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2006

17 February, 2006]

QUEENSLAND GOVERNMENT GAZETTE, No. 40

689

State Development and Public Works Organisation Act 1971 NOTICE The Governor in Council has approved the Sonoma Infrastructure Facility as shown on the map at Schedule A, as an infrastructure facility that is of significance , particularly economically or socially, to Queensland and the Mackay region , pursuant to s 125 ( 1)(f) of the State Development and Public Works Organisation Act 1971.

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SONOMA COAL PROJECT COLLINSVILLE

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INFRASTRUCTURE AREA /SUBDIVISION

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Infrastructure Facility Area

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LAND DEVELOPMENT AND MAPPING CONSULTANTS Unit 9 , rAfN/rr CHAMBERS. W.., ^ATERIM mA 91D0`3 $W= CLEVELAND, QUEENSLAND 4(63 P.O. BOX 461, CLEVELAND 4(63 PHONE (O?) 3286 33x2 (0?) 3286 2561 FAX

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STATEMENT GIVING REASONS WHY THE GOVERNOR IN COUNCIL APPROVED BY GAZETTE NOTICE ON 17 FEBRUARY 2006 AN INFRASTRUCTURE FACILITY AS HAVING SIGNIFICANCE UNDER THE STATE DEVELOPMENT AND PUBLIC WORKS ORGANISATIONACT 1971 1. Decision

On 17 February 2006, the Governor in Council approved by gazette notice under section 125(1)(f) of the State Development and Public Works Organisation Act 1971 ("the SDPWO Act") the Sonoma Infrastructure Facility as having significance, particularly economically or socially, to Queensland and the Mackay Region, the region in which the infrastructure facility is to be constructed.

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2.

Introduction

By letter dated 1 December 2005; QCoal Pty Ltd ("QCoal") made an application to the Coordinator-General, requesting that the Sonoma Infrastructure Facility, be approved by the Governor- in Council as an infrastructure facility having significance under s 125(1)(f) of the SDPWO Act. The Infrastructure Facility is comprised of the rail and other infrastructure necessary for the production and transportation of coking coal from the proposed Sonoma Coal Project ("the Project"). S 125(l)(f) of the SDPWO Act provides that the Coordinator-General may take land for the purposes of an infrastructure facility that is: · · of significance, particularly economically or socially, to Queensland or the region in which the facility is to be constructed; and approved by the Governor in Council, by gazette notice, as having that significance.

Pursuant to s 125(2) of the SDPWO Act, in considering whether an infrastructure facility would be of economic or social significance, the potential for the facility to contribute to community wellbeing and economic growth or employment levels must be taken into account. In accordance with s 125(3) of the SDPWO Act, in assessing such potential, the contribution the infrastructure facility makes to agricultural, industrial, resource or technological development in Australia, Queensland or the region in which the appropriate infrastructure facility is to be constructed is a relevant consideration. 3. Evidence or Other Material on Which Findings of Material Questions of Fact are Based

In forming-the decision to approve the Sonoma Infrastructure Facility as having significance, particularly economically or socially, to Queensland and the region in which the facility is to be constructed, the Governor in Council had regard to the following materials: · · · · Extract from State Development and Public Works Organisation Act 1971, ss 125 and 174; Appendix A and C of the Guidelines for acquisition of land for infrastructure projects by persons other than the State, September 1999, prepared pursuant to s 174 of the SDPWO Act; Letter dated 29 November 2005 from Queensland Rail ("QR") to The Coordinator-General about the proposed rail line to service the Project; Letter dated 1 December 2005 from Chris Wallin, Managing Director of QCoal to the Coordinator-General enclosing QCoal's application requesting that the Sonoma Infrastructure Facility be approved by the Governor in Council as an infrastructure facility having significance under s 125(1)(f) of the SDPWO Act; Letter dated 1 December 2005 from Chris Wallin, Managing Director of QCoal to the Coordinator-General providing supplementary information to support QCoal's application as an infrastructure facility having significance under s 125(1)(f) of the SDPWO Act; Deputy Coordinator-General's letter dated 8 December 2005 inviting submissions from persons potentially affected by the application and proposed infrastructure facility:

