2010-2011 Annual Report: Earth resources
Victoria’s earth resources sector is made up of a variety of commodities including brown coal, petroleum, minerals and base metals, as well as emerging industries such as geothermal and geosequestration.
There are currently 273 mining licences in Victoria. The majority of these mines are in mineral sands, gold, silver and platinum, employing about 11,600 people across the state.
Gold, silver, platinum, copper, lead and tin prices boomed in 2010-11. As a result, Victoria attracted more local and international resources industry investment and there were discoveries of new deposits, particularly gold, in areas of Victoria mostly untouched by modern exploration.
Victoria’s 13 goldfields have each produced more than one million ounces (Moz) of gold, including one field that has produced 22 Moz and another that has produced 12 Moz. There are significant new gold resources at gold mines at Stawell and Fosterville and estimates suggest that Victoria could contain another 20 to 80 Moz of gold with a potential market value of $60 billion.
Strong petroleum exploration and development activity in Victoria has attracted more than $6 billion in investment in petroleum field development projects since 2000. Global demand for oil and increasing domestic demand for gas has seen the expansion of oil and gas production in the Bass Basin and the Otway Basin in the past five years.
Victoria’s brown coal deposits are among the world’s largest. In the Latrobe Valley alone there is an estimated 33 billion tonnes of potential economic resource, including 13 billion tonnes currently unallocated. Its quality (low ash and minerals) is world class and suitable for electricity, conversion to liquid fuels and a variety of other uses.
The state’s extractive industries that produce a range of hard rock, clay, sand and gravel products to support the building and construction industry have a sales value of about $700 million. Five companies, with proposed work programs worth $64 million over five years, have permits to explore for sources of geothermal energy in Victoria.
The Rediscover Victoria initiative has been extended and will continue the important work of promoting exploration in the state’s under-explored areas. The program, which had been due to end in June 2011, received an additional $625,000 and was extended by 12 months.
In 2010-11, DPI supported and promoted investment opportunities in the earth resources sector, including the provision of leading-edge geoscience information to help reduce exploration risk for mining companies. DPI also facilitated projects under development in the state, managed the licensing and permitting system and ensured that environmental management standards are met by regulating the industry.
Morwell mine wall movement
Ground movement in the northern batter of the Hazelwood open-cut brown coal mine following heavy rain in February 2011 led to the closure of the Princes Highway at Morwell in the Latrobe Valley.
The disturbance became evident with the appearance of a sink hole in an adjacent drain and cracks in the surface of the Princes Freeway and an adjoining built-up area.
As the regulator of Victoria’s mineral resources, DPI supported the emergency response and recovery efforts in conjunction with the Technical Review Board, undertaking a geotechnical assessment and providing advice on monitoring, mitigation and remediation of the problem.
A comprehensive monitoring program, which includes real-time notification of significant ground movement linked to public evacuation procedures, is in place.
DPI led workshops examining public safety issues and the potential impact on other infrastructure and quantifying the risk levels. This work was carried out with a view to facilitating the earliest possible re-opening of the freeway within an acceptable level of risk.
Drainage works to stabilise the mine batter were identified and DPI worked with stakeholders to have these works implemented as soon as possible.
In order to validate the recovery strategy, DPI had all the advice it received independently reviewed. DPI supported Victoria Police in the operation of the Emergency Management Team and the implementation of a communication strategy to keep the community informed of developments. It also worked with VicRoads, Latrobe City Council and the mine operator, Hazelwood Power Corporation Pty Ltd, to resolve the issue, which had a significant impact on the community.
Regulation
DPI and the Department of Sustainability and Environment updated a memorandum of understanding (MOU) governing mining and extractive industry work approvals, widening it to include the approval of other activities regulated by the DPI’s Earth Resources Regulation Branch. Training on the details of the MOU enabled staff to reduce the time taken to issue approvals, thereby reducing the regulatory burden on industry.
DPI has also commissioned a review of its Earth Resource Regulation Branch’s community engagement program and the Strzelecki Awards. The review will gauge stakeholder perceptions and will be completed by the end of 2011.
Coal
Clean Coal Victoria (CCV) continued its important work, maximising the value of Victoria’s coal resource while delivering the best outcomes for the economy, the environment and local communities. A CCV study into land use in the Latrobe Valley found it was not economically viable to mine and process coal at Newborough, west of the Yallourn mine. This finding has permitted the opening up of new land for potential residential development. CCV began assessing coal resources in the Latrobe Valley in 2009 and its work informs long term planning decisions while protecting areas for coal development.
DPI also hosted the Victorian Coal Road Map Workshop in June 2011, which explored pathways to the competitive use of Victoria’s brown coal resources. With input from international and Victorian mining, coal technology, government and industry experts, the road map will assist government and industry to chart a sustainable future for the resource.
Geological Carbon Storage
Carbon capture and storage has the potential to play a major role in defining the future of coal-fired power generation in a lower emissions economy. The Victorian Geological Carbon Storage project completed several important studies in this area, including reports on subsurface fluid migration modelling and geological characterisation. The interpretation of a 2010 offshore seismic survey, carried out to assess the potential for carbon storage in offshore oil and gas reservoirs, will occur during the next 12 months.
The Cooperative Research Centre for Greenhouse Gas Technologies (CO2CRC) began stage two of the Otway Project in south-western Victoria to demonstrate that carbon capture and storage is a technically and environmentally safe way to make deep cuts into Australia’s greenhouse gas emissions.
The project is the first demonstration of the deep geological storage or geosequestration of carbon dioxide, the most common greenhouse gas.
The first stage involved studying the behaviour of 65,000 tonnes of carbon dioxide, which was injected into a depleted gas field. Stage two involves injection testing carbon dioxide into a saline geological formation. Monitoring and verification work is continuing to confirm that the carbon dioxide is behaving as expected.
A DPI review of the Mineral Resources (Sustainable Development) Act 1990 is providing Victoria with one of the world’s most modern and effective licensing systems
Minerals
A DPI review of the Mineral Resources (Sustainable Development) Act 1990 is providing Victoria with one of the world’s most modern and effective licensing systems. The aim of the review is to encourage the development of the state’s mineral resources and support a strong industry in Victoria. The first phase of the review resulted in the Mineral Resources (Sustainable Development) Amendment Act 2010, which provides a closer alignment between government and industry processes and improves security of tenure for industry proponents. The second stage of the review is now underway with a strong focus on further reducing regulatory burdens. DPI has worked with other agencies to redefine low-impact exploration in the Mineral Resources (Sustainable Development) Act 1990 with the aim of streamlining the operation of work plans.
A review of Victoria’s mineral sands endowment revealed the significant opportunity this resource offers Victoria. With more than three million tonnes of mineral sands resources, Victoria has the potential to become a global powerhouse in this sector. DPI is now actively working to remove barriers to the development of this resource and unlock the potential benefit for all Victorians.
Oil and gas
The release in April 2011 of new petroleum exploration acreage in Victoria’s Gippsland and Otway Basins has opened up these regions to further petroleum exploration. Oil and gas companies now have until October 2011 to bid on four offshore blocks in the Gippsland Basin and five onshore and offshore blocks in the Otway Basin. DPI carried out work to assess the prospectivity of the regions and is actively promoting them to the petroleum exploration industry.
