Adani’s Carmichael mine set to go within a fortnight
After six years of warfare involving governments, greenies and indigenous groups, while hunting for financial backers, Adani says its Carmichael mine is ready to go. But is it?
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THREE years ago Annastacia Palaszczuk was happy to smile and shake hands with Indian billionaire Gautam Adani shortly after the state approved a lease for what was billed as Australia’s biggest coal mine.
But fast forward to this week, when Adani Mining announced it would go ahead with a considerably scaled down project in the Galilee Basin, the Premier had little to say.
Yesterday Palaszczuk expressed doubt about whether the Carmichael coal mine would ever go ahead despite the Indian conglomerate’s announcement that it would finance the project itself.
“We’ve got a lot of companies that come and say we’ve got finance to begin things and it doesn’t happen,” she said.
“I will believe it when it starts happening.”
Bill Shorten, who is likely to be prime minister when the company forecasts its new mega mine will be operational, was similarly restrained. “I remain a sceptic of Adani. They’ve had plenty of false starts and they’ve had plenty of broken promises,” Mr Shorten said. “Now, we don’t know what they’ll be up to by the time we get into government, so we’ll deal with the facts of the situation we’re presented with, if we win the election in 24 weeks’ time.”
That’s hardly a ringing endorsement of a project that is portrayed as being a saviour of the Queensland economy, creating thousands of jobs and boosting state coffers with a promised “billions” in coal royalties.
Despite being much smaller than the $16.5 billion mega-mine that was first proposed eight years ago, the Carmichael project has become an emblem of the battle over climate change and economic development.
Like the battle over Tasmania’s proposed Franklin Dam in the 1980s, the central Queensland coal mine has taken on political ramifications in seats across the country.
Environmentalists warn the open cut mine – which could kick off a new era of coal mining in central Queensland – will contribute to global warming, rising sea levels and coral bleaching.
It’s an argument that pits inner-city electorates against those in central Queensland, that are suffering with higher levels of unemployment and to whom the promise of thousands of jobs is enticing.
At both federal and state levels, it’s a debate that Labor has struggled to take a position on.
Facing battles with the Greens and pressure from within some parts of the ALP, Shorten has equivocated on the merits of the mine and appears to have settled on a position of scepticism about whether it will stack up financially.
Based on a new YouGov Galaxy poll conducted for The Courier-Mail, this may be wise political strategy. The poll shows voter sentiment on the mine is hardening in Queensland, with 44 per cent opposed and 38 per cent in favour. Close to a quarter of Labor voters say they support the mine while about a third of LNP voters are opposed.
While the mine is not popular in some Liberal held seats either, it has been strongly backed by Nationals who are fighting to retain a series of north and central Queensland seats at next year’s election.
“It’s still, here in central and north Queensland, difficult economic times, the unemployment rate in this region is 6.8 per cent over the last 12 months and that’s well above the national average,” Resources Minister Matt Canavan says. “What this region needs is jobs and it needs big investments like this. My hope now is that we can all work together to create these jobs, deliver this opportunity.”
But the poll shows a divide between southeast Queensland, where opposition is stronger, and regional areas, where there are more in favour. This political division is just the latest in a series of hurdles the mine has faced.
Instead of its initial plans for a $16.5 billion mega-mine outputting 60 million tonnes a year, Adani is now proposing a $2 billion self-funded project that will reach 27.5 million tonnes a year when it is at full capacity. The first exports are expected by 2020, but initial production will be closer to 10 million tonnes and then scaled up in stages.
What was going to be a 388km rail line between the mine and the Abbot Point coal terminal is now set to be about half as long with links to the Aurizon network.
Before the last state election, Palaszczuk announced she would veto a $1 billion taxpayer funded loan that Adani sought through the Northern Australia Infrastructure Facility for the rail line to get the coal to port.
The company has prevailed over a series of legal challenges and environmental approvals and it still needs to finalise environmental management plans.
Other hurdles could emerge, with court cases still on foot and questions over the capacity of the existing rail line along with the agreement between Adani and Aurizon.
Banks have pulled funding amid doubts about the financial viability of the project, effectively forcing the company into a position where it says it will fund the mine and rail infrastructure itself. But the announcement has sparked a revived push from environmentalists to campaign against it – ensuring it will remain on the political agenda at the election due by next May.
“The mega-polluting Adani coal mine is one step closer to being built. Our elected representatives now have a clear choice on Adani,” says Australian Conservation Foundation chief Kelly O’Shanassy.
“Do they support opening up a massive new coal basin right when the world’s climate scientists desperately warn we must rapidly transition away from burning fossil fuels to halt global warming?
“Or do they stand with the millions of Australians who want this mine stopped to help secure a safe climate and stable communities?”
Adani Mining chief executive Lucas Dow insists the mine “stacks up both environmentally and financially”.
“We will now deliver the jobs and business opportunities we have promised for north Queensland and central Queensland, all without requiring a cent of Australian taxpayer dollars,” he says, while launching the latest iteration of the plans in Mackay.
Adani says it will export the high quality thermal coal to India and some southeast Asian countries for use in coal fired power stations.
Dow has made a virtue of this, saying the project will help lift living standards in developing nations and will do so using high quality thermal coal instead of more emissions-intensive coal mined in Indonesia.
The mine is now predicted to create 1500 direct jobs, most of which will be based in central and north Queensland, with another 6750 indirect jobs created as it ramps up production.
This is significantly fewer than the 10,000 jobs initially promised.
But the project opens the potential for six other mooted coal mines to open in the Galilee Basin, including the $6.7 billion Chinese-backed MacMines project that just received approval, along with the Kevin’s Corner and Alpha projects backed by Gina Rinehart, and Clive Palmer’s proposed Alpha North mine.
Adani says it will open its rail line to these competitors but questions still surround the capacity of the line.
It’s a prospect that will feed into the larger jobs versus development narrative that has defined the project long before any shovel has hit the ground.
WHAT YOU NEED TO KNOW
What is Adani proposing??
The Indian conglomerate, which operates in 50 countries in a range of sectors, including resources, logistics, energy and agribusiness, and which has annual revenue estimated at $A15 billion, says it will go ahead with the Carmichael open cut coal mine but has reduced the size of the planned output from 60 million tonnes a year to about 27.5 million tonnes. The Galilee Basin project in central Queensland will expand in stages, starting at about 10 million tonnes a year. The company will also fund a narrow gauge rail line linking the mine to Aurizon’s existing rail track.
How is it being funded?
Having failed to secure government subsidies and backing from banks, the company now says the project will be self-financed. Adani Mining chief executive Lucas Dow says this is possible after cutting costs through changes, including a smaller output and scaling back the rail line to the port. It expects to spend less than the $2 billion initially mooted to build the rail line and ramp up the mine.
what hurdles remain?
Adani has environmental approval but it still needs to finalise state and federal environmental management plans. The State Government says there are also still outstanding agreements about using the rail corridor and accessing water. As well, some native title legal challenges are still in train.
When will it start?
Adani says site preparation will start within a fortnight and it will begin exports by late 2020.
How many jobs will be created?
Adani claims the project will create about 1500 direct jobs, most of which will be based in central and north Queensland. The mine will use Townsville and Rockhampton as twin hubs for fly in fly out workers. The QRC forecasts the number of direct and indirect jobs will reach about 8250. Under Adani’s original proposal it predicted 10,000 jobs would be created.
Where will the coal go?
The company plans to sell the coal to India and other expanding southeast Asian markets. It says the high quality thermal coal sourced from the Galilee Basin will displace lower grade coal from Indonesia and elsewhere that is currently used to fuel Indian power stations.
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