South32 appears to be scrapping its controversial Dendrobium coal mine extension plans in NSW. 

BHP-spinoff South32 has announced it will not proceed with a plan to extend the life of the coal mine beneath Sydney's drinking water catchment.

The extension application was rejected by the Independent Planning Commission in 2021 before a revised plan later was given State Significant Infrastructure status by the New South Wales government. 

The company said it could have extracted an additional 78 million tonnes of metallurgical coal by expanding the underground operation, west of Wollongong, until 2048.  

But it has now informed the Australian Stock Exchange that it would no longer pursue the project and will instead look to extend the mine life within its already approved domain. 

“Over the past 18 months, we made significant progress actively reshaping our portfolio, and this decision increases our capacity to direct capital towards other opportunities,” South32 chief executive Graham Kerr said.

“This includes our world-class development options in North America.

“[It has] the potential to underpin a significant growth profile to produce metals critical to a low carbon future, servicing strategically important supply chains.”

Government agency WaterNSW had objected to the mine expansion proposal because of its potential impact on water supplies, and maintained its opposition in submissions to the revised plan's environmental impact statement (EIS).

Under its current licence, the Dendrobium mine can continue operating until 2030.

Local environment group Protect Our Water Catchment has welcomed the announcement, saying the original Dendrobium proposal should never have been allowed in the catchment. 

The Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) says the decision will affect about 500 direct jobs and hundreds more support roles. 

“We had expected the project to move forward so it was very unexpected news this morning for us and our members,” the union’s district vice president Bob Timbs says. 

“The life of the mine at the moment won't go past 2028 unless they can explore and open up other avenues of mining in the current footprint. 

“They've said their expected returns don't support the investment and that's fair enough but that's bad news for us, bad news for our members and bad news for the Illawarra.”