Whyalla Red Dust Action Group Incorporated

What's wrong with the proposed OneSteel Indenture Bill 2005?

The following notes have been supplied by Mark Parnell, Principal Solicitor with the Environmental Defenders Office (SA) Inc. The "EDO" represents the WRDAG Inc. in its ongoing fight against OneSteel's dust pollution, including representation in Court proceedings in the South Australian Environment Resources and Development Court.


Friday the 13th of May 2005 was an unlucky day for the people of East Whyalla, but it was even more unlucky for the "independent" EPA. On that day, the Premier announced from London that his government would introduce legislation into Parliament with the professed aim of ensuring that "OneSteel delivers investment, jobs, export targets and strong environmental improvements." What the Premier didn't say is that the real purpose of the legislation is to undermine both the EPA and the residents of East Whyalla in their fight for environmental justice.


The material that follows seeks to explain why the government's move is bad for both Whyalla and the long-term credibility of the EPA.

Read the full text of the Premier's press release of 13th May 2005. (MS Word 77Kb)

Read the Environmental Defenders Office media release of 13th May 2005 (MS Word 35 Kb)



Is the EPA really independent, or is it just a government department?

The Environment Protection Authority is established under the Environment Protection Act 1993 (SA).

Under Section 11 of the Act, The Authority is "subject to the direction of the Minister EXCEPT in relation to:

b. The performance of its functions under Part 6; or
The enforcement of this Act

Part 6 of the Act includes all provisions relating to pollution licences and exemptions.

So, this means that the EPA is independent of the Minister in relation to licensing and enforcement. Therefore, the Minister CANNOT direct the EPA as to who should be issued with pollution licences and what those licences should contain.


What is Premier Rann proposing to do?

According to the Premierís press release,

"a new bill will be introduced into Parliament later this year that is designed to extend the life of Whyallaís OneSteel operations until the year 2027 at the very least"

The Premier goes on to say that:

"The EPA will give the company a 10 year licence to operate."

So, leaving aside the arithmetic problems (2005 + 10 years = 2015), how can the Premier know what the independent EPA is proposing to do?

Well, he could if the independent EPA had already told him that a new 10 licence was its intention. But, the EPA has no such plans. In fact, the EPA has already issued an amended pollution licence to OneSteel on January 31st 2005. This amended licence is one that took nearly 2 years to write and one that the EPA believes is both reasonable and practical to achieve. This licence includes red dust control measures for the first time. The earlier EPA licence issued in 2000 had no effective dust control requirements. The EPA is now defending its licence in Court (following a OneSteel appeal). The Whyalla Red Dust Action Group Inc. has also been given permission to join that Court case.

So, clearly this is a case of the Premier proposing to "direct" the EPA to do something that the EPA doesn't want to do! That is political interference and it is against the Environment Protection Act. The only way the Premier can force the EPA to do his bidding is to change the law by removing the independence of the EPA, either generally or just in relation to OneSteel.

Presumably, this new 10 year licence is to be written by the Premier and NOT by the EPA. If the Premier asked the EPA what licence it believed should be issued, then the response would be: "The licence we issued OneSteel on 31st January 2005"!


So, what licence conditions will the new 10 year licence include?

Presumably the new licence will include conditions acceptable to OneSteel. In other words, some or all of the licence conditions imposed on 31st January by the EPA will be thrown out and replaced by new weaker conditions that reduce environmental or accountability standards. There can be no other reason for the Premierís move. It is not known which conditions will be discarded, although it is almost certain that conditions requiring OneSteel to spend money to fix its current pollution problem will be axed or watered down.

In an advertisement in the Whyalla News on Thursday 19th May 2005, OneSteel says of the proposed Indenture:
"It will encompass the current OneSteel environmental licensing conditions, including some of the new conditions, which were added in January of this year."

The most curious thing about this statement is that it indicates that OneSteel already knows what the new licence will contain - even though it hasn't been issued yet and the law to make it happen hasn't even been introduced into Parliament. This begs the question - Who makes the laws in this State - is it OneSteel or Parliament?

The OneSteel advertisement also states that the new 10 year licence will "not provide the Steelworks exemption from any dust control requirements. It does not relax our licence conditions; it actually tightens them."