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· · · ·

QR;

Department of Natural Resources and Mines; Yvonne Cox; Clive and Diane Watts;

Seven submissions received from affected persons in response to the Deputy Coordinator-General's letter dated 8 December 2005 inviting submissions from persons affected by the infrastructure facility: · · · · Letter dated 23 December 2005 from QR (Network Access); Letters (2) dated 22 December 2005 from the Department of Natural Resources and Mines; Letters (2) dated 20 December 2005 and 13 January 2006 from Ruddy Tomlins & Baxter on behalf of Clive and Diane Watts; and Letters (2) dated 20 December 2005 and 13 January 2006 from Ruddy Tomlins & Baxter on behalf of Yvonne Cox.

· ·

Facsimile dated 22 December 2005 from The Coordinator-General to Ruddy Tomlins & Baxter, extending the time for the receipt of submissions from Clive and Diane Watts and Yvonne Cox until 13 January 2006; The Coordinator-General's Briefing Note dated 2 February 2006 to the Honourable Peter Beattie MP, Premier containing the Coordinator-General's recommendation in relation to whether the Sonoma Infrastructure Facility constitutes an infrastructure facility of significance under s 125(1)(f) of the SDPWO Act.

, 2006

17 February, 2006]

QUEENSLAND GOVERNMENT GAZETTE, No. 40

691

a testing laving other reject e c' e c of an to be 4.

Explanatory Memorandum to Executive Council Minute about the Sonoma Infrastructure Facility. Macquarie Research - Equities, Coal Industry Outlook, 13 October 2005, Macquarie Bank. Queensland's World-class Coals, December 2005, Department of Natural Resources and Mines ("DNRM"). Media Statement -'Boom time for Queensland mining industry', 10 November 2005, The Hon. Henry Palaszczuk MP, Minister for Natural Resources and Mines. Media Statement - `Massive Expansion Ahead for Central Queensland', 4 October 2005, The Hon. Peter Beattie MP, Premier & Treasurer. Queensland Economic Review - September 2005, Office of Economic and Statistical Research ("OESR"). Findings of Material Questions of Fact

From the material to which regard was had, the following findings of fact were made: 4.1 Type of Infrastructure Facility Proposed Including Land on Which the Facility is to be Located

The application from QCoal identified the components of the Sonoma Infrastructure Facility as: ted ® an approximately 3.8km rail loop, weighbridge and associated coal washery and train loading facilities that will be connected to the existing Newlands rail line for the purpose of transporting coal from the Project to the export Port of Abbot Point; roads and other infrastructure to provide access to the rail loop by QR; a water pipeline to connect the Project to the existing Collinsville-pipcline operated by SunWater; water storage, distribution and reticulation facilities to service the Project and provide water for the coal washery and rail loading facility; electrical transmission and distribution facilities to transfer power for the Infrastructure Facility and the Project from the existing power lines operated by Ergon Energy; infrastructure for the storage of fuel; multipurpose office and other workshop facilities and communication infrastructure; and all other associated facilities required for the primary purpose or for any purpose incidental to carrying out the primary purpose described above.

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Details of the infrastructure facility are set out below: The Sonoma Infrastructure Facility is proposed to be located 6 km south of Collinsville on land adjacent to the Sonoma Coal Project at the northern end of the Bowen Basin coalfields. The Sonoma Coal Project will consist of at least three open cut pits, coal rejects and tailings disposal dams, haul roads, coal stockpiles, other site developments associated with coal mine operations, environmental buffer zones and the Sonoma Infrastructure Facility. QCoal lodged 3 Mining Lease Applications ("MLAs") on 21 November 2005: Belmore West MLA 10325; Sonoma East MLA 10327; and Sonoma West 10326 to covering an area of around 2,595ha. The land required for the Sonoma Infrastructure Facility, as shown in Schedule A, is held in a combination of freehold and leasehold title with an area of approximately 302 ha comprising:

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278.8ha of Lot 3 on SP134564 in the Shire of Bowen; and 23.18ha of Lot 25 on DK 276 in the Shire of Bowen.

