft EIS currently seam underground coal mine and associated under infrastructure. Expected to extract up to 7 Mtpa consideration. of metallurgical coal over 25 to 30 years. The Construction project would employ up to 1000 construction expected to employees and approximately 500 operational commence in employees. 2022 and operations in 2024. Lake Vermont- Proposed expansion of existing Late Vermont NA EIS currently Meadowbrook open cut mine incorporating multi-seam being prepared. Project underground longwall mining. The project will Construction produce 7 Mtpa ROM thermal and metallurgical commencement in coal. Peak construction workforce of 200 2022 with employees, with peak operations workforce of operations 400 employees. Construction is expected to commencing commence in 2022 and operations in 204. 2024. Source: DoSDMIP (2019), Isaac Region Council (2018d), Greater Whitsunday Alliance (2018).

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APPENDIX B: INPUT-OUTPUT METHODOLOGY

INPUT-OUTPUT MODEL OVERVIEW

Input-Output analysis demonstrates inter-industry relationships in an economy, depicting how the output of one industry is purchased by other industries, households, the government and external parties (i.e. exports), as well as expenditure on other factors of production such as labour, capital and imports. Input-Output analysis shows the direct and indirect (flow-on) effects of one sector on other sectors and the general economy. As such, Input-Output modelling can be used to demonstrate the economic contribution of a sector on the overall economy and how much the economy relies on this sector or to examine a change in final demand of any one sector and the resultant change in activity of its supporting sectors.

The economic contribution can be traced through the economic system via:

• Initial stimulus (direct) impacts, which represent the economic activity of the industry directly experiencing the stimulus.

• Flow-on impacts, which are disaggregated to:

o Production induced effects (type I flow-on), which comprise the effects from:

Direct expenditure on goods and services by the industry experiencing the stimulus (direct suppliers ▪ to the industry), known as the first round or direct requirements effects.

The second and subsequent round effects of increased purchases by suppliers in response to ▪ increased sales, known as the industry support effects.

o Household consumption effects (type II flow-on), which represent the consumption induced activity from additional household expenditure on goods and services resulting from additional wages and salaries being paid within the economic system.

These effects can be identified through the examination of four types of impacts:

• Output: Refers to the gross value of goods and services transacted, including the costs of goods and services used in the development and provision of the final product. Output typically overstates the economic impacts as it counts all goods and services used in one stage of production as an input to later stages of production, hence counting their contribution more than once.

• Gross product: Refers to the value of output after deducting the cost of goods and services inputs in the production process. Gross product (e.g., Gross Regional Product) defines a true net economic contribution and is subsequently the preferred measure for assessing economic impacts.

• Income: Measures the level of wages and salaries paid to employees of the industry under consideration and to other industries benefiting from the project.

• Employment: Refers to the part-time and full-time employment positions generated by the economic shock, both directly and indirectly through flow-on activity, and is expressed in terms of full time equivalent (FTE) positions. An FTE employee represents one person working full time for a period of one year. This differs from the total number of jobs supported by a project in that:

o Total jobs supported may include a mix of full time, part time and casual work. FTE employment converts all jobs to a FTE basis.

o As FTEs are measured in terms of work over a one-year period, the same person employed full time for multiple years will be counted each year they are employed. For example, 10 FTE employees is equivalent to both10 people employed full time for one year or one person employed full time for 10 years (or any mix of jobs and years in between).

Input-Output multipliers can be derived from open (Type I) Input-Output models or closed (Type II) models. Open models show the direct effects of spending in a particular industry as well as the indirect or flow-on (industrial

79 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT support) effects of additional activities undertaken by industries increasing their activity in response to the direct spending.

Closed models re-circulate the labour income earned as a result of the initial spending through other industry and commodity groups to estimate consumption induced effects (or impacts from increased household consumption).

Input-Output modelling used in this study has used an open model. That is, type II flow-on impacts from household consumption induced effects have not been included in the results. Type II flow-on impacts have not been included to present a more conservative estimate of the impacts delivered by the Project.

MODEL DEVELOPMENT

Multipliers used in this assessment are derived from sub-regional transaction tables developed specifically for this project. The process of developing a sub-regional transaction table involves developing regional estimates of gross production and purchasing patterns based on a parent table, in this case, the 2015-16 Australian transaction table (ABS, 2018c).

Estimates of gross production (by industry) in the study areas were developed based on the percent contribution to employment (by place of work) of the study areas to the Australian economy (ABS, 2012a; ABS, 2017a), and applied to Australian gross output identified in the 2015-16 Australian table.

Industry purchasing patterns within the study area were estimated using a process of cross industry location quotients and demand-supply pool production functions as described in West (1993).

Where appropriate, values were rebased from 2015-16 (as used in the Australian national IO transaction tables) to 2019 values using the Consumer Price Index (ABS, 2019a).

MODELLING ASSUMPTIONS AND LIMITATIONS

General Assumptions and Limitations of Input-Output Analysis

The key assumptions and limitations of Input-Output analysis include:

• Lack of supply-side constraints: The most significant limitation of economic impact analysis using Input- Output multipliers is the implicit assumption that the economy has no supply-side constraints so the supply of each good is perfectly elastic. That is, it is assumed that extra output can be produced in one area without taking resources away from other activities, thus overstating economic impacts. The actual impact is likely to be dependent on the extent to which the economy is operating at or near capacity.

