On Wednesday, a court in the state of New South Wales is set to hear an appeal of a ruling this year that blocked the expansion of a nearby open-pit coal mine. The ruling was on a lawsuit brought by Bulga residents against the British-Australian mining giant Rio Tinto. The state is joining Rio in the appeal, which is being heard in the highest court in New South Wales.

At stake is not just the fate of the village of 300 people. The mining industry and other state governments will be watching the outcome closely as slowing growth in China, the chief consumer of Australian commodities, heightens anxieties over the country’s economy.

If the appeal succeeds, the mine expansion will proceed as approved by the state last year. If it fails, it could set a precedent that favors the environmental interests of local communities over the economic interests of state governments. That would upend a system that has traditionally given primacy to the interests of large mining companies.

“This is a wake-up call,” Leslie Krey, 66, said in an interview at her house just outside the Bulga town center.

“There’s got to be something other than mines,” added Ms. Krey, whose husband, John, is one of the leading campaigners against the mine’s expansion.

In February 2012, the New South Wales planning authorities approved plans intended to extend the life of the Mount Thorley Warkworth Mine by more than a decade, to 2033. Those plans involved expanding the operation, owned by a subsidiary of Rio Tinto, onto land that Rio Tinto had pledged in 2003 as a permanent conservation zone to shield Bulga from the mine.

Residents of Bulga feared that the noise and dust from an expanded mine would irrevocably damage the environment and drive down home values that were already low. In addition, Saddle Ridge, a spiny natural buffer between the town and the mine, would be demolished. Also, a large section of the critically endangered Warkworth Sands Woodland would face eradication, the residents argued.

There were numerous environmental studies, but no one, not even Rio, is disputing that the expansion would destroy the ridge and the woodland. Rio is simply asserting that the economic benefit outweighs the environmental impact and is offering to set aside land elsewhere. Graham Witherspoon, a spokesman for Rio, declined to comment on any environmental or financial impact the mine may have had on the community.

A citizens’ group, the Bulga-Milbrodale Progress Association filed a suit to stop the expansion, and last April, the state’s Land and Environment Court issued an unprecedented ruling in the group’s favor, citing “negative social impacts on local community” and threats to its “sense of place.”

Now, Rio Tinto has taken the unusual step of asking the New South Wales court to entirely void the ruling, which was handed down by Judge Brian J. Preston. His ruling in April represented the first time the lower Land and Environment Court had ever ruled against an approved mining grant of this scope and scale, and it had the potential to significantly expand the court’s authority.

In a 2009 affidavit to the state’s Department of Planning, Rio Tinto argued that an expansion would give it access to an additional 163 million tons of coal over the lifetime of the mine. The decision to expand the mine, it said, was made based on a sharp rise in the long-term average price of coal from $33 per ton when the 2003 grant was approved to $53 per ton in 2009, meaning more than $8 billion in additional revenue for the company over the life of the mine.

Mining, whether for the high-quality thermal coal around Bulga — the kind used to fuel power plants — or the iron and gold in the country’s vast open west, is woven deeply into the fabric of rural Australia, where it provides many of the best-paying and most stable jobs. It has also been the engine powering a decade of robust economic growth that has largely spared the country from the effects of the global downturn.

Rio Tinto says that if the ruling is upheld, production at the existing mine will begin slowing next year, with the eventual loss of more than 1,300 jobs across the region, the Hunter Valley.

Article source: http://www.nytimes.com/2013/08/14/business/global/in-australia-signs-of-a-tilt-in-economic-equilibrium.html?partner=rss&emc=rss