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Production of coal will involve the hauling of raw coal from pits at the Sonoma Mine to the coal processing plant. The raw coal will be washed to meet the quality specifications determined by Sonoma Coal's customers. After washing, the coal will be loaded onto trains provided by QR. A purpose built train loadout facility and approximately 3.8 km rail loop will be constructed by QR to service the Sonoma Coal Project. Coal will be hauled 105 km by rail from the Sonoma Mine to the Port of Abbot Point for export. Initial production from the Sonoma Mine is expected to be approximately 2 million tonnes per annum (Mtpa) with expansion up to 4Mtpa possible once additional rail and port capacity becomes available. 4.2 Demand Projections for the Services Associated with the Infrastructure

The Sonoma Mine is expected to produce over 60% coking coal to be used primarily in the steel manufacturing process. The remainder of the coal produced will be thermal coal products for use in electricity generation and cement industries, amongst others. The primary market for the coal from the Sonoma Mine will be the export market.

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According to Macquarie Research, in 2004 global supply of seaborne metallurgical coal was 192 Mtpa, predominantly from the main exporting countries of Australia, Canada, USA, China and Russia. According to research by DNRM Queensland is the largest provincial exporter of coal in the world. Research from DNRM indicates that within Australia, the majority of all coking coal is produced in Queensland, specifically in the Bowen Basin. New open-cut developments, with close proximity to infrastructure within the Bowen Basin remain rare. QCoal's application indicates that, against the backdrop of global supply issues, 2004 also saw steel production top 1 billion tonnes for the first time. China became the world's largest steel producer, consumer and exporter. Subsequently, demand for coke and coking coal has hit record highs, as reflected in the coal price. Global demand and supply side constraints have resulted in record prices for coking coal. Coking coal is currently trading around US$125 per tonne and is forecast to remain tight for at least the next 3 years. Recent analyst forecasts believe contract-prices around US$115 per tonne are likely in the coming year. Sonoma coking coal benefits from low phosphorus and sulphur while maintaining high fluidities and market acceptable levels of ash. QCoal anticipates that the primary markets for Sonoma coking coal are considered to be Japanese and European steel mills. Japanese steel mills are considered the most likely as the Asian region continues to experience robust economic growth and is best placed to benefit from the ongoing growth in Chinese demand and ultimate emergence of India as a global economic power. QCoal considers Europe to be the second main market, due to the low phosphorus content of Sonoma coal. Phosphorus is closely regulated by a number of European countries and European steel mills have traditionally paid a premium price to obtain low phosphorus coals for their coke blends. QCoal's application suggests that, as with the coking coal market, the thermal market has been strongly influenced by China and global supply side issues in 2004/5. Internationally, 442 million tonnes of seaborne export coal was traded in 2004 with 30% provided by Australian suppliers. OESR research and Macquarie Research both suggest that the coal market dynamic was altered as China reduced exports by diverting thermal coal previously earmarked for export to domestic power generation. In the foreseeable future, QCoal expects that Chinese domestic demand will continue to constrain Chinese exports and Chinese imports will continue to increase as domestic mines are unable to meet power generator's needs. 4.3 Needs Which the Facility Would Meet and How the Infrastructure Would Satisfy the Identified Need

As the Infrastructure Facility will provide all of the transportation and processing infrastructure for the Project, demand for the Facility is driven by demand for product coal from the Sonoma Mine. The Infrastructure Facility will meet these needs by providing:, · · · · · Coal processing and train loading facilities, Rail transport infrastructure to allow transport of product coal to end users, Water storage, distribution and reticulation facilities to allow the production and processing of coal, Electrical transmission and distribution facilities to -allow the production and processing of coal; and Other facilities to enable the Sonoma mine to meet global demand for its coal products.

