Bulga Coal Management environment and community coordinator Ben Clibborn said the mine, which has both underground and opencut operations, uses 10 megalitres of water per day, half of which is attributed to tailings.

Located in the Hunter Valley, rainfall at the mine has been well below average levels for the past five years with just 320mm falling in 2006, far less than the average annual total of 720mm.

Clibborn said Bulga Management has put in place strategies to ensure the site does not run out of water and risk closing down if the low rainfall patterns continue.

He added that estimations of water supply had been incorrect in planning procedures, as planners did not factor in the amount of water locked up in tailings and sediment levels in dams, therefore the total water available to the site was even less than realised.

As the mine prepares for production increases management has engaged in a series of mini-projects, each with one goal in mind - to save water onsite.

Short-term initiatives include:

The use of chemical dust suppressant Dustbloc to replace the need to water down surfaces. Bulga trialled three products and found surface absorbed bitumen emulsion was more effective then paper production by-product polymer;

Secondary flocculation of tailings - found to increase water re-use, make for easier capping during mine closure and increase available space for tailings disposal;

Application of evaporation reducing powder to water storages to reduce pan evaporation. Trials on small catch dams found a 42% reduction in evaporation. The company plans to expand the trial on major water infrastructure this summer;

Bi-monthly dam sediment checks using an aluminium boat equipped with depth sensors and GPS instruments to give accurate measurements of water stores;

A two-day site audit focusing on water management was conducted that returned recommendations for changes needed to make optimum use of water supply; and

The purchase of water and transfer from Xstrata Coal mines - 875ML - and 13 external sources - 1042ML.

Clibborn said Xstrata is now looking at more sustainable options for Bulga and its Hunter Valley mines and is looking into three main options.

First is the building of a reverse osmosis plant that will treat underground mine water at Xstrata's joint-venture opencut mine, Liddell Coal, that will be supplied to Macquarie Generation at Lake Liddell and transferred to the Bulga Coal site.

The second option being considered is building the Cross Hunter pipeline that will link Bulga Coal to the greater Ravensworth Area, giving the mine access to Liddell's underground stores.

The pipeline has the potential to share water between industries and possibly be connected to other sources including the Singleton Sewerage Works, which is the third water source being considered, Clibborn said.

Clibborn added that "drought proofing" the mine was an environmental priority as well as an economic necessity and that the osmosis plant project with Macquarie Generation was an ideal example of sustainable development.

He said mine managers needed to be thorough in their evaluation of water sources and needs and install monitoring systems in a bid to catch water wastage and shortfalls in supply before they became an operational issue.