High and dry

Hopes that fresh water in the Mingenew area would be preserved for agriculture have been dashed, after Karara Mining was granted a licence to draw five gigalitres a year from the Parmelia aquifer.

A group of Mingenew farmers had fought to stop the Department of Water (DoW) giving the mining company about 95 per cent of the remaining available water from the aquifer, which runs under their farms.

The Department of Agriculture and Food has identified the area as having the potential for future horticultural or other agricultural pursuits because of the availability of fresh water but these opportunities may now be limited.

Karara Mining, a joint venture between Gindalbie Metals and Chinese steelmaker Ansteel, will use the water for its magnetite project, about 160km east of Mingenew.

The approval process sparked questions about the DoW's first in, first served water allocation policy, prompting Water Minister Bill Marmion to call for a review.

After granting the licence last Thursday, Mr Marmion suggested the policy - written in 1914 - was outdated.

"Historically, the first in, first served approach was used to allow immediate development of available water," he said. "As competition for water increases, the policy has become less effective."

The day after notifying Karara its licence had been approved, Mr Marmion was heralding the opening of the first stage of the $955 million, 50 billion litre Southern Seawater Desalination Plant, near Binningup.

_Karara originally applied for 5.3gl of water per annum from the Parmelia aquifer, or 100 per cent of the remaining rights to the aquifer. It scaled back the application to 5gl after submissions were made against its request. _

Mingenew farmer Ben Cobley accused Mr Marmion of lacking integrity over the decision.

"I am disappointed the Minister refused to intervene and allowed the Act to be adhered to," he said.

Mr Cobley said the decision would stifle the expansion of Mingenew's food production capacity.

"A precedent has been set that anyone can use fresh, potable groundwater for purposes other than drinking and growing food," he said.

"To stifle enterprise development in an agricultural region is a tragedy and the politicians, agro-political parties and bureaucrats who have allowed this to occur should be ashamed of themselves."

DoW Mid West and Gascoyne regional manager Adam Maskew said the licence conditions would prevent an adverse impact from the miner's drawdown.

"The terms and conditions of Karara's licence will ensure the long-term protection of the water resource, groundwater-dependent ecosystems and existing users," he said. "Conditions include regular monitoring of water levels, including neighbouring farm bores and wetlands."

Mr Maskew said monitoring would be carried out by Karara and the DoW.

Karara Mining chief executive Steve Murdoch welcomed the DoW's decision and defended the process by which it was made.

"We are pleased to receive the licence after what was a very robust government process, which was designed to ensure the use of water generates an economic return to the State and doesn't just become a tradeable or speculative commodity," he said.

"The Karara Project has the overwhelming support of the Mid West population, which can see the long-term economic benefits a major mining project like this can deliver."

During its first stage of production, the Karara Project is expected to generate close to $50 million a year in royalties.

Mr Murdoch said the 5gl licence would support iron ore production of up to 12 million tonnes per annum.

The mine's production potential is 30 million tonnes of ore a year. To achieve this, the company may need an additional 12gl of water a year.