Coal production is a vital part of economic activity in Queensland and the coal industry is a major source of income for the State's economy. In recent years, the industry has continually surpassed historical highs in both the production and the export of coal. Research by the DNRM indicates that the Queensland coal industry has entered another phase of major expansion that could take coal exports from 145.5 Mt in 2004-05 to about 215 Mt/a by 2010 mainly driven by increased demand for metallurgical coals from Queensland's traditional markets in Asia and Europe. According to Macquarie Research, although the past two years have seen unprecedented rises in the prices for all the main coal types in the seaboume-traded coal markets, growth in Australian exports has been limited since 2003 by infrastructure constraints in Australian rail and port capacity. According to DNRM research, rail transport, port capacities and other infrastructure are progressively being expanded to meet this increased demand and by October 2005 the Queensland Government had committed to spend more than $2.2 billion on new infrastructure projects that will support the coal industry. According to the OESR, in the medium term, the outlook for Queensland's coal production is positive. Continued growth in coal exports depends on the extent of demand for coal from key overseas markets, such as China and Japan, and the ability of the industry to extract and transport the coal. Despite an anticipated moderation in economic growth in China in 2005/2006, global demand for coal is expected to remain strong, supporting growth in Queensland's coal

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17 February, 2006]

QUEENSLAND GOVERNMENT GAZETTE, No. 40

693

industry in the medium term. Longer term demand may be influenced by the extent to which China and India can increase capacity to provide for their own coal needs as mining capacity and productivity increase. Despite the emergence of other major coal producers, such as India and Indonesia, Queensland is expected to maintain its position in the export market for coal by supplying quality (low-sulphur, low-ash, high-permeability) resources, underpinned by its established trading relationships with key markets, such as Japan. 4.4 Timing of Project or Service Delivery

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The Project schedule is currently based on a construction period from March 2006 to July 2006. Product coal from the Project is expected in late September 2006, with a mine life of approximately 15 years. QCoal's application indicates that, if QCoal is unable to acquire the land required for the Infrastruue Facility prior to the QR construction start date of April 2006, the project will be significantly delayed. QR's advice of 23 December 2005 is that the rail infrastructure construction required to facilitate coal haulage from the project has been programmed for completion in the 4th quarter of 2006, subject to land access by the end of January 2006. QR also advises that there is presently a significant demand for new coal infrastructure and therefore the optimal management and resourcing of infrastructure projects is vital to ensure beneficial and timely outcomes for all stakeholders. 4.5 Special Assistance Required from Government other than Land Acquisition

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QCoal's application to the Coordinator-General does not identify any additional requests for special assistance from the Queensland Government.' .by 1 in :oal t to °4.6 Financial Analysis Including Project Risk/ Return

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While market analysis indicates sustained demand for products from the Sonoma mine, financial analysis by QCoal has been based on long run average coal prices. QCoal has advised that development of the mine will proceed even if future coal prices return to long run average levels. This return would represent a 56% drop in the current coking coal price and a 34% drop in the current thermal coal price. These price fluctuations would affect all operators in the coal industry. QCoal advises that strong interest in purchasing Sonoma coking coal has already been registered from both Asian and European markets. Ongoing marketing efforts are focused on finalising long term offtake arrangements to support the project. QCoal is in advanced negotiations with a major steel mill to take a significant equity position in the project. Both equity investment and long term offtake negotiations are based on Sonoma coal being available for export in September 2006. The Project provides critical demand for the expansion of the Abbot Point Coal Terminal. QCoal is in the process of negotiating take-or-pay arrangements for expanded capacity. QCoal advises that these arrangements form the financial basis for the Stage 2 expansion. The Abbot Point Stage 2 expansion will increase the Port capacity to 21 million tonnes and provide 100 full time jobs during the 12 - 15 month construction period. 4.7 Possible Environmental Effects

