I am concerned by comments that seem to equate CNX position to that of CXY. This is false.
One could deduct that the primary reasons why CXY has been targeted are (a)it registered a sample, which although transitional, was slightly above trigger levels; and (b) its site is located in prime agricultural land. Once the alarm was so publicly raised, the concerns of rural stakeholders were always going to be difficult to dispel.
In demonising CXY, however, recall that both the government and high profile stakeholders such as Dorothy Pratt and the KCCG have referred to CSIRO 'best practice' guidelines about the importance of locating UCG well away from high-value agricultural land. This is a tacit endorsement of CNX.
Visit the DERM webpage on UCG, and you'll note that it refers only to the alleged incident at Kingaroy. Compare this to allegations in relation to CNX (made at the height of the hysteria) - initially downplayed by the department, investigated, and swiftly scientifically disproven. The issue was then dropped and has not been publicly mentioned since.
CNX Environmental Evaluation is a precaution prompted by an understandably cautious department burned by their own political mishandling of the CXY situation. It's important to note that the grounds for the evaluation relate to the late notification of a minor spill of process water - nothing to do with the UCG process itself. The department can't order an evaluation just on a whim - it must have grounds, however minor. The evaluation is unfortunate, but one must admit that CNX has only itself to blame for not reporting the spill in a timely manner. One would assume if it had, it would be fine.
One reason why I continue to hold is that in being scientifically evaluated, CNX, unlike CXY, can draw on the successful completion of it's 100-day commercial trial. In doing so, it gathered a wealth of data showing an environmentally safe process. If there were any issues with the trial, these would have been borne out by the strict reporting requirements to which CXY has succumbed. Arguing for your CSIRO-developed technology is much easier when you have trial data to demonstrate the fact. The Minister has highlighted that the three UCG trials are utilising different technologies, and has said that the point of the trial is to establish what works and what doesn't. All will be assessed individually, which seems consistent with the evaluation process DERM has followed to date. I suspect that should the evaluation be completed favorably, this episode will be retrospectively viewed as a valuable (if unsought) scientific validation of the CNX process.
Unfortunately CXY's problems completing its trial means that unlike CNX or LNC, they have the unenviable task of validating a non-proven concept. No doubt they have been very shabbily treated by the department, but I don't know that CNX can claim the same mistreatment. It seems that CNX have more or less been treated fairly in accordance with the processes to which it has left itself open.
Unlike CXY, CNX has not been shut down. It is permitted to operate its existing panels. It just requires approval to commission the new ones.
It is understandable that investors might be unnerved by the recent lack of new information. But I think that it's preferable that due process between the department and the company be resolved between those parties, rather than in public as per the CXY debacle. I note that LNC, which we understand to be in the same situation as CNX, has not issued any public announcements regarding their Environmental Evaluation. LNC does not appear to regard it as a material concern.
Further, while the evaluation is completed, CNX is continuing to progress plans for its approved project in Chile which it hopes to commence work on in early 2011.
Conspiracy theories are unnecessary (for now).
CNX Price at posting:
41.3¢ Sentiment: Buy Disclosure: Held
