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Farmers’ last bid to stop giant coal mine

In a classic tale of David versus Goliath, a group of farmers in Queensland is launching a last-ditch bid to stop a $7 billion coal mine going ahead on their land.

Mining giant, Xstrata is planning to build the southern hemisphere’s biggest coal mine near Wandoan, north of Brisbane, Queensland, which will have a mine-life of around 30 years, producing around 30 million tonnes of coal a year, according to ABC News.

Xstrata’s mining lease covers 32,000 hectares, and 70 farming and grazing properties lie within its tenements. Forty-two families have so far reached an agreement with the company to sell their properties.

John Erbacher, who runs a piggery, cattle and mixed crops operation has been fighting Xstrata for five years, but has told ABC News that he is not yet ready to give up the fight. His farm is likely to be shut down to make way for the mine.

In 2012, the group of farmers unsuccessfully challenged the mine in the Land Court. Later this month the fight goes to the Supreme Court, when the farmers will argue that the state government should never have approved the mine.

Should they fail, the farmers will be forced to accept compensation, and stop farming.

However, the coal mine faces several other threats too.

It could be axed if Xstrata’s US$90 billion merger with Glencore goes ahead. Glencore’s chief executive, Ivan Glasenberg, reportedly doesn’t support billions being spent on proposed green field projects.

Falling coal prices could make the mine unprofitable, while a hike in state government royalties on coal in Queensland of up to 50% could also mean the project is un-viable.

The drop in coal prices has already claimed several heads, with BHP Billiton (ASX: BHP) cancelling US$5 billion in new rail and port infrastructure to support its coal mines and has closed its Gregory and Norwich Park coal mines. Rio Tinto (ASX: RIO) closed its Blair Athol coal mine and downsized its nearby Clermont coal mine. Around 2,000 workers have already lost their jobs.

Foolish takeaway

Famers will be hoping the latest court action is successful; otherwise they may be dependent on the falling coal price or the Xstrata-Glencore merger going ahead, to stop the planned coal mine in its tracks.

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Motley Fool writer/analyst Mike King owns shares in BHP. The Motley Fool’s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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