Operators of a mine on Tasmania's King Island plan to use a multi-million-dollar government grant to lease diesel generators to power the project, despite the money being initially granted to connect the mine to the island's grid.
The Dolphin Tungsten Mine closed 30 years ago, but is due to restart at the end of April under the operation of Sydney-based firm Group 6 Metals, formerly run by King Island Scheelite, with the help of a $10 million government loan.
Tungsten is used in electric vehicle batteries, defence systems, construction and aviation.
Group 6 Metal chief executive Keith McKnight told ABC Northern Tasmania the company's initial plan was to connect to the local electricity grid, but it would now lease diesel generators for the first two years of the project to cut costs.
"One of the main reasons for connecting to the grid on King Island is because they've got a high percentage of renewable energy," he said.
"Throughout last year it became apparent that the initial $2 million to fund the connection was not going to be enough.
"There was a significant escalation in capital costs and there were also some other operating and commercial factors," he said.
While King Island's grid isn't entirely renewable, it's powered largely through wind, solar and battery sources, with diesel used to top those up when needed.
Renewables in the works
Mr McKnight said that some of the money involved will be put towards exploring renewable energy options that could power the site.
"This money is going towards supporting the company in its interim solution, but more importantly it's going to go towards the company implementing a long term, reliable power solution," he said.
Group 6 Metals has signed a non-binding memorandum of understanding with Fortescue Future Industries, a subsidiary of Fortescue Metals Group, to "explore opportunities for the potential provision of renewable energy, heat energy and hydrogen".
The plan involves feasibility studies and due diligence activities, with an aim to reach "definitive agreements", though the company didn't say how long that would take.
Mr McKnight said the investment was worth it, because the site's considerable tungsten deposits could make it operational for more than 14 years.
Greens slam 'diesel-powered dreams'
While acknowledging that the mine would bring jobs and economic benefits to the sparsely populated Bass Strait island, Tasmanian Greens leader Cassy O'Connor said the grant shouldn't have been re-purposed to pay for diesel generators.
"This mainland-based company doesn't need the Tasmanian government to pay for their diesel-powered dreams," she said.
"After all, they've recently raised tens of millions of dollars in investment capital.
"All this is about for them is eking out every possible cent from the public purse."
Ms O'Connor said the move to re-direct the public funds away from local energy provider Hydro Tasmania towards the mine project was problematic given the rising power costs for ordinary Tasmanians.
"In the face of tens of thousands of Tasmanians struggling to pay their rising power bills, the government has done next to nothing to help," she said.
"But the Liberals sure are quick to stump up some cash when a corporate operator puts its hand out."
Minister for Energy and Renewables Guy Barnett said in a statement the plan for Group 6 Metals to provide its own energy solution, rather than rely on a local power connection, was the best way for the mine to restart "in line with the project time frames".
