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Australian gold miner Regis Resources (ASX: RRL) warned on Monday that its McPhillamys project is “not viable” due to a last-minute environmental protection declaration by the federal government.
The company had intended to construct a tailings dam near the headwaters of the Belubula River to manage waste from the proposed McPhillamys gold and silver mine in New South Wales.
Federal Environment Minister Tanya Plibersek’s decision to protect the Indigenous cultural heritage area, made on Friday afternoon, means the dam cannot be built at the planned location near Blayney, Regis said.
Plibersek has said her decision would not impact the McPhillamys project as Regis could place the dam elsewhere. The miner noted that choosing a new location would effectively restart the approvals process and potentially delay the project by five to 10 years.
Regis chief executive officer Jim Beyer voiced his frustration over the federal minister’s intervention, pointing out that it occurred after the project had already been assessed and approved under both state and Commonwealth legislation following a nearly four-year process.
“The decision by Minister Plibersek is unprecedented and directly contradicts the EPBC Act approval provided from within the minister’s own department,” Beyer said.
Regis Resources, which is the third largest Australian gold producer listed on the local exchange (ASX), said it will also have to revisit the A$190 million ($127m) carrying value of the under-development project, and its ability to continue to report the asset’s ore reserves. This official estimate is central to how investors value mining companies.
The company believes the Indigenous group with the clearest legal authority to assess the heritage value of the site, the Orange Local Aboriginal Land Council, did not oppose the project. They believed that any potential heritage impacts could be “appropriately managed and mitigated”, Regis said.
Other Indigenous groups in the area opposed the project due to heritage concerns.
Australia’s Association of Mining and Exploration Companies (AMEC) chief executive Warren Pearce said the government’s decision lacked reason and common sense, setting “a truly terrible” precedent for investment risk in Australia.
“If any project, no matter how thoroughly consulted, negotiated, supported and assessed, can be knocked over by the objections of only a few people at the end of the process, then how can any company or investor have confidence to invest in Australia,” he told The West Australian on Sunday.
“Absolutely nobody benefits from this decision. Not the local community, not Traditional Owners, not the state of New South Wales, nor the industry. It’s a lose, lose, lose,” Pearce said.
The company was planning to extract up to 60 million tonnes of ore and produce 2 million ounces of gold from the proposed mine.
Regis’ setback unfolds as the Australian government, led by prime Minister Anthony Albanese, faces scrutiny over its handling of Indigenous heritage in relation to economic development. This issue has come to the forefront with the ongoing saga over the Jabiluka uranium deposit in the Northern Territory.
The Albanese government has pledged that Jabiluka will “never be mined” and instead will be integrated into the adjacent Kakadu National Park, aligning with the wishes of the Mirarr people.
Energy Resources of Australia (ASX: ERA), the Rio Tinto-controlled company holding the Jabiluka lease, recently won a small, but key battle to keep its rights over the asset after a federal court issued an interim order to stay the government’s decision to not extend ERA’s lease.
Shares of Regis Resources crashed on the news, recovering slightly later on Monday, to close 2.12% down at A$1.62 each. This leaves the miner with a market capitalization of A$1.22 billion ($817 million).
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