• Fixed prices: Constraints on the availability of inputs, such as skilled labour, require prices to act as a rationing device. In assessments using Input-Output multipliers, where factors of production are assumed to be limitless, this rationing response is assumed not to occur. The system is in equilibrium at given prices, and prices are assumed to be unaffected by policy and any crowding out effects are not captured. This is not the case in an economic system subject to external influences.

• Fixed ratios for intermediate inputs and production (linear production function): Economic impact analysis using Input-Output multipliers implicitly assumes that there is a fixed input structure in each industry and fixed ratios for production. That is, the input function is generally assumed linear and homogenous of degree one (which implies constant returns to scale and no substitution between inputs). As such, impact analysis using Input-Output multipliers can be seen to describe average effects, not marginal effects. For example, increased demand for a product is assumed to imply an equal increase in production for that product. In reality, however, it may be more efficient to increase imports or divert some exports to local consumption rather than increasing local production by the full amount. Further, it is assumed each commodity (or group of commodities) is supplied by a single industry or sector of production. This implies there is only one method used to produce each commodity and that each sector has only one primary output.

80 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

• No allowance for economies of scope: The total effect of carrying on several types of production is the sum of the separate effects. This rules out external economies and diseconomies and is known simply as the “additivity assumption”. This generally does not reflect real world operations.

• No allowance for purchasers’ marginal responses to change: Economic impact analysis using multipliers assumes that households consume goods and services in exact proportions to their initial budget shares. For example, the household budget share of some goods might increase as household income increases. This equally applies to industrial consumption of intermediate inputs and factors of production.

• Absence of budget constraints: Assessments of economic impacts using multipliers that consider consumption induced effects (type two multipliers) implicitly assume that household and government consumption is not subject to budget constraints.

Despite these limitations, Input-Output techniques provide a solid approach for taking account of the inter- relationships between the various sectors of the economy in the short-term and provide useful insight into the quantum of final demand for goods and services, both directly and indirectly, likely to be generated by a project. The use of Input-Output modelling has been agreed with the Department of State Development, Manufacturing, Infrastructure and Planning (DSDMIP) for this study, in consideration of the size and scale of the Project, and acknowledgement that the Project will deliver a continuation of an existing activity rather than a tangible change in the structure of the regional economy (see section 3 for additional details regarding the Project and section 4 for a description of the regional economy).

In addition to the general limitations of Input-Output Analysis, there are two other factors that need to be considered when assessing the outputs of sub-regional transaction table developed using this approach, namely:

• It is assumed the sub-region has similar technology and demand/ consumption patterns as the parent (Australia) table (e.g. the ratio of employee compensation to employees for each industry is held constant).

• Intra-regional cross-industry purchasing patterns for a given sector vary from the national tables depending on the prominence of the sector in the regional economy compared to its input sectors. Typically, sectors that are more prominent in the region (compared to the national economy) will be assessed as purchasing a higher proportion of imports from input sectors than at the national level, and vice versa.

Specific Assumptions Used in this Project

Key assumptions used in modelling the construction, operation and ongoing site rehabilitation, and post-mine rehabilitation and decommissioning phases of the Project are described in section 3.

In addition to these assumptions, in modelling construction phase impacts it was also assumed that approximately 25% of purchases on goods and services (supply chain related activity) made by construction-related businesses sourced from outside the regional catchment would be spent within the local economy (i.e., only 25% of the type I flow-on activity associated with non-local construction companies is assumed to represent additional local activity in the regional catchment).

Additionally, in assessing construction phase impacts, AEC’s modelling approach has treated sub-contractors in the construction sector engaged through first round effects as part of the initial stimulus impact rather than as part of the production induced impact. That is, the first round effect typically produced by Input-Output modelling has been removed from the production induced flow-on impact to ensure there is no double counting of these sub- contractors.

81 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

APPENDIX C: INPUT-OUTPUT RESULTS

This Appendix presents the results of the Input-Output modelling across the following activities:

• Construction, operation and ongoing site rehabilitation, and post-mine rehabilitation and decommissioning phases of the Isaac Downs Project (in isolation).

• Construction, operation and ongoing site rehabilitation, and post-mine rehabilitation and decommissioning phases of Stanmore’s mining assets (IPM and Isaac Downs) assuming the Isaac Downs Project proceeds (with project scenario).

• Construction, operation and ongoing site rehabilitation, and post-mine rehabilitation and decommissioning phases of Stanmore’s mining assets (IPM) assuming the Isaac Downs Project does not proceed (without project scenario).

A description of the modelling assumptions used in the above activities is presented in section 3.3 (Isaac Downs Project) and section 3.5 (with and without project scenarios).

Modelling results are presented for the regional catchment and Queensland. All modelling outcomes are presented in 2019 dollar values and financial years unless otherwise specified. Modelling results present both direct and indirect (flow-on) impacts of the Project. Only type I flow-on impacts are included, which are production- induced support activity resulting from demand for goods and services from the mine and associated infrastructure manufacturing and development activity. Type II flow-on impacts (i.e. household consumption induced impacts) are excluded from this analysis to provide a more conservative estimate of impacts.

An overview of the Input-Output modelling approach used and general assumptions and limitations of Input-Output modelling are provided in Appendix B.

