Response to Submissions

Shenhua Watermark RTS

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Q. What is the effect of applying changes to the assumptions in the Benefit Cost Analysis (BCA)? 
A. The BCA identifies and quantifies all the material economic efficiency costs and benefits of the Project. Even when applying changes to price, royalty and company tax assumptions in the BCA, it does not change the conclusion that there are substantial net production benefits of the Project to the region, NSW and Australia
On this basis the Project is estimated to have net social benefits to Australia of between $1,315 M and $1,639 M.  

As identified by Dr Jeff Bennett, Professor of Environmental Management, Crawford School of Public Policy, Australian National University in his peer review of the Economics Impact Assessment for the Project (see Appendix AF of the EIS):
"It is clear that the assessment's conclusion that the mine would provide a net benefit to the Australian society is robust to a range of variations in a range of key analytical parameters". 

"In conclusion, I am satisfied that the Gillespie Economics Assessment of the Watermark Mine provides a sound basis for decision making."
Q. What assessment guidelines were used in the Economics Assessment? 
The BCA valued (weighed) impacts in accordance with the Guideline for the use of Benefit Cost Analysis in Mining and Coal Seam Gas Proposals and as such the assessment method is appropriate. All material environmental impacts were valued and included in the BCA for the Project in accordance with the BCA Guidelines.
Q. What sensitivity testing was undertaken?
A. Sensitivity testing of variables in the Economics Impact Assessment by +/-20% is considered an adequate approach, particularly as it relates to a sustained increase or decrease in values over the 30 year life of the Project, rather than more temporary changes.
While current coal prices are below those assumed in the BCA, projections suggest thermal and Pulverised Coal Injection (PCI) coal prices (in USD) are set to increase and for the value of AUD to fall relative to USD. These projections increase the value of the Project.
Q. What is the estimated contribution to the NSW economy due to the Project?
A. The Project is estimated to make up to the following total annual contribution to the NSW economy for 30 years:
• $1,752 M in annual direct and indirect regional output or business turnover (compared to $1,554 M estimated in the Economics Impact Assessment);
• $826 M in annual direct and indirect regional value added (compared to $802 M estimated in the Economics Impact Assessment);
• $306 M in annual direct and indirect household income (compared to $276 M estimated in the Economics Impact Assessment); and
• 3,728 direct and indirect jobs (compared to 3,260 jobs estimated in the Economics Impact Assessment). 
Q. How does this financial benefit compare to the use of the land for agricultural purposes ?
A. The present value of the continued use of the agricultural lands and water for agricultural
    purposes that will be utilised by the Project is estimated at $40 Million. Based on these
    comparative values, the Project is considered to be a significantly more efficient land
    use than continued agricultural production.


Watermark Coal Mine
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