However, this statement makes no sense when you consider that OneSteel is currently in Court disputing the dust control conditions imposed by the EPA in January this year. Why would OneSteel try to stop these conditions one day and then applaud them the next? OneSteel did not appeal against its EPA licence because the conditions were too weak - it appealed because it believed they were too tough!

Read the OneSteel advertisement of 19th May (pdf 260Kb)


What is an Indenture Act?

An Indenture Agreement is a contract between industry and government, usually in relation to large scale manufacturing or mining. An Indenture Act is where the Parliament gives legal force to an Indenture Agreement by passing a special Act of Parliament.

The use of Indentures is now very uncommon because it is generally accepted that environmental standards should apply equally across all sectors of society without giving preferential treatment to particular companies.


Isnít there already an Indenture Act in place for Whyalla? If so, what's wrong with amending it?

Yes, there are two old Acts from 1937 and 1958 which were passed to facilitate iron ore mining in the Middleback Ranges and the Whyalla Steelworks.

Until it was amended in 2000 (when OneSteel took over from BHP), the 1958 Act included the notorious Section 7, which provided that BHP was:

"not liable for discharging, from its works at or near Whyalla, effluent into the sea or smoke dust or gas into the atmosphere or for creating noise, smoke, dust or gas at such works, if such discharge or creation is necessary for the efficient operation of the works of the company and ... is not due to negligence on the part of the company Ö"

This section was removed in 2000 and replaced by a section that only granted BHP immunity for pre-2000 pollution, but not for subsequent pollution. It is this post-2000 pollution that is the subject of the current EPA licence appeal and the residentsí civil enforcement action in the Environment Resources and Development Court. [See current s.7 Broken Hill Proprietary Companyís Steel works Indenture Act 1958].


How will the 1958 BHP Indenture Act be modified?

Until we see the Bill, we will not know exactly what it contains. As well as over-riding the current EPA licence, the new Bill is likely to undermine the independence of the EPA by making it clear that the EPA is NO LONGER INDEPENDENT when it comes to licensing or regulating OneSteel.

Is the current EPA licence standing in the way of "Project Magnet"?

According to the Premier:

"The Indenture bill allows Project Magnet to go ahead"

This pre-supposes that without a new Indenture Act, the project will not proceed. This is not true. Project Magnet will go ahead if the OneSteel Board decides that it can make more money in the long term by processing a different type of ore (Magnetite), rather then the current haematite ore reserves. This is the major consideration. Despite much talk about its environmental benefits, Project Magnet is not an environmental initiative, it is a business initiative based on the bottom line of maximum return to shareholders.

Hopefully, OneSteel claims that Project Magnet will fix much of the the pollution problem turn out to be correct. But if that is the case, then there should be no need to undermine the current EPA licence because the current licence already makes considerable concessions to Project Magnet in that it defers the need to comply with many pollution standards until after Project Magnet is due to be completed.


Will Project Magnet fix the dust problem?

The residents certainly hope that Project Magnet will reduce some of the dust problem, but there are serious questions yet to be answered. OneSteel apparently has a consultantsí reports showing anticipated dust reduction, however this has never been published.

In any event, assuming Project Magnet is completely successful, it will not be implemented for 2, 3 or even four or more years. This leaves the residents with on-going unresolved pollution, with resulting impacts on public health and amenity.


Whatís wrong with this "one-off" protection for an important industry?

The heart of the pollution control system in South Australia is the independent EPA. The reason "independence" is so important is that it helps prevent political interference. It ensures that all South Australians and all polluting industries will be bound by the same standards.

Once we sacrifice the independence of the EPA in relation to OneSteel, then the whole system of pollution regulation and control in South Australia is tainted. South Australians will no longer be confident that licensing and enforcement decisions are free from political interference. It is only a small step to then envisage a system where political factors determine who gets a pollution licence, who gets prosecuted and who gets special protection.

The clear message Premier Rann is sending to industry is "if the EPA makes your life difficult by requiring tough pollution control measures, then come and see me and Iíll fix it up for you with special legislation."

The EDO will continue to campaign against these retrograde measures and will continue to fight for a clean and healthy environment for the people of East Whyalla.

Mark Parnell
Environmental Defenders Office (SA) Inc.

19th May 2005