Coal power worsening Australia drought - green group

Coal power worsening Australia drought - green group

By Nao Nakanishi, (Reuters) HONG KONG

25th April 2007

Australia's coal industry, one of the world's biggest, is aggravating the country's worst drought in centuries, which may raise questions about expanding production, the head of an environmental group said on Wednesday.

Geoff Evans, director of environmental group Mineral Policy Institute, said countries like China should learn from Hunter Valley, one of Australia's top coal-producing regions, now facing a drought that threatens its key farming industry.

"Coal-fired power stations are contributing to the problem of water overuse in Southern Australia," he told Reuters. "There's conflict between power station use of water and other water uses, particularly farmers.

"Does the Hunter Valley become sacrificed to coal, a global commodity that contributes to climate change and boomerangs back on the Hunter Valley in higher temperatures and less rain?"

Australia's drought, the worst in hundreds of years, prompted Prime Minister John Howard to warn last week that irrigation might be turned off in the food bowl Murray-Darling River basin that accounts for 41 percent of the nation's agriculture.

It may also force the country to shut down its Snowy Hydro power scheme, which would force generators to crank output from coal-burning power plants, which provide most of its electricity.

At the same time, international coal prices are also now heading towards historic highs, and many miners are expanding production to meet surging global demand from new power plants in countries like China, India and Vietnam.

Evans was visiting Hong Kong from Newcastle in Australia, a top coal-exporting port, which plans to double its coal handling capacity in line with output from Hunter Valley. He said he would like to see a cap on coal exports and a moratorium on new mines.

About 12 mines are due to be built in the next five years in the region, which has already about 30 mines mainly owned by the world's top miners such as BHP Billiton Ltd//Plc or Rio Tinto Ltd/Plc .

"It would kill the economy of the region for any other industry because of the scale of the expansion of the coal mines. It's massive open-cut coal mines," he said.

"It makes it impossible for other businesses to operate, especially businesses that require clean air and clean water, such as the wine industry."