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. i ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT 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. ii ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT • 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. iii ISAAC DOWNS PROJECT – ECONOMIC IMPACT ASSESSMENT 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.