Anti-coalmine protester Jonathan Moylan. Credit:Peter Lorimer Front Line Action on Coal activist Jonathan Moylan caused a national outcry earlier this month when - from his camp in the Leard forest - he issued a fake ANZ press release purporting to withdraw a $1.2 billion loan to finance Maules Creek on corporate responsibility grounds. In 23 minutes of frantic trade, $314 million was wiped off the market value of Whitehaven Coal as its shares plunged 9 per cent - though the stock bounced back sharply once the hoax was revealed and a BusinessDay analysis of course of sales data showed shareholder losses that day could not have exceeded $450,360. Moylan, who later told one journalist he had sent out the press release ANZ should have written, and now faces possible jail time, was interviewed by the Australian Securities and Investments Commission last week amid calls to make an example of the 24-year-old to ensure market integrity, after David Jones and Macmahon Holdings investors fell prey to misinformation scams last year. Maules Creek resident Lloyd Finlay, whose 600-hectare mixed farm abuts the Leard State Forest and is ''right in the firing line of where the mines are looking at purchasing'', had not made up his mind about the project until the hoax. He had been to meetings of the Maules Creek Community Council, set up in 2010 to oppose the three coal projects that will clear most of the 7033-hectare forest.

But after the hoax, says Finlay, the Council ''lost all credibility''. Farmers are by no means unanimously opposed to the mine, he says, and do not like being branded extremists. ''We're concerned at the direction the council is heading in and who they're involved with,'' he says. Maules Creek itself is home to about 40 families and has no shop, no pub - just a school, a hall and a cricket ground. Finlay, who has lived there for 30 years, would love to stay. Sixth-generation local farmer Phil Laird, president of the Maules Creek Community Council, after whose family the Leard forest was named, distances himself from the ANZ hoax and from Front Line Action on Coal, saying he had ''no part at all in the hoax''. But Laird is clearly sympathetic to Moylan and did rally outside ASIC's Sydney office in his support, saying in a statement that ''a friend in need is a friend indeed''. Laird has a host of objections to the Maules Creek mine. ''[NSW Planning Minister] Brad Hazzard himself said to us, in front of 400 people at Gunnedah, that it was illogical for an open-cut mine to be operating in a state forest, in a tier-one biodiversity asset.''

Laird wants Maules Creek to go underground, which would save much of the old gum trees, which were only ever selectively logged and provide habitat for species including koalas, and avoid creating a permanent 300-metre deep, increasingly salty storage pond - as large as 600 hectares, he says. ''From our perspective, an underground mine would satisfy many of the stakeholders,'' Laird says. ''The customers would get coal, people would be employed, the company could earn profits, the community could stay here without the dust and the massive water impacts.'' An underground mine was considered and rejected as unviable, as it would ''result in the sterilisation of significant viable coal reserves''. Under the original 1990 approval, some areas were to be mined underground, but Whitehaven managing director Tony Haggarty says the area the company is now proposing to mine was always approved as an open-cut and it is not technically feasible to mine those seams underground. Haggarty says the Maules Creek project, the first to be considered by the new Independent Expert Scientific Committee, will be ''one of the most reviewed projects that will ever have been approved in the industry, if it gets approved''.

Maules Creek will produce about 60 per cent semi-soft coking coal, used in steelmaking, and 40 per cent high-quality thermal coal used for power generation. Since the project was proposed in August 2010, semi-soft prices rose from about $US172 a tonne to more than $US240 a tonne in the wake of the Queensland floods but have since fallen sharply to $US117 a tonne, according to IHS McCloskey data. Thermal coal prices are about where they were, just above $US90 a tonne. But at a cost of $A780 million Maules Creek remains a viable project due to the quality of the 610-million-tonne deposit and the small amount of overburden that needs to be removed. Whitehaven estimates it can mine the coal for $62.40 a tonne, loaded onto a ship at Newcastle. Once it ramps up, Maules Creek will produce 13 million tonnes a year, of which 10.5 million tonnes will be saleable coal. Haggarty says delays in the approval process have cost Whitehaven tens of millions of dollars, counting holding costs, the cost in take-or-pay contracts for port capacity, upgrades to the rail line, and so on. But Haggarty rejects as ''rubbish'' the argument that Maules Creek is somehow marginal. ''One can't deny that in this market the project is less profitable than it would otherwise be,'' he says. ''But what's important is that your project is competitive through the cycle. Even if people believe the current market is going to be with us for the next 10 years, this is one of very few projects that would stack up.'' PhillipCapital analyst Lawrence Grech agrees, saying Whitehaven would shut down other, older mines - as it did last year with its Sunnyside mine - before it abandoned the Maules Creek project. The cost of older coal mines in the Hunter Valley are rising, Grech says, as they get deeper. In the Gunnedah Basin, despite higher rail costs due to the greater distance to port, higher-quality product and lower so-called strip ratios can make new projects more profitable than old mines. The Maules Creek project, after all, was the main driver for Whitehaven's 2012 merger with Nathan Tinkler's Aston Resources, which bought the project from Rio Tinto for $480 million in 2009 before floating on the stock exchange in early 2010. Tinkler emerged with a 19.4 per cent stake in Whitehaven - making him the largest shareholder - but destabilised the company through most of last year with an unsuccessful privatisation bid and, later, a failed campaign to spill the board.

Whitehaven says the Leard forest was classified as low value and made available to mining as part of a 2007 deal done by the former Labor government that ensured conservation of hundreds of thousands of hectares of forest. The environmental damage done by clearing the forest - less than a third will remain if all three mines are approved, as expected - will be balanced by the purchase of six times as much ''offset'' land, to be set aside for conservation. But the offset strategy has itself been criticised, as some of the land bought by Whitehaven has already been cleared or is farmland that will take decades to regenerate. Federal independent Tony Windsor flew over the Leard State Forest and some of proposed offset country in a helicopter last month, with Environment Minister Tony Burke. The mine is not within his electorate but Windsor is concerned about mining developments that threaten agricultural land - particularly the Liverpool Plains. Loading He contrasts the Maules Creek mine with two far more controversial proposals in the Gunnedah Basin, BHP Billiton's Caroona coalmine and Shenhua's Watermark project. Windsor says Maules Creek is not on the Plains and will have nowhere near the environmental or groundwater impacts of Caroona or Watermark.

But he is unimpressed by the offset strategy. ''I don't think you can just say 'We'll remove these endangered species and replace it with some cleared farming country … so eventually it will become the same as what it was 100 years ago and offset what we're removing','' he said. ''I just have a bit of difficulty getting my head around that … you look at what they're wanting to remove and what they're wanting to replace it with - the country outside the forest - there [would be] very little timber left.''