ISAAC DOWNS PROJECT

Construction

Construction activity associated with developing the Isaac Downs Project is expected to support a total of $64.2 million in output for businesses in the regional catchment, of which $47.1 million will be supported directly through construction activity and $17.1 million through flow-on supply chain impacts. This level of business activity is estimated to support, including direct and flow-on impacts, $29.3 million in GRP for the regional catchment economy, and 273 full time equivalent (FTE)10 jobs for residents of the regional catchment paying $21.7 million in wages and salaries.

Construction of the Isaac Downs Project will also provide economic benefits elsewhere in the Queensland economy, both directly through sourcing construction and professional services outside the regional catchment as well as through supply chain impacts.

These impacts represent the total impact over the course of the construction period. A summary of construction activity impacts is provided in the table below.

Table C. 1. Construction Phase Impacts, Isaac Downs Project, Aggregate Impacts 2019/20 to 2023/24 Impact Output ($M) GRP/ GSP Incomes ($M) Employment ($M) (FTEs) Regional Catchment Initial Stimulus (Direct) $47.1 $21.7 $17.0 220 Production Induced (Flow-On) $17.1 $7.7 $4.7 53 Total $64.2 $29.3 $21.7 273

10 Where one FTE is equivalent to one person working full time for a period of one year.

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Impact Output ($M) GRP/ GSP Incomes ($M) Employment ($M) (FTEs) Queensland Initial Stimulus (Direct) $62.3 $29.7 $24.6 289 Production Induced (Flow-On) $39.0 $18.1 $10.9 121 Total $101.4 $47.8 $35.4 411 Sources: ABS (2012a; 2017a; 2018c; 2019a), Stanmore Coal (unpublished), AEC. A breakdown of GRP supported by industry in the regional catchment and Queensland economies from construction activities associated with the Isaac Downs Project is outlined in Figure C. 1. The local construction industry is estimated to receive the largest share of GRP impacts, at $20.5 million in the regional catchment with a further $6.4 million elsewhere in Queensland.

Figure C. 1. GRP/ GSP ($M) Supported Through Isaac Downs Project Construction Activity, Aggregate Impacts 2019/20 to 2023/24

Construction Professional, scientific and technical services Manufacturing Rental, hiring and real estate services Administrative and support services Transport, postal and warehousing Financial and insurance services Wholesale trade Electricity, gas, water and waste services Public administration and safety Information media and telecommunications Mining Accommodation and food services Other services Agriculture, forestry and fishing Retail trade Education and training Initial - RC Arts and recreation services Production Induced - RC Initial - RoQ Health care and social assistance Production Induced - RoQ Ownership of dwellings $0.0 $5.0 $10.0 $15.0 $20.0 $25.0 $30.0 Gross Regional/ State Product ($M) Note: RC = Regional Catchment. RoQ = Rest of Queensland. Sources: ABS (2012a; 2017a; 2018c; 2019a), Stanmore Coal (unpublished), AEC. In terms of employment, the construction industry is estimated to receive the largest increase in jobs with 207 FTE employees supported in this industry in the regional catchment through construction phase activity, and a further 56 FTEs supported elsewhere in Queensland. This accounts for 64% of total employment supported by the Project in Queensland during construction activity (including direct and flow-on activity).

83 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

Figure C. 2. Employment (FTEs) Supported Through Isaac Downs Project Construction Activity, Aggregate Impacts 2019/20 to 2023/24

Operations

During peak operations (2021/22 to 2029/30) the Isaac Downs Project is estimated to directly produce an average output of just under $400 million per annum, supporting an additional $52.2 million in industry output in the regional catchment through supply chain (production induced) flow-on activity. This level of output is estimated to produce an annual average of $242.3 million in GRP in the regional catchment and support 435 FTE jobs paying $55.6 million per annum (including direct and flow-on activity).

Mine production is anticipated to decline between 2030/31 and 2036/37 as the strip ratio increases, resulting in reduced impacts over this period.

The Isaac Downs Project will also support businesses, jobs and economic activity elsewhere in the Queensland economy through supply chain impacts, resulting in a higher production induced flow-on impact in Queensland.

Average annual impacts of the Isaac Downs Project once operational are summarised in the table below.

Table C. 2. Operations Phase Impacts, Isaac Downs Project, Average Annual Impacts 2021/22 to 2029/30 and 2030/31 to 2036/37 Impact Output ($M) GRP/ GSP Incomes ($M) Employment ($M) (FTEs) Regional Catchment 2021/22 to 2029/30 Initial Stimulus (Direct) $396.3 $217.6 $41.4 281 Production Induced (Flow-On) $52.2 $24.8 $14.2 155 Total $448.5 $242.3 $55.6 435 2030/31 to 2036/37 Initial Stimulus (Direct) $110.5 $41.9 $16.1 109 Production Induced (Flow-On) $20.3 $9.6 $5.5 60 Total $130.8 $51.6 $21.7 170

84 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

Impact Output ($M) GRP/ GSP Incomes ($M) Employment ($M) (FTEs) Queensland 2021/22 to 2029/30 Initial Stimulus (Direct) $396.3 $217.6 $41.4 281 Production Induced (Flow-On) $129.3 $62.1 $35.1 383 Total $525.7 $279.7 $76.5 664 2030/31 to 2036/37 Initial Stimulus (Direct) $110.5 $41.9 $16.1 109 Production Induced (Flow-On) $50.3 $24.2 $13.7 149 Total $160.9 $66.1 $29.8 259 Sources: ABS (2012a; 2017a; 2018c; 2019a), Stanmore Coal (unpublished), AEC. The figure below shows that the mining industry is expected to contribute an annual average of $227.5 million to Queensland’s GSP during mine operations, the majority of which ($217.6 million) will be generated directly by the Isaac Downs Project within the regional catchment.

