Value Propositions

HDL's consents for the Stockton Plateau Hydro Scheme set upper limits. The scheme may be configured within the limits in response to a potential partner's investment objectives. To date, investors' interests have been on power generation into the local network and national grid, or on lowest-cost solutions for managing the government’s acid mine drainage liabilities. With the imminent cessation of mining possibly making a 250+ work force redundant, the highest value proposition may be to provide dedicated green energy to a high energy-use industry looking for green power security, a skilled workforce and green credits for resolving the government’s environmental liabilities.

HDL’s consents for the Stockton Plateau Hydro Scheme are aspirational. Diversion of acid mine drainage (AMD) to an ocean outfall provides for the best possible renewable generation and environmental outcomes. Runoff, including AMD, is collected from all the tributaries on the Stockton Plateau affected by current, future and historic mining. The scheme will manage AMD from the disturbance of waste dumps by weathering and natural hazards, which can be expected over the-long term. The scheme will meet financial and environmental objectives which cannot be met by other solutions.

The underlying value proposition for the Stockton Plateau Hydro Scheme is that the value of renewable energy will subsidise the infrastructure necessary to restore water quality in the Ngakawau River to pre-mining conditions. The developer of the scheme will manage the government’s long-term AMD liabilities. The government’s financial contributions to the scheme will be sufficient to ensure the financial viability of the scheme.

Full containment of the long-term effects of mining and restoration of Ngakawau River is consented and constructable. It is the lowest-cost and lowest-risk long-term solution. It can be considered the minimum acceptable AMD rehabilitation outcome for the government after 120 years of government-owned coal mining.

In 2014, the Ngakawau Restoration Project (NRP) reconfiguration of the Stockton Plateau Hydro Scheme was proposed to achieve Stockton Mine's more immediate and pragmatic investment objectives. The NRP will manage AMD from the mining licence to standards equivalent to the mine's current conditions of discharge consent, which require compliant mine discharges 90% of the time. The mine's capital contributions to the project for AMD diversion was to be less than the NPV of long-term lime-dosing liabilities for the mine.

The proposed NRP reconfiguration retains the coverage of the Stockton Plateau Hydro Scheme but the hydro resource is reduced to 140GWh. Reservoir sizes are reduced, reducing capital cost. The reservoirs spill during higher flow events. AMD from the entire plateau is diverted to an ocean outfall 75% of the time. The capital and operating cost contributions for AMD management is c.50% of total scheme cost, less than the long-term cost of lime-dosing for the current mine site, and significantly less than the cost of AMD management for the entire plateau when AMD management for historic mines, not covered by the mine’s liabilities, are added. The scheme should meet or exceed the government's investment objectives.

The Treasury’s latest investment objective that establishes “maintenance of health levels that exist at mine closure” could endorse ongoing lime-dosing. This may be pragmatic in the short-term but, when the miner quits the site and current consents need to be replaced for long-term rehabilitation of the plateau, the test will be if continued long-term degradation of Stockton Plateau and Ngakawau River is acceptable to the Minister, Cabinet, Iwi, Department of Conservation and the wider community. It can be expected that replacement consents will need to meet Australasian guidelines for management of discharge of effluent to freshwater, which the current management of discharges from the plateau would not meet. It is significant that current operational lime dosing targets at the compliance site are to reduce acidity to pH5 in order to achieve some recovery of aquatic life in the Ngakawau River. A target pH of 5 represents a greater reduction in acidity than is required by the mine’s current consents, which stipulate a target of pH4, bringing into question the adequacy of the mine's current discharge consents.

HDL’s value proposition is that the holistic environmental baseline set by the consents for the Stockton Plateau Hydro Scheme will provide for final design to meet the standards of environmental outcomes eventually agreed with Iwi and the community following the exit of the miner. The value of the government’s contribution will need to be sufficient to attract hydro investment with the attendant costs of managing the government’s AMD liability in the long-term.

In the event the government rejects investment in the Stockton Plateau Hydro Scheme and continues with lime-dosing as a long-term solution, (i.e. continued lime-dosing is acceptable and consentable as a long-term management option), the NRP remain a financially viable and potentially lowest-risk hydro investment. In this event, the scheme could discharge treated water to the Ngakawau Estuary, avoiding the need, risks and costs of constructing an ocean outfall. Consents for discharge of treated AMD to the Ngakawau Estuary from a power station at Ngakawau were granted to Solid Energy in 2012 and are now held by the Treasury.