Australian gold miner Regis Resources (ASX: RRL) that its McPhillamys project is 鈥渘ot viable鈥� 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.聽
Federal Environment Minister Tanya Plibersek鈥檚 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鈥檚 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.
鈥淭he decision by Minister Plibersek is unprecedented and directly contradicts the EPBC Act approval provided from within the minister鈥檚 own department,鈥澛燘eyer 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鈥檚 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 鈥渁ppropriately managed and mitigated鈥�, Regis said.
Other Indigenous groups in the area opposed the project due to heritage concerns.
Australia鈥檚 Association of Mining and Exploration Companies (AMEC) chief executive Warren Pearce said the government鈥檚 decision lacked reason and common sense, setting 鈥渁 truly terrible鈥� precedent for investment risk in Australia.
鈥淚f 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,鈥� he told on Sunday.
鈥淎bsolutely nobody benefits from this decision. Not the local community, not Traditional Owners, not the state of New South Wales, nor the industry. It鈥檚 a lose, lose, lose,鈥� Pearce said.
The company was up to 60 million tonnes of ore and produce 2 million ounces of gold from the proposed mine.
Indigenous heritage protection
Regis鈥� 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 鈥渘ever be mined鈥� 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聽issued an interim order to stay聽the government鈥檚 decision聽to not extend ERA鈥檚 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).