File photo of an Australian mine.

Australian town seeks 'unusual' costs from mining firm

An Australian town is asking Xstrata to pay it at least A$100m if the company decides to go ahead with a coal mine in the area.

Wandoan, home to just 380 people, is one of a growing number of small towns that risk being overwhelmed by Australia's fast-paced mining boom. The hamlet is a five-hour drive from Brisbane and in the middle of farming and cattle-grazing country.

Mining firms often pay communities a token amount before commencing on projects, but industry experts said the amount Wandoan was requesting was unusual.

"Someone has to pay and, I'm sorry, it shouldn't be my community and residents," said Ray Brown, the mayor of the Western Downs Regional Council. "This is a starting point."

Brown said the A$100m would go towards paying for some of the infrastructure needed to host a mine, including an airport, roads, and water and sewerage networks.

The fee, however, does not include the cost of housing for the 1,300 workers the mine will employ.

"I know it does happen on a much smaller scale... what seems to be possibly unique about this is the size of the funding," Gavin Wendt, an analyst with MineLife in Sydney said of the amount the Wandoan was asking for.

"It does make a lot of sense from their perspective."

Brown said the council had been negotiating with Xstrata for about two years to reach an agreement on costs.

Asked when it planned to sign the agreement, Xstrata did not immediately respond and a spokesman said that, once signed, the agreement would still depend on whether the company would go ahead with the mine project.

Small communities across Australia have struggled to house and provide services for the sudden influx of thousands of workers from the mining boom.

The flood of highly paid, mostly male mining workers has also meant that some towns are hit with price inflation and outbreaks of sexually transmitted diseases.

The Wandoan mine project, which would produce 22 million tonnes of coal per year, has yet to receive final approval from Xstrata, but the company expects to receive a mining lease for the development in the fourth quarter of this year.

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