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Vic coal mines face clean-up fund increase

Victorian taxpayers will be better protected from coal mine operators who might try and shirk their clean-up duties at major sites in the Latrobe Valley.

The owners of three major mines - Hazelwood, Yallourn and Loy Yang - will have their rehabilitation bonds increased after the previous amounts were deemed insufficient, the state government said on Friday.

That means Engie, owners of the defunct Hazelwood mine and power station, must keep in reserve $289 million as a surety for the clean up works.

It's an increase from the previous $73.4 million requirement.

AGL, which owns Loy Yang, is up from $112 million to $154 million, and Energy Australia, which owns the Yallourn mine, will rise from $68.5 million to $148 million.

The bonds allow the government to draw on the money if mine operators don't fulfil their rehabilitation obligations.

"Taxpayers shouldn't have to bear the financial burden of rehabilitating coal mines, so we have increased these security bonds to give local communities greater certainty," acting Resources Minister Jacinta Allan said in a statement.

"Latrobe Valley communities can be confident that we are taking the action we need to make sure mines are safe and rehabilitated appropriately."

An Engie spokesman said the company has "announced publicly on many occasions that it is committed to meet all rehabilitation obligations relating to the closure of Hazelwood".

Energy Australia said it will continue to work with the state government, but its opposition to bonds remained unchanged.

"Site rehabilitation is most effectively managed through ongoing and progressive works which are subject to regular monitoring and reporting," a spokeswoman said

"Such an approach minimises or avoids tying up funds that could otherwise be used for rehabilitation."

Environment Victoria says the bonds force multinational companies, like Engie, to think seriously about rehabilitation issues in Australia.

"Increasing mine rehabilitation bonds to the full cost of clean-up is the only way of guaranteeing that Victoria's coal mines do not become abandoned industrial wastelands," Environment Victoria's Dr Nicholas Aberle said.

The recommended increases came from the reopened 2015/16 Hazelwood Mine Fire Inquiry, which assessed the number of fire-related deaths and the future rehabilitation prospects of coal mines in Morwell.

A bushfire spread into the Hazelwood coal mine in February 2014 and blanketed the nearby town with smoke and ash for 45 days.

AGL has been contacted for comment.