Adani collapse would hurt trading relationships: minerals council

Australia’s trade with India would be damaged by a collapse of the Adani coalmine project.

The mining sector has warned that the collapse of the $16.5 billion Adani coalmine project in Queensland would inflict “serious damage” on Australia’s trading relationship with India and deny opportunities to producers in NSW.

NSW Minerals Council chief executive Stephen Galilee said yesterday the Adani project was being viewed as a “litmus test for how serious Australia is in wanting to do business with India”.

The Indian conglomerate postponed its final investment ­decision on Monday after the Queensland Labor government deferred on a royalties deal for the project following a factional split forcing Premier Annastacia Palaszczuk into a compromise with her deputy, Jackie Trad.

Mr Galilee said there were huge knock-on export opportunities for NSW coal producers if the mine went ahead, and the strength of the sector lay in “maintaining strong long-term trading relations around the world”.

“If the Adani project is blocked for spurious reasons, we risk damaging that emerging trading relationship with India. And that puts the export opportunities for our NSW producers at risk as well.”

Adani is seeking a $900 million concessional loan from the Northern Australian Infrastructure Facility for a rail-line connecting the mine in Queensland’s Galilee Basin to the terminal at Abbot Point.

The loan is opposed by Bill Shorten, who says the project should “stack up” without taxpayer support. Resources Minister Matt Canavan yesterday noted the Rudd Labor government announced a direct equity investment of $580m into Australian Rail Track Corporation in 2008 to expand the rail corridors connecting Hunter Valley coalmines to the Port of Newcastle.

India imported 5.9 million tonnes of thermal and coking coal from NSW last year, with Mr ­Galilee saying production from the Adani mine would go only part of the way to meeting the growing demand for coal.

The International Energy Agency medium-term market ­report in December estimated Indian coal imports would rise 4.9 per cent a year to 2021, with India expected to eclipse China as the world’s largest coal importer over this period.

The Indian demand for thermal coal is expected to jump from 505 million tonnes in 2015 to 672 million tonnes in 2021, but its domestic production will be unable to keep pace and is ­expected to rise from 379 million tonnes to 520 million tonnes — leaving a gap of 150 million tonnes.

“India will need to import over 150 million tonnes of thermal coal to meet the shortfall in its local production and that is just under the total amount of thermal coal we export from NSW to the rest of the world,” Mr Galilee said.

At its peak capacity, Adani will produce 60 million tonnes a year — going only a part of the way to meeting India’s supply shortfall.