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An Environmental Impact Statement (EIS) for the Project is required for the assessment of the environmental. authority (mining lease) under the provisions of the Environmental Protection Act 199.4. The purpose of the EIS is to assess the potential adverse and beneficial environmental, economic and social impacts of the project; and management, monitoring, planning and other measures proposed to minimise any adverse environmental impacts of the project. A draft EIS has been submitted to the Environmental Protection Authority (EPA). The possible likely environmental effects of the development and operation of the Project include noise, dust and water management issues which are typically associated with the development of coal mines. The EIS indicates mitigation of any likely adverse environmental effects will be managed in accordance with guidelines approved by the EPA. The Commonwealth Minister for the Environment and Heritage has determined that the proposed Sonoma Mine is not a controlled action under the Environment Protection and Biodiversity Conservation Act 1999 (Cth). The decision by the Commonwealth Minister is the subject of an appeal to the Federal Court by the Wildlife Preservation Society of Queensland Whitsunday Branch. The appeal was heard in November 2005 and a decision is expected in early 2006. 4.8 Technical and Financial Capacity of the Proponent to Implement the Proposed Facility

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QCoal is a privately owned Queensland company based in Brisbane and has been actively involved in the Queensland coal exploration and mining industry for over ten years. QCoal has completed successful mineral exploration programs in North and Central Queensland resulting in joint ventures with listed mineral exploration and production companies.

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17

The most recent of these is the Coppabella Deposit that was developed and is currently operated by Macarthur Coal as the Coppabella Mine. To undertake major project development and mining operations, QCoal proposes to enter into long term commercial agreements with experienced companies that have the appropriate level of resources to successfully undertake such projects: · · Leighton Contractors has been engaged by QCoal to develop a mine plan and will operate the mine on a contract basis once operations commence. Sedgman, a Queensland based engineering and construction company specialising in coal preparation and material handling, has developed the washplant for the Sonoma Coal Project under a design, build and operate agreement with QCoal. BGC Contracting, part of the BGC Group, will undertake the design and construction of the onsite infrastructure. BGC Contracting has engaged Parsons Brinkerhoff to provide design services for the project.

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QCoal has secured the necessary commitments from the various Government owned corporations (eg. QR, the Ports Corporation of Queensland and SunWater) to construct and/or operate components of the Project. QCoal has executed agreements with QR to construct the rail infrastructure based on the understanding that QCoal would acquire the freehold title to the underlying land prior to the commencement of construction. QR has scheduled construction to commence in April 2006. Based on forecast demand for products from the Sonoma mine, QCoal has entered into a coal transport agreement with Queensland Rail. This agreement is on a take-or-pay basis (i.e. even if no coal is produced and/or transported from.the, project, QCoal must pay the rail freight charges) and allows QCoal to transport 2Mtpa of product coal from the mine to the Port of Abbot Point for export. The proposed Mine is approximately 105km by rail from Abbot Point Bulk Coal Terminal, the export port for the Project. Rail transport and port user agreements have been entered into to secure an initial export capacity of 2Mtpa. Additional port capacity of 2Mtpa has been requested and the Ports Corporation of Queensland has indicated this capacity would be available following the proposed Stage 2 expansion of Abbot Point. This will take the total export capacity for the Sonoma Coal Project to 4Mtpa. 4.9 Investigations on the Required Land

