Adani has cut its plan for initial output to 10-15 million tonnes a year. (www.adaniaustralia.com)
The most divisive project in recent Australian history can finally break ground.
Virtually all that is left is for Adani to put its money where its mouth is.
If it doesn’t pave the way for the world’s last big energy coal rush in central Queensland’s Galilee Basin, no-one else will.
Sceptical observers still struggle with the forbidding arithmetic of Adani, or whoever follows it, trying to turn a profit from a remote thermal coal mine in the era of the Paris climate agreement.
But even the Indian miner’s foes in the conservation movement recognise it has made all the moves of a company that remains serious about building one of Australia’s largest thermal coal mines.
Adani Australia boss Lucas Dow insists the numbers stack up.
“Our future plans all make economic sense, it stacks up, it will endure throughout the price volatility that typically our industry sees,” he said.
Today the Indian miner jumped through the last of its major regulatory hoops as the Queensland Government performed a backflip.
Waiving a key requirement they’d repeatedly held up as Adani’s final barrier — that it “definitively” identify the source aquifers of the Doongmabulla springs complex before approval — state environmental officials signed off on the Indian miner’s Groundwater Dependent Ecosystem Management Plan (GDEMP).
That ushers in stage two for the Carmichael Mine project.
Adani can clear the land that is home to the endangered southern black-throated finch.
It can lay asphalt for its huge trucks, set up power and sewage and water treatment plants, and the buildings from which its mine managers will call the shots.
It can dig up and stockpile the earth that now sits on its coal pits and excavate the entrances to its underground mines.
And it can sink bores deep underground to suck out the water in its coal seams, leaving the black stuff dry for the digging.
Today’s approval hinged on its plan to avoid destroying one of the world’s last unspoiled desert oases, the Doongmabulla Springs Complex.
The so-called “bathtub effect” of groundwater means a likely underground source of the springs — the closest of which is 7 kilometres from the mine site — will sink.
Under its federal environmental approval, Adani is permitted to drain that aquifer by up to 20 centimetres.
Before today, Queensland Environment Minister Leanne Enoch and her department insisted that Adani must definitively identify all the source aquifers for the springs.
The Federal Environment Department last week made clear Adani still hadn’t done so.
Adani’s working assumption that the springs were fed only by a sandstone layer that its mine wouldn’t touch was “implausible”, officials said last week.
This echoed independent advice from the federal science agencies that Queensland environmental officials also tapped into.
The federal agencies have forced Adani to do extra groundwater monitoring on two rock layers the miner will be digging into to check if it saps the springs.
But the Queensland environment department said today it was satisfied Adani had identified the “main” source of the springs and would accept “further work … to identify any potential contribution from other aquifers”.
It has forced Adani into two years of extra groundwater, earth and possibly seismic testing.
Adani can begin box cut mining but not underground mining until the tests are completed.
Academic scientists still harbour grave doubts about the fate of both the springs and the finch.
And a bureaucratic bungle by former federal environment minister Melissa Price, around the approval of Adani’s plan to use river water to wash its coal, yesterday sent her successor back to the drawing board.
But clearing that hurdle is a formality.
Today’s ruling came after Premier Annastacia Palaszczuk caved to political pressure in Queensland’s mining belt by calling in her top bureaucrat to broker speedier rulings by environmental officials.
That pressure was the result of a parochial and effective campaign against federal Labor by conservative candidates, led by federal Mining Minister Matt Canavan but including Pauline Hanson and Clive Palmer, himself a Galilee coal mine prospect.
It was a critical public relations victory for Adani. It had recently adopted more aggressive corporate tactics, after trying in vain to persuade capital city-dwellers of its virtues, in the face of a protest movement that mauled its public image.
Adani also sought to turn another defeat into victory. No bank will touch it. So it cut its plan for initial output to 10-15 million tonnes a year, and announced it would pay for the mine itself.
This still begs questions:
- Will billionaire owner Gautam Adani plough more than a quarter of his reported $7 billion fortune into an Australian venture when he could buy similar coal cheaper from Indonesia?
- Will Adani’s plan to burn Australian coal to sell power to Bangladesh (at almost double the going rate in India) come off?
- Will Adani’s jobs bonanza be an anti-climax? If as stated by Nationals MP Brigid McKenzie last year, there are as few as 100 long-term jobs, would that spark a backlash from unions and beyond?
She’s since deferred to Adani’s claim of up to 1,800 ongoing jobs — which is odd when Adani’s original mine plan was set to net 1,464 jobs at best.
Adani’s Carmichael coal mine site in central Queensland’s Galilee Basin. (Twitter: Matthew Canavan)
While the mine has become the touchstone for a culture war in Australia around climate change action, Adani has all but prevailed in its battles around the finance, the politics, and the regulation of its proposed project.
But Bloomberg commentator David Fickling has predicted Adani could make twice as much buying Indian government bonds.
And two other potential monkey wrenches remain.
One wildcard is if traditional owners who oppose the mine win a pending Federal Court appeal ruling about Adani’s Indigenous Land Use Deal.
That would send Adani back to the drawing board trying to win over an Indigenous representative group split 6-6 down the middle. It may never get that deal again.
Another wildcard is the protest movement that used the Maules Creek mine as a dress rehearsal for the Carmichael mine. Their blockades managed to delay the NSW project by a decade.
What will the world’s appetite for thermal coal be like in ten years?
One of the trio of other Galilee contenders, MacMines, abandoned its mining lease application and its Brisbane office months ago.
The two others, Australian billionaires Gina Rinehart and Clive Palmer, do not fear bank lobbying and can finance their respective ventures themselves.
But unlike Adani, their end markets are uncertain and they cannot wear lower margins by cutting out the middlemen.
And they are much further behind on the long and tortuous path of mega-mine approval. Returns on these multi-billion dollar projects are measured out in decades.
The International Energy Agency gives the thermal coal trade, if global heating is to be kept to 2 degrees Celsius, just three. The clock is ticking.