Figure C. 3. GRP/ GSP ($M) Supported Through Isaac Downs Project Operations, Average Annual Impacts 2021/22 to 2029/30

Gross Regional/ State Product ($M) Note: RC = Regional Catchment. RoQ = Rest of Queensland. Sources: ABS (2012a; 2017a; 2018c; 2019a), Stanmore Coal (unpublished), AEC. Figure C.4 shows that, on an annual average, approximately 334 FTE jobs are estimated to be supported in the mining industry in Queensland per annum, of which approximately 300 FTE jobs will be within the regional catchment.

85 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

Figure C. 4. Employment (FTEs) Supported Through Isaac Downs Project Operations, Average Annual Impacts 2021/22 to 2029/30

Employment (FTEs) Note: RC = Regional Catchment. RoQ = Rest of Queensland. Sources: ABS (2012a; 2017a; 2018c; 2019a), Stanmore Coal (unpublished), AEC.

Post-Mine Rehabilitation/ Decommissioning

An estimated $5.3 million in output in the regional catchment is estimated to be supported through post-mine rehabilitation and decommissioning each year for a period of five years between 2037/38 and 2041/42, $3.1 million of which stems from direct mine-site rehabilitation/ decommissioning activity. Including direct and flow-on activity, post-mine rehabilitation is estimated to support approximately $1.9 million in GRP in the regional catchment each year, 17 FTE jobs and $1.1 million in wages and salaries.

Flow-on impacts are estimated to be marginally higher in Queensland, reflecting some goods and services will be sourced from outside the regional catchment during this phase of activity.

Table C. 3. Post-Mine Rehabilitation and Decommissioning Phase Impacts, Isaac Downs Project, Average Annual Impacts 2037/38 to 2041/42 Impact Output ($M) GRP/ GSP Incomes ($M) Employment ($M) (FTEs) Regional Catchment Initial Stimulus (Direct) $3.1 $1.1 $0.6 10 Production Induced (Flow-On) $2.2 $0.9 $0.5 7 Total $5.3 $1.9 $1.1 17 Queensland Initial Stimulus (Direct) $3.1 $1.1 $0.6 10 Production Induced (Flow-On) $2.9 $1.2 $0.7 9 Total $6.0 $2.3 $1.3 19 Sources: ABS (2012a; 2017a; 2018c; 2019a), Stanmore Coal (unpublished), AEC. Post-mine rehabilitation/ decommissioning activity will primarily support the construction industry, with approximately $1.4 million in GSP supported by this industry each year over the five year rehabilitation period.

86 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

Figure C. 5. GRP/ GSP ($M) Supported Through Isaac Downs Project Post-Mine Rehabilitation and Decommissioning Activity, Average Annual Impacts 2037/38 to 2041/42

Construction Manufacturing Professional, scientific and technical services Rental, hiring and real estate services Administrative and support services Wholesale trade Transport, postal and warehousing Financial and insurance services Mining Accommodation and food services Electricity, gas, water and waste services Information media and telecommunications Public administration and safety Other services Agriculture, forestry and fishing Retail trade Education and training Initial - RC Arts and recreation services Production Induced - RC Initial - RoQ Health care and social assistance Production Induced - RoQ Ownership of dwellings $0.0 $0.5 $1.0 $1.5 $2.0

Gross Regional/ State Product ($M) Note: RC = Regional Catchment. RoQ = Rest of Queensland. Sources: ABS (2012a; 2017a; 2018c; 2019a), Stanmore Coal (unpublished), AEC. Approximately 13 FTE jobs in Queensland’s construction industry will be supported by post-mine rehabilitation/ decommissioning each year during this phase, the majority of which will be located in the regional catchment.

Figure C. 6. Employment (FTEs) Supported Through Isaac Downs Project Post-Mine Rehabilitation and Decommissioning Activity, Average Annual Impacts 2037/38 to 2041/42

Construction Manufacturing Professional, scientific and technical services Administrative and support services Transport, postal and warehousing Rental, hiring and real estate services Wholesale trade Accommodation and food services Other services Public administration and safety Financial and insurance services Mining Retail trade Electricity, gas, water and waste services Agriculture, forestry and fishing Information media and telecommunications Arts and recreation services Initial - RC Education and training Production Induced - RC Initial - RoQ Health care and social assistance Production Induced - RoQ Ownership of dwellings 0 5 10 15

Employment (FTEs) Note: RC = Regional Catchment. RoQ = Rest of Queensland. Sources: ABS (2012a; 2017a; 2018fc 2019a), Stanmore Coal (unpublished), AEC.

87 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

Annual Impacts

The following figure provides a summary of the GRP/ GSP supported in the regional catchment and rest of Queensland each year by the Isaac Downs Project, including all phases of activity (construction, operations and post-mine rehabilitation). The largest contribution to GRP will be experienced between 2021/22 and 2029/30, reflecting peak mining production.

The contribution to GRP tails considerably from 2030/31 as the strip ratio increases and mine production decreases. During these years, mining activity at the IPM is anticipated to recommence to supplement production of the Isaac Downs mine.