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The location of the Infrastructure Facility is based primarily on geological and geotechnical analysis and hydrological studies of the Sonoma Coal Project Area. Its location is constrained to the north by Coral Creek, a watercourse that experiences large flood events in certain wet seasons, to the east by the existing Newlands railway and Bowen Development Road, and to the south and west by known coal resources. The final location and design of the rail infrastructure has been undertaken in conjunction with QR to minimise the impact of the rail infrastructure on the coal resources identified while meeting QR's design standards. The proposed site for the Infrastructure Facility has the following advantages: · Exploration drilling has verified that no significant coal resource will be sterilized. The majority of the Sonoma MLA area contains shallow coal seams and the proposed location of the Infrastructure Facility has been selected specifically to avoid sterilization. of the coal resource; The Facility is located immediately alongside the existing Newlands railway resulting in the shortest rail loop possible designed to QR's standards and located to avoid sterilization of any major coal resources; The site occupies gently rising ground with the advantage of better foundation material for water storage facilities, site buildings and the coal washery; The Infrastructure Facility is located immediately adjacent to the existing power transmission lines operated by Ergon Energy; Main road traffic access from the Bowen Development Road is across a single tr ack railway line south of the rail loop and in the best position for safe entry/exit to/from the proposed mine.

· · ® ·

QCoal currently holds Exploration Permit for Coal (EPC) 586 and EPC 639. EPC 586 was granted to QCoal in November 1995 and EPC 639 was granted in December 2001. QCoal has undertaken exploration in the Sonoma area since 1995. Three MLAs over the proposed development area were lodged on 21 November 2005 covering a total area of approximately 2,595ha.

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QUEENSLAND GOVERNMENT GAZETTE, No. 40

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The Sonoma Infrastructure Facility is located on exclusive possession tenures that are not subject to Native Title. A draft Cultural Heritage Management Plan has been agreed with the Traditional Owners and is currently being documented for execution. 4.10 Economic Significance of the Infrastructure Facility

The Project is expected to directly employ 200 people during the construction period and create 110 full time jobs over the expected 15 year life of the mine. Once operational, the mine will be responsible for in excess of $17 million per annum on wages. Based on experience at similar mines, a direct wage contribution of $10.2 million will be injected into the surrounding Collinsville and Bowen area. Economic analysis of spending by mine.employees in other mining towns indicates that as-well as direct wage expenditure, new households created by the Sonoma Coal Project will generate in excess of $10 million in indirect expenditure in their local communities. In addition to expenditure on labour costs, the Sonoma Coal Project mine will spend an estimated $57 million per annum on non-labour operating costs. Mine employees will be accommodated in the nearby town of Collinsville. This will provide benefits to the historic mining town through development of new housing estates and provide additional demand for local businesses. QCoal estimates that indirect spending flows from the Project will be in the order of $12.3 million per year in Collinsville and the surrounding community. In addition the Project will make the following significant contributions to the surrounding Mackay region and the State: · · · contribute over $15 million per annum in Coal Royalties to the Queensland Government; earn in excess of $200 million per annum in export revenue for the State; contribute 5 cents per tonne of coal railed towards the Coal Research Levy; spend $15 million per year on rail freight with QR; provide $7.6 million in user charges to the Ports Corporation of Queensland and provide new demand to underwrite the Stage 2 expansion of the Abbot Point Terminal; and provide approximately $20 million of additional road, rail, water, power and other infrastructure for the area. Social Significance of the Infrastructure Facility

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The proposed Project will provide direct employment for 200 people during the construction phase with 110 direct positions created over the life of the mine (2006 until 2021 at the earliest). The predicted increase in employment is likely to lead to a corresponding increase in the demand for community services and reinforcing the mining industry as the primary employer in Collinsville. Bowen Shire Council has advised QCoal that there is sufficient community infrastructure (eg. water supply and sewerage) to readily cater for an expanded population of 4000 persons (1500 greater than present). Other facilities and services will readily cope with the expected population increase from the Project. 4.12 Summary of the Public Submissions

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As part of the assessment of the significance , particularly economically or socially , to Australia, Queensland or the Mackay region of the infrastructure facility, the Deputy Coordinator- General invited submissions on the relevant issues from affected persons, in accordance with the Guidelines for Acquisition of Land for Infrastructure Projects by Persons other than the State. Seven submissions were received as follows: · · QR (Network Access); The Department of Natural Resources and Mines (2); Ruddy Tomlins & Baxter on behalf of Clive and Diane Watts (2); and Ruddy Tomlins & Baxter on behalf of Yvonne Cox (2).

