Adani to begin construction on scaled-back Carmichael mine

The controversial mine in Queensland will move ahead but it will be scaled back after the project failed to find external financing.

Environmental groups have reacted with anger at Adani’s announcement that it will self-fund the construction of its controversial Carmichael mine and that work will begin soon.

The mining giant said a scaled-down mine and rail project would be 100 per cent financed through the Adani’s Group’s resources.

Adani Mining chief executive officer Lucas Dow made the announcement at the Bowen Basin Mining Club luncheon in Mackay, Queensland today. He also suggested work could begin this year.

Environmental groups have already vowed to continue the fight against the mine, saying it was not in Australia’s best interests.

The Australian Marine Conservation Society spokeswoman Imogen Zethoven said it defied belief that Adani was pushing ahead with the mine when “Queensland is experiencing record breaking heatwaves, bushfires are burning across the state and our beautiful Reef could suffer another major bleaching event this summer”.

“The world’s climate scientists have made it abundantly clear that to save our Great Barrier Reef we must have no new coal mines and shut all coal plants by 2030,” she said.

“The Morrison Government and the Labor Opposition must stop this dirty coal mine, which will accelerate dangerous climate change and risk a safe future for Australia.”

She said Adani was currently being prosecuted for illegally releasing coal-laden water near the Great Barrier Reef and the company could not be trusted with Australia’s reef and water.

Environmentalist Bob Brown said his foundation would organise a cavalcade of cars from Hobart to the Central Queensland mine site in time for the next federal election.

“Let the issue be decided in the ballot box,” he said. “Australians can choose between coal and coral.”

But the Australian Resources and Energy Group has welcomed the news and said the project would deliver much-needed affordable electricity to people in India, as well as benefits for Australians.

“With an operating life of up to 90 years, it will deliver significant long-term economic value and support new community infrastructure via state royalty revenue streams,” AMMA chief executive Steve Knott AM said.

Adani has been trying to get its project off the ground for eight years but it has faced legal challenges from environmental and indigenous groups.

“Having now overcome the final hurdle and demonstrated that the Carmichael mine and rail is a commercially and environmentally sustainable, stand-alone project, it is time for Australia to get behind Adani as it moves toward the construction phase,” Mr Knott said.

Today’s announcement follows recent changes to simplify construction and reduce the initial capital requirements for the project.

The mine was originally expected to be a $16.5 billion project but will now only cost $2 billion, according to the Townsville Bulletin.

“Our work in recent months has culminated in Adani Group’s approval of the revised project plan that de-risks the initial stage of the Carmichael mine and rail project by adopting a narrow gauge rail solution combined with a reduced ramp up volume for the mine,” Mr Dow said.

“This means we’ve minimised our execution risk and initial capital outlay. The sharpening of the mine plan has kept operating costs to a minimum and ensures the project remains within the first quartile of the global cost curve.”

NEW TIMELINE

According to the Bulletin, Mr Dow said work on the mine would start first, after management plans were approved by state and federal governments. Work on the rail line was expected to begin early in the New Year. The first coal experts would be produced in 2021.

Today’s announcement is not the first time Adani has announced it was going to start construction.

Adani Australia chief executive Jeyakumar Janakaraj previously said physical construction of the mine was scheduled to start in weeks in October 2017.

This year it was announced that pre-construction work on the project was expected to begin in the September quarter.

FINAL APPROVALS NEEDED

Adani still has to be given final environmental and planning approvals by the state government, and the decision could prove difficult for Premier Annastacia Palaszczuk, who has always said the mine needs to stack up financially.

“Today’s announcement removes any doubt as to the project stacking up financially,” Mr Dow said.

Adani Australia CEO Lucas Dow speaks at a business breakfast co-hosted by Townsville Enterprise

SCALED BACK VERSION

Once spruiked as Australia’s biggest coal mine, which would produce 60 million tonnes of coal per year. The scaled-back version will now produce 27.5 million tonnes at its peak.

Initially production will only be 10 to 15 million tonnes but it will ramp up to 27.5 within 10 years.

A rail line to service the mine will also be scaled back.

Earlier this year Adani scrapped plans for a 388km standard gauge rail line and will instead build a 200km line that will connect to Aurizon’s existing Goonyella and Newlands rail network. This will more than halve the cost from $2.5 billion to $1 billion.

ABOUT 1500 JOBS

Mr Dow said the project would deliver 1500 direct jobs during the initial ramp-up and construction phase of the mine and rail projects. Thousands more indirect jobs would be created.

Townsville and Rockhampton were still expected to be the primary source markets for jobs but workers would also be hired from other areas.

Previously Adani suggested the project would generate 10,000 direct and indirect jobs.

Adani headquarters in Townsville.

FAILED TO FIND FUNDING

The company had to find its own funding for the project after banks overseas and in Australia distanced themselves from coal export projects in the area, or introduced policies that prohibited financing Adani’s mine.

Early this year rail operator Aurizon walked away from plans to build a rail line linked to the mine, withdrawing its application for a $5 billion government-funded loan from the Northern Australia Infrastructure Facility (NAIF).

The decision comes after Adani was previously denied a $1 billion NAIF loan to build its own rail line, after the Queensland Government vetoed it ahead of the state election.

The Carmichael mine was previously delayed by court challenges brought by environmental groups as well as the need to change the Native Title Act to legitimise an Indigenous Land Use Agreement it had signed.

STOP ADANI MOVEMENT WILL CONTINUE TO FIGHT

Adani’s mine has been hugely controversial because of its potential impacts to climate change and Australia’s Great Barrier Reef but also for the impacts an unlimited water licence will have on farmers and allegations about the company’s environmental track record in India and its financial arrangements.

Even conservative shock-jock Alan Jones fronted a campaign last year to oppose the mine.

Australian Conservation Foundation chief executive officer Kelly O’Shanassy said Australia’s elected representatives should stand with millions in the country who wanted the mine stopped.

“Adani’s announcement doesn’t mean this dangerous coal mine is a done deal,” she said. “There are numerous regulatory hurdles, approvals and management plans to clear. Adani still needs to sign contracts, secure access to rail lines and unacceptably move to extinguish native title.

“Adani remains under investigation from the Queensland Government for allegedly sinking illegal bore holes into groundwater aquifers. And Adani is being taken to court by the government for polluting the Great Barrier Reef with polluted coal water.

“The Stop Adani movement will fight this proposed mine every step of the way. There is too much at stake.

“Millions of Australia have shown up and spoken out against this climate wrecking mine. They will keep on until we stop Adani. It’s time our elected representative stood with them.”

Thousands of people attended Stop Adani protests across Australia last year, including at Four Mile Beach at Port Douglas Picture: Anna Rogers.

— With AAP

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