Figure C. 7. Annual GRP/ GSP ($M) Supported Through Isaac Downs Project Activity

$400

$350

$300

$250

$200

$150

$100

$50 Gross Regional/ State Product ($M) Product StateGross Regional/

Initial - RC Production Induced - RC Initial - RoQ Production Induced - RoQ

Note: RC = Regional Catchment. RoQ = Rest of Queensland. Sources: ABS (2012a; 2017a; 2018c; 2019a), Stanmore Coal (unpublished), AEC. In line with GRP, employment at the Isaac Downs Project is expected to peak between 2021/22 and 2029/30 in line with peak mine production. Between 2030/31 and 2036/37 mining labour at the Isaac Downs mine is anticipated to decline as mining activity at the IPM recommences and some mining labour is transferred back to the IPM.

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Figure C. 8. Annual Employment (FTEs) Supported Through Isaac Downs Project Activity

800

700

600

500

400

300 Employment (FTEs) Employment 200

100

Initial - RC Production Induced - RC Initial - RoQ Production Induced - RoQ

Note: RC = Regional Catchment. RoQ = Rest of Queensland. Sources: ABS (2012a; 2017a; 2018c; 2019a), Stanmore Coal (unpublished), AEC.

WITH PROJECT SCENARIO

The ‘With Project Scenario’ has been based on the project description which is outlined in section 3.5. This scenario assumes that the Isaac Downs Project is approved to commence and will operate in conjunction with other mining assets under Stanmore Coal’s ownership (IPM).

Construction

Construction impacts in the ‘With Project Scenario’ are as per the Isaac Downs Project above.

Operations

Operations impacts have been examined across three key time periods:

• 2019/20 to 2029/30, which reflects the construction and transition of operations to the Isaac Downs Project, and peak production at Isaac Downs.

• 2030/31 to 2036/37, which reflects the winding down of Isaac Downs as the strip ratio increases and recommencement of mining activities at the IPM to supplement the decline in production at Isaac Downs.

• 2037/38 to 2046/47, which reflects the transition of mining activity to the IPU through to cessation of operational activities of Stanmore’s open cut assets at the IPM and Isaac Downs. The table below shows that operations in the first period of analysis (2019/20 to 2029/30) generates the highest output and GRP, reflecting that coal extraction from the Isaac Downs Project is considered to be more economical in comparison to Stanmore Coal’s IPM operations. In the regional catchment, an estimated $445.7 million in output is expected to be supported from mining activities during this initial period (2019/20 to 2029/30), $390.6 million of which stems from direct mining activities. Including direct and flow-on activity, operations are estimated to support approximately $226.4 million in GRP in the regional catchment each year, 449 FTE jobs and $57.1 million in wages and salaries.

From 2030/31 to 2036/37, impacts to output and GRP are estimated to decline as Isaac Downs winds back production and extraction of lower value coal at the IPM is recommenced. Despite the lower contribution to output

89 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT and GRP, the labour required to produce this volume of coal is estimated to increase, resulting in higher levels of employment and incomes compared to the previous period.

Production, employment and economic activity is anticipated to fall in the last ten year period (2037/38 to 2046/47) as open cut mining activity ceases at Isaac Downs and the IPM and transitions to the IPU.

Table C. 4. Operations Phase Impacts, With Project Scenario, Average Annual Impacts 2019/20 to 2029/30, 2030/31 to 2036/37, and 2037/38 to 2046/47 Impact Output ($M) GRP/ GSP Incomes ($M) Employment ($M) (FTEs) Regional Catchment 2019/20 to 2029/30 Initial Stimulus (Direct) $390.6 $200.3 $42.1 285 Production Induced (Flow-On) $55.1 $26.2 $15.0 163 Total $445.7 $226.4 $57.1 449 2030/31 to 2036/37 Initial Stimulus (Direct) $308.3 $94.2 $48.0 326 Production Induced (Flow-On) $62.5 $29.7 $17.0 185 Total $370.8 $123.9 $65.0 511 2037/38 to 2046/47 Initial Stimulus (Direct) $160.8 $57.0 $29.6 201 Production Induced (Flow-On) $31.6 $15.0 $8.6 94 Total $192.4 $72.0 $38.2 295 Queensland 2019/20 to 2029/30 Initial Stimulus (Direct) $390.6 $200.3 $42.1 285 Production Induced (Flow-On) $136.6 $65.6 $37.1 405 Total $527.2 $265.9 $79.2 690 2030/31 to 2036/37 Initial Stimulus (Direct) $308.3 $94.2 $48.0 326 Production Induced (Flow-On) $154.9 $74.4 $42.1 459 Total $463.2 $168.6 $90.1 785 2037/38 to 2046/47 Initial Stimulus (Direct) $160.8 $57.0 $29.6 201 Production Induced (Flow-On) $78.4 $37.7 $21.3 232 Total $239.2 $94.6 $50.9 433 Sources: ABS (2012a; 2017a; 2018c; 2019a), Stanmore Coal (unpublished), AEC.

Post-Mining Rehabilitation/ Decommissioning

An estimated $15.7 million in output is anticipated to be generated from post-mining rehabilitation and decommissioning of Stanmore’s assets (IPM and Isaac Downs), with $9.1 million in output, 30 FTE jobs and $3.2 million in wages and salaries stemming from direct activities associated with mine and associated infrastructure decommissioning and rehabilitation.