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The matter being assessed by the Coordinator-General, that is, whether the infrastructure facility is of significance, particularly economically or socially to Queensland or the. region in which the facility is to be constructed, was addressed directly only in the submission received from QR (Network Access); which supported a finding that the Sonoma Coal Project has that significance.

of

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[17 February, 2004

The submission from QR (Network Access) noted that the coal industry is currently in an expansion phase and that the`; Sonoma Coal Project will support: ® · · ® increased utilisation of existing QR assets and further railand.port infrastructure expansion; revenue generation for the State through railing and port charges, royalties and flow-on effects; employment and skill development opportunities for workers in the region; and continued employment for QR employees and contractors in the local area.

Approval by the Governor in Council of the project as an infrastructure facility of significance is a prerequisite to compulsory acquisition where the proposed taking of the land by the Coordinator-General is for conferring rights or interests in the land to be taken on a person other than the State. The SDPWO Act requires a one month notification period after -the relevant gazettal and then a 4 month consultation and negotiation period before consideration of the acquisition by the Coordinator-General. If the project does not proceed any land taken would have to be offered back to the former owners of the land. 5. The Reasons for the Decision

The Governor in Council approved by gazette notice on 17 February 2006 under s 125(1)(f) of the SDPWO Act, the Sonoma Coal Project as an infrastructure facility of significance, particularly economically or socially, to Queensland and the Mackay region, the region in which the facility is to be constructed, for the following reasons: · The Project is a new hard coking coal discovery located approximately 6 km south of Collinsville at the northern limit of Queensland's Bowen Basin coalfields. QCoal discovered and is developing the Sonoma Coal Project, which will contribute to resource development in Queensland and the Mackay region. The proposed Project will be an open cut operation initially producing 2 Mtpa, with potential to expand to 4 Mtpa once rail and port capacity become available. The Sonoma Infrastructure Facility will process and transport up to 4Mtpa of product coal over the 15 year forecast life of the mine. On 21 November 2005, QCoal lodged three MLAs over the area required for the Sonoma Coal Project. The proposed Project will provide direct employment for 200 people during the construction phase and, once operational, create over 100 direct jobs in the Collinsville area and Mackay Region for the life of the Project. The Project will provide a substantial contribution to the maintenance of a higher level of sustainable social and economic activity in the region. The existence of a new mine operator will reduce overall reliance on the existing sources of employment and encourage new development by attracting new households to the region. In addition to direct employment for the Collinsville district, the Sonoma Mine will make the following significant contributions to the surrounding Mackay region and the State: · ® · ® · · · contribute over $15 million per annum in Coal Royalties to the Queensland Government; earn in excess of $200 million per annum in export revenue for the State of Queensland; contribute 5 cents per tonne of coal railed towards the Coal Research Levy; spend $15 million per year on rail freight with QR; provide $7.6 million in user charges to the Ports Corporation of Queensland and provide new demand to underwrite the Stage 2 expansion of the Abbot Point Terminal; and . provide around $20 million of additional road, rail, water, power and other infrastructure for the region.

·

· · ·

·

The forecast robustness in global coal markets and subsequently high demand for product coal from the Sonoma mine results in a need for infrastructure to allow maximum production, processing and transportation of coal to meet end-user demand. Increasing coal exports will help to ensure long term supply chain opportunities for Central Queensland coal fields and strengthen the possibility of further expansions in the Bowen and Surat basins. The Sonoma Infrastructure Facility is an integral part of the Project, as it will provide the entire coal processing and transport infrastructure for the Project as well as the required power, water and other infrastructure. It is considered that the Project will provide significant economic and social contributions to the Mackay Region and the State of Queensland. Given the significance of the Project and the integral role the Sonoma Infrastructure Facility will have in the operation of the Project, it is considered that the Sonoma Infrastructure Facility is an infrastructure facility of significance in accordance with s 125 of the SDPWO Act.

· · ·

Ross Rolfe Coordinator-General

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