Coal in Decline: Adani question and Australia is out of step

28 Aug 2017

The Indian billionaire Gautam Adani’s $21bn proposal to build a giant mine in the Galilee basin, about 340km south-west of Townsville, dates back to 2010. It has outlasted three Australian prime ministers and survived the signing of a global deal to combat climate change. Unsuccessful court battles have been waged and lost by opponents, promised imminent start dates have come and gone, and government support has steadily increased.

Though known as the Carmichael mine, if fully developed it will actually be 11 mines: six of them open-cut and five underground, spread over a length of 50km. eventually, the company says, it could yield up to 60m tonnes a year to be shipped to burn in Indian coal plants. The rail and port infrastructure necessary would open up the possibility of reviving some of the dormant coalmining plans in the basin, with a total potential additional output of about 150m tonnes of coal a year.

To put that into context, Australia now exports about 200m tonnes. It is, by any measure, a massive expansion that could push the world measurably closer to breaching the goals of the Paris climate agreement.

The details of the Adani proposal have moved over time. It was initially proposed to run for 150 years but that has been scaled back to 60. The company promised it would create 10,000 jobs; an ACIL Allen Consulting economist contracted by the company later conceded in court a more likely figure was 1,464. And the project is promised to initially start on a smaller scale, producing 25m tonnes a year.

It has environmental approval, has been granted access to groundwater from the Great Artesian Basin, and won a four-year deferment before it has to start paying royalties to the state. In June Adani announced it had made a final investment decision and was ready to go ahead. In truth, this was spin – it was still yet to secure finance for the project (Australian banks have not been willing) – but it was ramping up pressure on the Australian government to approve a $900m low-cost loan through its Northern Australia Infrastructure Facility to help to fund a railway that Adani would own and operate for itself and other potential Galilee basin miners.

Adani’s biggest champion has been the recently resigned resources minister Matt Canavan, who argued the mine should go ahead on economic, humanitarian and, most audaciously, environmental grounds. Specifically: bring jobs and growth to struggling north Queensland; help improve the lives of the 240 million Indians living without electricity; and be better for the planet given that India is building coal plants anyway, and Australian coal is a cleaner product than what is dug up in other parts of the world.

All three points have been contested. There has been significant pushback against the idea that, in a world where the demand for coal is flat at best, existing Australian mines would not lose out if the Galilee basin were developed. The coal consultancy Wood Mackenzie was commissioned to look at the issue by the $2bn Infrastructure Fund, which owns a stake in the coal-reliant Port of Newcastle, and found existing mines in southern Queensland and NSW would be hit. “Put simply, either the $1bn loan to Adani will have a significant impact on coal production and jobs in the Hunter Valley, Bowen basin and Surat basin, or the business case for the Adani rail line is deeply flawed and the promised jobs for north Queensland unlikely to materialise,” it reported.

What does this mean for the Carmichael mine, Goyal says India does not need it, but will use the coal. Tim Buckley, of the Institute for Energy Economics and Financial Analysis, says a two-week trip he took to India to meet energy executives and government officials suggested a different story. “There was almost zero discussion on Carmichael,” he says. “The project is not on the radar, not expected to happen, immaterial for India’s energy plans given the progressive move away from imported thermal coal and just unbendable for Indian banks given excessive Adani group debt.”

Source-TheGuardian