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Table C. 5. Post-Mining Rehabilitation and Decommissioning Phase Impacts, With Project Scenario, 2047/48 Impact Output ($M) GRP/ GSP Incomes ($M) Employment ($M) (FTEs) Regional Catchment Initial Stimulus (Direct) $9.1 $3.1 $1.7 30 Production Induced (Flow-On) $6.5 $2.6 $1.5 20 Total $15.7 $5.7 $3.2 50 Queensland Initial Stimulus (Direct) $9.1 $3.1 $1.7 30 Production Induced (Flow-On) $8.6 $3.6 $2.0 26 Total $17.7 $6.7 $3.7 56 Sources: ABS (2012a; 2017a; 2018c; 2019a), Stanmore Coal (unpublished), AEC.

WITHOUT PROJECT SCENARIO

The ‘Without Project Scenario’ assumes the Isaac Downs Project does not proceed and that Stanmore Coal continues operation in its other mining assets (IPM).

Without the Isaac Downs Project Stanmore is expected to continue open cut mining at the IPM until the resource is depleted (2027/28). Production will then switch to the IPU until the resource is depleted (2036/37). Additional details of the Without Project Scenario is provided in section 3.5.

Construction

Construction impacts in the ‘Without Project Scenario’ are as per the Isaac Downs Project above.

Operations

Operations impacts have been examined across two key time periods:

• 2019/20 to 2027/28, which reflects the continued operation of the IPM until the resource is depleted.

• 2028/29 to 2036/37, which reflects the transition of mining activity to the IPU through to cessation of open cut operational activities of the IPM.

Over 2019/20 to 2027/28, $311.8 million in annual output is anticipated to be supported by operations at the IPM in the regional catchment on average, $255.9 million of which is generated from direct mine-site related activities. Over this period, the IPM will support $90.1 million in GRP, 398 FTE jobs and $49.5 million in wages and salaries in the regional catchment.

Once IPM open cut coal assets are depleted, Stanmore Coal is expected to transition activities to its less productive IPU mine. Annual output generated from the IPU is estimated to be around $188.9 million, of which $157.7 million stems from direct mining activities. Activities over this period will support 291 FTE jobs and $37.8 million in wages and salaries annually.

91 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

Table C. 6. Operations Phase Impacts, Without Project Scenario, Average Annual Impacts 2019/20 to 2027/28 and 2028/29 to 2036/37 Impact Output ($M) GRP/ GSP Incomes ($M) Employment ($M) (FTEs) Regional Catchment 2019/20 to 2027/28 Initial Stimulus (Direct) $255.9 $63.6 $34.2 232 Production Induced (Flow-On) $55.9 $26.6 $15.2 166 Total $311.8 $90.1 $49.5 398 2028/29 to 2036/37 Initial Stimulus (Direct) $157.7 $56.3 $29.3 199 Production Induced (Flow-On) $31.2 $14.8 $8.5 93 Total $188.9 $71.1 $37.8 291 Queensland 2019/20 to 2027/28 Initial Stimulus (Direct) $255.9 $63.6 $34.2 232 Production Induced (Flow-On) $138.6 $66.6 $37.7 411 Total $394.5 $130.2 $71.9 643 2028/29 to 2036/37 Initial Stimulus (Direct) $157.7 $56.3 $29.3 199 Production Induced (Flow-On) $77.3 $37.1 $21.0 229 Total $235.0 $93.4 $50.3 428 Sources: ABS (2012a; 2017a; 2018c; 2019a), Stanmore Coal (unpublished), AEC.

Post-Mining Rehabilitation/ Decommissioning

$21.0 million in output is anticipated from post-mining decommissioning and rehabilitation activities in 2037/38 in the ‘Without Project Scenario’, of which $12.2 million will stem from decommissioning and rehabilitation activities at the site. Including direct and flow-on activity, decommissioning of Stanmore’s assets and post-mine rehabilitation is estimated to support approximately $7.7 million in GRP in the regional catchment in 2037/38, 67 FTE jobs and $4.3 million in wages and salaries.

Table C. 7. Post-Mining Rehabilitation and Decommissioning Phase Impacts, Without Project Scenario, 2037/38 Impact Output ($M) GRP/ GSP Incomes ($M) Employment ($M) (FTEs) Regional Catchment Initial Stimulus (Direct) $12.2 $4.2 $2.3 40 Production Induced (Flow-On) $8.7 $3.5 $2.0 27 Total $21.0 $7.7 $4.3 67 Queensland Initial Stimulus (Direct) $12.2 $4.2 $2.3 40 Production Induced (Flow-On) $11.5 $4.8 $2.7 35 Total $23.7 $8.9 $5.0 75 Sources: ABS (2012a; 2017a; 2018c; 2019a), Stanmore Coal (unpublished), AEC.

DIFFERENCE – WITH PROJECT SCENARIO VS WITHOUT PROJECT SCENARIO The figure below provides a summary of the GRP/ GSP supported in the regional catchment and rest of Queensland each year by the Isaac Downs Project and IPM mines, compared to what would be delivered by the IPM alone (i.e. if the Isaac Downs Project does not proceed). This includes all phases of mining-related activity (construction, operations and post-mine rehabilitation). The largest contribution to GRP will be experienced between 2021/22 and 2029/30, reflecting peak mining production at Isaac Downs Project.

