Obeid purchased the Cherrydale Park property in Cascade Coal’s Mt Penny project area in late 2007. Expressions of interest for the exploration licence were sought less than a year afterwards.

The subsequent awarding of the Mt Penny license by then-minister for mineral resources Ian Macdonald and the purchase of a property by Obeid which covers the Mt Penny licence has prompted calls by resident action groups for an inquiry by the state’s corruption watchdog.

According to the AFR the government hired law firm Clayton Utz to investigate the Obeid family’s purchase of the property, leading to calls for further investigation.

“Eddie Obeid’s status as a former minister for mineral resources, his position within the then government, and the circumstances surrounding [Obeid’s family company] Locaway’s purchase of Cherrydale Park are grounds that justify further investigation,” the Clayton Utz report stated.

The AFR reported the law firm as saying that investigating the awarding of EL 7406 was “a matter of priority.”

Following the investigation, Clayton Utz reportedly advised the government to further investigate the relationship between Obeid and Macdonald, who awarded the Mt Penny EL to Cascade Coal in November 2009.

The Bylong Valley Protection Alliance has welcomed the call for an investigation into the Obeid purchase and wants a full investigation of all the circumstances surrounding the awarding of the Mt Penny exploration licence.

BVPA secretary Craig Shaw said a number of questions needed to be answered before the project progressed.

“When Ian Macdonald was minister for mineral resources he was asked about the details of the awarding of the Mt Penny exploration licence. At the time he brushed off concerns by saying that the process had been overseen by an ‘external independent probity auditor’,” Shaw said.

“But one of the things we never found out, for example, was just why tenders were re-opened in the first place after the first round closed.

“Our understanding is that the role of the auditor in the case of the Bylong tender was extremely limited and the decision to re-open the tender was not his.”

Shaw said the current investigation into the Doyles Creek project was a valid reason to pursue a probe into the Mt Penny EL.

“With the associated controversy surrounding former minister Macdonald, the referral of the Doyles Creek exploration licence matter to ICAC [ the Independent Commission Against Corruption] and other incidences of corruption in the previous Labor ministry, we think it’s time there was a fearless and exhaustive investigation of all the issues surrounding the awarding of the Mt Penny EL,” Shaw said.

A probe by the NSW ICAC into the Mt Penny licence could be a blow for the project, which is expecting to lodge an environmental impact statement for the open cut mine in early 2012.

The Mt Penny mine, located in Bylong in the western coalfields of NSW, could attract 200 construction and operation jobs.

It is expected to produce 5Mtpa of thermal coal for export and domestic markets.