THE controversial coal mine proposal that contributed to Barry O’Farrell’s downfall has estimated operating costs that would make it one of the world’s cheapest-running coal mines, the NSW Planning Assessment Commission will hear on Wednesday. The owner&nbsp;of the Wallarah 2 mine on the Lake Macquarie/Central Coast border, Kores, has&nbsp;told the NSW Department of Planning its operating costs would be $55 per tonne, Australia Institute economist Rod Campbell will tell a hearing. “This would make the project one of the cheapest mines to operate in the world, a very surprising assumption for a relatively small, underground, greenfield mine in Australia, outside of the major mining areas,” Mr Campbell will say. The Korean Government-backed company proposes to mine up to five million tonnes of thermal coal per year, largely for export, with coal transported by rail to Newcastle port. The company’s estimate of the net benefits of the project have dropped from $1.5 billion in 2008, to $346-541 million in 2013, and $274-485 million in 2016. Mr Campbell will tell the PAC that the mine’s operating costs appear “heavily understated, giving a misleading impression of the project’s likely financial and economic position”, as Kores&nbsp;attempts to obtain NSW Government approval. “Approval would add to the sale value of the project. Lack of approval would result in an asset write down, with implications for company balance sheets and the careers of the people responsible,” Mr Campbell will tell the PAC. The company’s response to criticism of its economic assessment was to state that an environmental impact statement did not need to address the financial viability of a project, and the economic impact assessment prepared for Wallarah 2 “makes no comment on the financial viability or profitability of the project”. Mr Campbell criticised the Department of Planning for saying Kores had responded to earlier Australia Institute criticisms of coal price and company tax figures put forward by the company, and its subsequent financial viability. He also criticised the company’s assessment of the project’s impact on the Central Coast’s water catchment area, saying it was inappropriate for the economic assessment to include no detailed consideration of the&nbsp;impacts, and to assume all impacts would&nbsp;be offset by mitigation measures. The Departments of Health and Primary Industries, and Central Coast Council, have continued to raise&nbsp;concerns about the company’s methods of determining water impacts could be managed or mitigated. The company assessed that the mine’s impact on groundwater would&nbsp;have zero cost and impacts to surface water and water supplies would&nbsp;have a maximum cost of $1 million. “Our conclusion remains that the project is unlikely to be financially viable. Its costs have been underestimated and its benefits overestimated in the economic assessment of the amended project, as in the two previous iterations. This is not seriously contested in the response to submissions or the economic peer review,” Mr Campbell said in a submission that will be put to the PAC on Wednesday. Kores’s submissions on the likely economic benefits of the mine have been strongly criticised by the PAC in the past, with a previous PAC in 2014 concluding that benefits claimed for the project by Kores, which were largely accepted by the Department of Planning, were “not credible”. The PAC found the Department of Planning uncritically accepted Kores’s estimates of the economic benefits of the mine, and made ‘‘no attempt’’ to address specific points raised by critics of the economic assessment, although the criticisms ‘‘appear to be soundly argued and entirely plausible’’. It was not acceptable practice for the department to gloss over the criticisms with a few generalisations as it had in its assessment of Kores’s estimates, the PAC&nbsp;said. A $1-billion difference between the claimed economic benefits of the mine and the likely actual benefits was ‘‘staggering’’, it said. The commission described the lack of critical assessment of Kores’s figures as ‘‘clearly ... unsatisfactory’’ and concluded that ‘‘far greater quality control’’ was required over inclusion in assessment reports of untested claimed benefits for mine projects. ‘‘There is now a substantial body of adverse comment about the standard of economic analysis for mining projects in NSW generally and this appears to be increasing rather than abating,’’ the commission found. The Wallarah 2 mine has come under sustained and substantial criticism since its proposal in 2008. In January, 2009 the then NSW Opposition Leader Barry O’Farrell advised mine opponent Alan Hayes in an email that he appreciated “the opportunity to reiterate the Liberal Party’s opposition to the coal mining proposal and our determination, in office, to prevent it from going ahead”. At the 2014 PAC hearing Jilliby resident Alexia Martinez strongly criticised Mr O’Farrell, saying she bought her property because of his promise. Mr O’Farrell’s government was criticised for allowing the Wallarah 2 proposal to be assessed&nbsp;after the Coalition was elected to government, and despite his pre-election statements. Mr O’Farrell resigned as Premier after evidence to the Independent Commission Against Corruption about a bottle of wine sent to him by a lobbyist for Kores and other interests.