92 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

Figure C. 9. Additional Annual GRP/ GSP ($M) Supported by Isaac Downs Project $300.0

$250.0

$200.0

$150.0

$100.0

$50.0

Gross Regional/ State Product ($M) Product State Gross Regional/ $0.0

-$50.0

2035

2034

2033

2048 2032

2047 2031

2046 2030

2045 2029

2044 2028

2043 2027

2042 2026

2041 2025

2040 2024

2039 2023

2038 2022

2037 2021

2036 2020 Initial - RC Production Induced - RC

Initial - RoQ Production Induced - RoQ Note: RC = Regional Catchment. RoQ = Rest of Queensland. Sources: ABS (2012a; 2017a; 2018c; 2019a), Stanmore Coal (unpublished), AEC. In line with GRP/GSP above, the Project is anticipated to support increased employment in the regional catchment and the rest of Queensland. As production at the Isaac Downs Project overlaps mining activities at IPM in 2029/30, the number of additional jobs increases significantly. Employment will then be supported by the commencement of activities at the proposed IPU mine in 2037/38.

Figure C. 10. Additional Annual Employment (FTEs) Supported by Isaac Downs Project

600

500

400

300

200 Employment (FTEs) Employment 100

-100

2034 2024 2029 2039 2046

2031 2041 2023 2028 2033 2038 2043 2048 2021 2026 2036 2045

2022 2027 2032 2037 2042 2047 2020 2025 2030 2035 2040 2044 Initial - RC Production Induced - RC Initial - RoQ Production Induced - RoQ

Note: RC = Regional Catchment. RoQ = Rest of Queensland. Sources: ABS (2012a; 2017a; 2018c; 2019a), Stanmore Coal (unpublished), AEC.

93 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

APPENDIX D: LIKELIHOOD-CONSEQUENCE ASSESSMENT FRAMEWORK

Likelihood-consequence impact assessment frameworks are well recognised as an appropriate approach for assessing economic, social and environmental impacts.

The approach is adapted from risk-based assessment approaches, as per the Australian/New Zealand Standard for risk management (Standards Australia, 2009). The framework identifies and ranks benefits into relevant levels (very low, low, medium, high and very high) to compare options.

The assessment examines the likelihood of an effect occurring, and the potential consequences (i.e., a measure of severity/ magnitude of effect) should the effect occur. Table D. 1 contains the descriptors used to classify the likelihood and consequence.

Table D. 1. Descriptors Used to Classify Likelihood and Consequence Descriptor Description Likelihood Very high Is expected to occur High Will probably occur Moderate Might occur Low Unlikely to occur Very Low May occur in exceptional circumstances Consequence Very high • Adverse Impact: Extreme permanent loss of human, social, financial or built capital/wellbeing, with anticipated major public outrage • Beneficial Impact: Significant permanent enhancement of human, social, financial or built capital/wellbeing High • Adverse Impact: Substantial loss of human, social, financial or built capital/wellbeing, will attract public concern • Beneficial Impact: Substantial enhancement of human, social, financial or built capital/wellbeing Moderate • Adverse Impact: Moderate and noticeable loss of human, social, financial or built capital/wellbeing • Beneficial Impact: Moderate enhancement of human, social, financial or built capital/wellbeing Low • Adverse Impact: Small but noticeable loss of human, social, financial or built capital/wellbeing, can be easily rehabilitated • Beneficial Impact: Small enhancement of human, social, financial or built capital/wellbeing Very Low • Adverse Impact: Negligible loss of human, social, financial or built capital/wellbeing • Beneficial Impact: Negligible enhancement of human, social, financial or built capital/wellbeing Source: Adapted from Standards Australia (2009). The level of overall impact associated with each potential impact was then determined by combining likelihood and consequence using the matrix in Table D. 2.

Table D. 2. Impact Summary Table Consequences Likelihood Very Low Low Moderate High Very High Very High Medium Medium High Very High Very High High Low Medium Medium High Very High Moderate Low Low Medium High High Low Very Low Low Low Medium High Very Low Very Low Very Low Low Medium Medium Source: Adapted from Standards Australia (2009).

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APPENDIX E: CBA METHODOLOGY

STEP 1: DEFINE THE SCOPE AND BOUNDARY

To enable a robust determination of the net benefits of undertaking a given project, it is necessary to specify base case and alternative case scenarios. The base case scenario represents the ‘without project’ scenario and the alternative or ‘with project’ scenario examines the impact with the project in place.

The base case (without) scenario is represented by line NB1 (bc) over time T1 to T2 in Figure E.1. The investment in the project at time T1 is likely to generate a benefit, which is represented by line NB2 (bd). Therefore, the net benefit flowing from investment in the project is identified by calculating the area (bcd) between NB1 and NB2.

Figure E.1. With and Without Scenarios

Benefit d NB2

NB1 b c a

T1 T2 Time

Source: AEC.

STEP 2: IDENTIFY COSTS AND BENEFITS

A comprehensive quantitative specification of the benefits and costs included in the evaluation and their various timings is required and includes a clear outline of all major underlying assumptions. These impacts, both positive and negative, are then tabulated and where possible valued in dollar terms.

Some impacts may not be quantifiable. Where this occurs the impacts and their respective magnitudes will be examined qualitatively for consideration in the overall analysis.

