Bulga’s residents thought they had won a victory against a mine expansion which seemed sure to decimate their tiny Hunter Valley town. And then the government arrived to help.

It was the tiny town that hit back. And won.

But now, the New South Wales Government has brought down a sledgehammer to crush the legal case the Hunter Valley hamlet of Bulga had assembled to prevent global mining giant Rio Tinto from expanding its coal mine to within 2,600 metres of the town.

While the villagers, ecologists and environmental lawyers had expected Rio Tinto to ask the NSW Government to hit back against Bulga, no one foresaw the scale of the government’s response as produced by the NSW Resources Minister, Chris Hartcher, on July 29.

Back in April, the Bulga Milbrodale Progress Association won a spectacular legal victory in the NSW Land and Environment Court. Its legal team’s appeal persuaded the Court’s Chief Judge, Justice Brian Preston, that the state government had gravely erred in giving Rio permission to expand its already huge Mount Thorley Warkworth mine in the Hunter Valley.

Justice Preston withdrew approval for Rio Tinto to expand the mine and found that almost every one of its arguments in favour of the expansion was seriously flawed.

As The Global Mail’s multimedia story on the battle for Bulga reported, the judge found grave defects in Rio’s inflated economic case for the mine expansion; he found the miner’s plans to replicate elsewhere the precious woodlands it would now destroy didn’t stack up; and he found there was no doubt that the villagers of Bulga would be adversely affected by the expanded mine. So he gave Rio Tinto an answer global mining companies have become quite unused to hearing in Australia: no.

Rio Tinto has since appealed Justice Preston’s decision and the matter is scheduled to be heard in the NSW Court of Appeal beginning August 14. The hearing is eagerly awaited by both the environmental lobby and by the mining lobby which is concerned that Justice Preston’s decision – if it stands – would considerably strengthen anti-coal-mining forces throughout Australia.

Within a week or two of Justice Preston’s decision, Rio Tinto’s London-based global head of energy, Harry Kenyon-Slaney, was in the Sydney office of the NSW Premier, Barry O’Farrell, to protest it.

Rio’s angst may be understandable. In 2007 the mining titan blew $US38.1 billion buying the Alcan aluminum company, only to see the investment turn into a dog: Rio’s aluminum business has lost about 75 per cent of its value since the purchase. Consequently, Rio has many of its coal mines up for sale and it sorely needs to wring all the value it can from them; Justice Preston’s decision to nix the Mount Thorley Warkworth expansion has not aided that cause.

On Monday, July 29 the NSW Government stepped in with what amounts to a lifeline for Rio, dressed up as a policy change that would make the NSW system of approvals for mines more transparent and fairer.

The changes, which the public has only two weeks to comment on before they will be brought into law, would mean, according to environmental lawyers, it is highly unlikely that a ruling such as Justice Preston made in this case would ever be repeated. The exhibition of the proposed amendments concludes on August 12, two days before Rio’s appeal hearing commences.

The government-proposed amendment to the state environmental planning policy would require that those who rule on approvals for mines – mostly senior public servants and judges – would in future have to give much greater weight to the claimed economic significance and benefits of a mining proposal. Indeed, the new laws would make the economic significance of a new or expanded mine the overriding consideration of those charged with approving such applications.

No longer will equal weight to be given – as Justice Preston gave in his Bulga decision – to the adverse environmental and social effects of mining development.

And while the government claims that its new mining-approval system was not prompted by the Bulga decision, the document very specifically voids issues that Justice Preston highlighted in his decision as being in favour of the villagers’ case against Rio Tinto’s mine expansion.

For instance, as The Global Mail recorded in our earlier feature, there was a spectacular clash between Justice Preston and the barrister appearing for the state government in his court. The issue was whether a mining company could buy up houses deemed to be too exposed to mine noise and then rent those houses to mine-company employees who would just have to put up with noise levels deemed too high for the former residents. The government barrister thought tenants could be treated differently to home owners. The judge thought not.

The judge maintained that planning law did not treat tenants as lesser beings than owners. But this, it seems would change, under the government’s proposed new laws. Tenanted dwellings would have less protection from mining noise than privately owned dwellings.

In his Bulga decision, Justice Preston railed against the so-called environmental offsets that Rio Tinto was offering, to make up for land it would destroy by mining. The judge said the new areas of land that Rio was proposing to protect – some of which were up to 100km distant from the landforms its expanded mine would destroy – did not represent ‘like for like’.

The government’s proposed law changes will make it much harder for judges in future to take such a view; they will be required to give much greater weight to environmental offsets that have had a prior tick of approval from an expert government agency – as was the case with the offsets deal to which Justice Preston so strongly objected.

Finally, the government’s proposed law changes will, in the view of environmental lawyers, give Rio Tinto a parachute if the Court of Appeal rejects its bid to overturn Justice Preston’s decision.

In that event, the miner could simply resubmit its application to expand the Mount Thorley Warkworth mine and have it reconsidered under the new laws.

Indeed, the laws seem almost tailored to fit Rio Tinto’s plans for the village of Bulga.

Rio Tinto's Backup Plan: The NSW Government

"The illusion of freedom will continue as long as it’s profitable to continue the illusion. At the point where the illusion becomes too expensive to maintain, they will just take down the scenery, they will pull back the curtains, they will move the tables and chairs out of the way and you will see the brick wall at the back of the theatre."

Frank Zappa