The company behind New South Wales' largest coal mine fears it could have to close earlier than anticipated, leaving thousands of workers questioning their future.
In a letter obtained by the ABC, BHP management told its 2,000 staff at Muswellbrook's Mount Arthur Coal that it might need to bring forward its impending closure.
"While I would like to avoid this scenario, the findings of this review may lead to a reassessment of our Pathway to 2030 plan," BHP's vice-president of NSW Energy Coal Adam Lancey said.
"I understand this is a lot to take in, but I wanted you to hear it from me first."
Mining giant BHP last year announced it was bringing forward the closure from 2045 to 2030 after being unable to find a buyer for the Mt Arthur site.
Mr Lancey told staff, due to the NSW government's "unexpected" announcement of its coal reservation scheme, coupled with the coal price cap, it had led management to reassess the 2030 plan.
"For Mt Arthur Coal, this would see approximately 1.5 million tonnes needing to be re-directed [for domestic use] and sold at a reduced price [of $125/tonne]."
The mine is approved to operate until 2026, but BHP has told the ASX it would apply to extend that until 2030.
Mr Lancey said the "primary concerns" relate to the potential impacts on Mt Arthur Coal’s operations and business model.
"Including what to do if our production costs are above the price cap," he said.
"As well as understanding potential impacts on local communities and infrastructure such as the rail network, our long-standing commercial partnerships and our ability to meet our obligations to customers, and the energy market more broadly.
"While we support affordable energy prices for NSW households and businesses, we have doubts about the [coal reservation scheme's] ability to achieve this."
Mr Lancey said he had written to the NSW government to voice concerns, and said BHP was opposed to market interventions.
"Short-term measures can have negative long-term impacts … In this case, businesses may think twice about investing in NSW."
Deputy premier meeting with BHP
Deputy Premier Paul Toole is in the Hunter region today and said he knew Mt Arthur was a significant employer in the region.
"Today I'm actually meeting with coal producers; that was actually set up over a week ago," Mr Toole said.
"BHP is going to be one of those coal producers present at that meeting this afternoon."
Mr Toole said coal mining would be around for decades to come and the workforce at sites being phased out needed to be retained.
"Having come from a coal mining community and actually seeing the importance and the value that it provides to the state, I'll continue to support those workers and those companies that actually help keep the lights on here in NSW."
'Disaster waiting to happen'
Federal Labor Member for Hunter Dan Repacholi said the news from BHP would "definitely come as a shock to many people".
He said he had spoken to other mining companies, and called on the NSW government to reverse its decision on the coal reservation scheme.
Initially, only coal mines already supplying domestically would need to reserve more coal, but now that more coal mines had been directed to do so Mr Repacholi said it could be disastrous.
"The decision to apply the reservation policy on all [NSW] mines that produce thermal coal is honestly an absolute disaster waiting to happen," he said.
"It will impact tens of thousands of jobs in the Hunter."
Mount Arthur is one of many NSW mines to now purely export, and Mr Repacholi feared the rail and road network could not support more domestic supply movements.
"The pressure it will put on to our road system ... the pressure it will put on our rail system," he said.
"We have the most complex rail system in the world to get out high-grade quality coal to the port. We need to make sure we don't tamper with that."
