A COLLIE environmentalist and union leader are questioning the ability of Lanco Resources to export coal from Bunbury port.
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This follows WA Environment Minister Albert Jacob recently granting Lanco approval for the construction of a $500 million export facility at the port on the condition that certain guidelines are met and adhered to.
Indian owned Lanco wants to export up to 12 million tonnes of coal each year from Griffin Coal's Collie Basin operations.
The facility will require dredging up to 1.9 million cubic metres at the port and blasting 20,000 cubic metres of rock.
Construction is expected to start in mid-2015, with the first exports planned for 2017.
Among the concerns of the environmentalist and the union leader are possible damage to the environment, the inability of the government to undo any damage done, little legal ramifications in the event of environmental damage, questionable production and quality levels, and the economic viability of the project.
"So mining bosses are not always honest about the impact of mining on the environment even when they get guidelines from the government so it remains to be seen if Lanco will stick to the environmental guidelines."
Ken Waterhouse, the ex-president of Collie Conservation Group worked in a variety of mines for 20 years and witnessed first-hand the problems associated with the mining industry.
"I was part of the community liaison committee for Worsley Alumina when they were exporting bauxite and alumina," Mr Waterhouse said.
"The bosses told us that they there would be no dust and told us they were running state of the art equipment.
"But I can show you photographs with lots of dust blowing around.
"So mining bosses are not always honest about the impact of mining on the environment even when they get guidelines from the government so it remains to be seen if Lanco will stick to the environmental guidelines."
"The problem is that there is little the government can or is willing to do when these guidelines have been breached," Mr Waterhouse said.
"Several years ago Lanco and Griffin were guilty of two breaches of the bund walls on Boronia Creek when the walls failed and pollution contaminated the creek.
"All they got was a $250 fine both times which leads me to believe the Environment Protection Assocation (EPA) is a toothless tiger and sets a poor precedent for future breaches of environmental guidelines."
Mr Waterhouse also questioned Lanco's productivity and the quality of the coal it was producing.
"Lanco can't even supply the power stations adequately and they are chasing thinner coal seams and producing inferior quality coal," Mr Waterhouse said.
In June Lanco was unable to continue to supply fuel for its 1200MW Karnataka power station, which it had to switch off.
It would take Lanco two years to set up the facilities to export coal and they would need to carry out trial runs and this means that coal would have to be stored somewhere at great expense and with possible safety issues in the event of fire breaking out, according to Mr Waterhouse.
Then there is the poor economic performance of Griffin and Lanco.
Bunbury Against Coal Exports (BACE) reported that Griffin recorded a loss of $70m last financial year, resulting from a 29 per cent drop in revenue, including a 65 per cent fall in the final quarter, as Griffin struggled with bad weather, failing equipment and deteriorating coal quality.
"In recent months, Griffin has struggled to pay its contractors and its tax liabilities," BACE spokesman Laurie Capill said in a press release.
"Lanco Infratech, which owns a half a dozen power plants in India, had over $6bn debt as of March 2014."
The capital expenditure for expansion of Griffin Coal is expected to be around 900 million to 1 billion Australian dollars, a Lanco official told The Economic Times in India last year.
CFMEU Mining and Energy district secretary Gary Wood is concerned about the future of Griffin mine workers after some payments were delayed last month and the issue was only resolved following intensive consultations between Lanco and representatives of the miners.
"We seek ongoing security of employemnt for our members," Mr Wood said.
"Griffin coal needs to have a staged approach to the ramping up of increased tonnage from their coal operations."
"If they choose to go down the other route of larger export volumes then there is significant investment required and one has to question the return on this."
It was reported last week that Deutsche Bank was holding off on funding the Abbot Point coal export terminal in Queensland.
Credit Agricole, Barclays and the Royal Bank of Scotland have previously taken positions to not finance the expansion of Abbot Point.
Furthermore, Coal prices are globally depressed, with expectations that they will remain below A$90/tonne for at least the next five years.
However, spokesman for Lanco and Griffin, James Riordan refuted the criticisms.
"Griffin Coal welcomes the opportunity to confirm its commitment to the people of Collie and The South West with its plans to grow the Domestic Coal Industry through developing sustainable operations," Mr Riordan said.
"Progress on reaching significant milestones has been validated by securing Ministerial consent for Environmental Compliance, this is one step in a number of Government and Corporate checkpoints as the project moves towards its construction commencement, anticipated mid 2015."