Financing costs are not included in a CBA. As a method of project appraisal, CBA examines a project’s profitability independently of the terms on which debt finance is arranged. This does not mean, however, that the cost of capital is not considered in CBA, as the capital expenses are included in the year in which the transaction occurs, and the discount rate (discussed below in Step 5) should be selected to provide a good indication of the opportunity cost of funds, as determined by the capital market.

STEP 3: QUANTIFY AND VALUE COSTS AND BENEFITS

CBA attempts to measure the value of all costs and benefits that are expected to result from the activity in economic terms. It includes estimating costs and benefits that are ‘unpriced’ and not the subject of normal market transactions but which nevertheless entail the use of real resources. These attributes are referred to as ‘non-market’ goods or impacts. In each of these cases, quantification of the effects in money terms is an important part of the evaluation.

However, projects frequently have non-market impacts that are difficult to quantify. Where the impact does not have a readily identifiable dollar value, proxies and other measures should be developed as these issues represent real costs and benefits.

95 ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT

One commonly used method of approximating values for non-market impacts is ‘benefit transfer’. Benefit transfer (BT) means taking already calculated values from previously conducted studies and applying them to different study sites and situations. In light of the significant costs and technical skills needed in using the methodologies outlined in the table above, for many policy makers utilising BT techniques can provide an adequate solution.

Context is extremely important when deciding which values to transfer and from where. Factors such as population, number of households, and regional characteristics should be considered when undertaking benefit transfer. For example, as population density increases over time, individual households may value nearby open space and parks more highly. Other factors to be considered include, depending on the location of the original study, utilising foreign exchange rates, demographic data, and respective inflation rates.

Benefit transfer should only be regarded as an approximation. Transferring values from similar regions with similar markets is important, and results can be misleading if values are transferred between countries that have starkly different economies (for example a benefit transfer from the Solomon Islands to Vancouver would likely have only limited applicability). However, sometimes only an indicative value for environmental assets is all that is required.

STEP 4: TABULATE ANNUAL COSTS AND BENEFITS

All identified and quantified benefits and costs are tabulated to identify where and how often they occur. Tabulation provides an easy method for checking that all the issues and outcomes identified have been addressed and provides a picture of the flow of costs, benefits and their sources.

STEP 5: CALCULATE THE NET BENEFIT IN DOLLAR TERMS

As costs and benefits are specified over time it is necessary to reduce the stream of benefits and costs to present values. The present value concept is based on the time value of money – the idea that a dollar received today is worth more than a dollar to be received in the future. The present value of a cash flow is the equivalent value of the future cashflow should the entire cashflow be received today. The time value of money is determined by the given discount rate to enable the comparison of options by a common measure.

The selection of appropriate discount rates is of particular importance because they apply to much of the decision criteria and consequently the interpretation of results. The higher the discount rate, the less weight or importance is placed on future cash flows.

The choice of discount rates should reflect the weighted average cost of capital (WACC). For this analysis, a base discount rate of seven percent has been used to represent the minimum rate of return, which is in line with Queensland and Australian Government guidelines. As all values used in the CBA are in real terms, the discount rate does not incorporate inflation (i.e., it is a real discount rate, as opposed to a nominal discount rate).

To assess the sensitivity of the project to the discount rate used, discount rates either side of the base discount rate (seven percent) have also been examined (four percent and ten percent).

The formula for determining the present value is:

FV PV = n 1( + r)n

Where:

PV = present value today

FV = future value n periods from now r = discount rate per period n = number of periods

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Extending this to a series of cash flows the present value is calculated as:

FV1 FV2 FVn PV = + +  + 1( + r)1 1( + r)2 1( + r)n

Once the stream of costs and benefits have been reduced to their present values the Net Present Value (NPV) can be calculated as the difference between the present value of benefits and present value of costs. If the present value of benefits is greater than the present value of costs, then the option or project would have a net economic benefit.

In addition to the NPV, the internal rate of return (IRR) and benefit-cost ratio (BCR) can provide useful information regarding the attractiveness of a project. The IRR provides an estimate of the discount rate at which the NPV of the project equals zero, i.e., it represents the maximum WACC at which the project would be deemed desirable. However, in terms of whether a project is considered desirable or not, the IRR and BCR will always return the same result as the NPV decision criterion.

STEP 6: SENSITIVITY ANALYSIS

Sensitivity analysis allows for the testing of the key assumptions and the identification of the critical variables within the analysis to gain greater insight into the drivers to the case being examined.

A series of Monte Carlo analyses has been conducted to test the sensitivity of the model outputs to changes in key variables. Monte Carlo simulation is a computerised technique that provides decision-makers with a range of possible outcomes and the probabilities they will occur for any choice of action. Monte Carlo simulation works by building models of possible results by substituting a range of values – the probability distribution – for any factor that has inherent uncertainty. It then calculates results over and over, each time using a different set of random values from the probability functions. The outputs from Monte Carlo simulation are distributions of possible outcome values.

During a Monte Carlo simulation, values are sampled at random from the input probability distributions. Each set of samples is called an iteration, and the resulting outcome from that sample is recorded. Monte Carlo simulation does these hundreds or thousands of times, and the result is a probability distribution of possible outcomes. In this way, Monte Carlo simulation provides a comprehensive view of what may happen. It describes what could happen and how likely it is to happen.