US firm’s FTA plan to keep mine

The Australian | January 16, 2014

US firm’s FTA plan to keep mine


AN American investor plans to invoke the US-Australia Free Trade Agreement to prevent the NSW government cancelling a coal exploration licence that the Independent Commission Against Corruption said is tainted by corruption and should be expunged.

The NSW government gave two coal companies until yesterday to say why their exploration licences should not be cancelled.

A spokesman for the NSW Minister for Energy and Resources, Anthony Roberts, said their submissions had been received and would be considered.

Rob Roy, the executive director of Ventry Industries, said he was shocked that a government would contemplate expropriating assets.

He said he had seen these things in countries such as Venezuela or Argentina, but thought Australia was a safe country in which to invest. "That has now changed," he said.

Ventry Industries is a Massachusetts-based and family-run "institutional-sized" investment company that holds 2.43 per cent of NuCoal Resources, the company that holds the Doyles Creek coal licence under threat of cancellation.

NuCoal spent $94 million buying the licence through a takeover of a company run by former union boss John Maitland and his associates, who gained the licence without a tender with a proposal for a "training mine". Mr Maitland and the then minister for primary industries, Ian Macdonald, were both found to have engaged in corrupt conduct by the ICAC.

Mr Roy said he would also use the US-Australia Free Trade Agreement to enforce his legal rights to compensation if the licence was cancelled.

Article 11.7 of the FTA says the governments cannot expropriate or nationalise investments . . . without "prompt, adequate, and effective compensation".

He said along with other investors, he would lobby the US congress and the US ambassador to Australia, John Berry, to protect their investment.

NuCoal chairman Gordon Galt said compensation could reach $500m, but said there was a "win-win" solution if NSW allowed mining to proceed at Doyles Creek. "If this goes the wrong way . . . then you can confidently expect that NSW will be off-limits for a very large number of institutional investors," he said.

NuCoal’s statement to the stock exchange said the ICAC recommendations were "infected with error, both legal and factual".

It said if Doyles Creek was allowed to proceed, it would support 350 jobs and produce more than $2.6 billion in taxes and royalties.

The other company under threat of losing its exploration licence said the government should confiscate the property of former ministers Mr Macdonald and Eddie Obeid, instead of hurting innocent investors.

Cascade Coal, which has written an open letter to MPs, also said special legislation to cancel the licences could do irreparable damage to the reputation of NSW and cost taxpayers hundreds of millions of dollars in compensation.

The ICAC heard the Obeid family could make another $30m — on top of the $30m they have already received — if mining proceeds at Mount Penny over their family farm Cherrydale Park.

Cascade Coal argues the ICAC report expressly stated no findings reflected adversely on the integrity of any of the public servants who approved the licence, or the Probity Auditor who reviewed it.

source: The Australian