What is Adani and how will it impact Australia?


Adani’s proposed mine in Queensland has long been a lightning rod for division over coal-mining and climate change in Australia. It is also being named as a big reason for Labor’s lost seats in Queensland amid the Morrison government’s upset re-election.

Now Queensland’s Premier says everyone’s “had a gutful” of the issue – and she wants it sorted out.

“I am expecting a definite timeframe by Friday,” Premier Annastacia Palaszczuk said on May 22.

So what’s next for this controversial project and what are the implications of it finally going ahead?

Adani's Abbot Point coal terminal near Bowen on the Queensland coastline would likely need to be expanded to accommodate the company's Carmichael coal mine if it is developed.

Adani’s Abbot Point coal terminal near Bowen on the Queensland coastline would likely need to be expanded to accommodate the company’s Carmichael coal mine if it is developed.Credit:Glenn Hunt

First, what exactly is the project?

The Carmichael mine, named after a nearby river, is the most viable of nine coal projects earmarked for the Galilee Basin. The basin is about the size of Victoria and contains one of the world’s largest untapped deposits of thermal coal – the type used to make electricity. The mine, which is proposed by Adani Mining (a subsidiary of India’s Adani Group), is meant to be a keystone project for the Indian company’s so-called “pit-to-plug” strategy of owning coal mines to feed its power plants in India.

Adani also runs ports in India and has other interests, including renewable energy. Its chairman and founder, Gautam Adani, was the 10th richest Indian in 2018, worth $17 billion ($US11.9 billion), Forbes reported. He has a poor environmental record.

Queensland is no stranger to coal mining, of course. The Bowen Basin, which runs along eastern Queensland into NSW, contains about two-thirds of the state’s coal reserve, including the higher value (and harder to substitute) coking coal, used in steel making.

Still, the nearby Galilee’s “greenfield” nature is attractive for new entrants. Beyond Adani, other billionaires are in the mix, with Gina Rinehart backing GVK’s proposed mine and would-be senator Clive Palmer seeking to advance his Waratah Coal venture.

If all nine proposed Galilee ventures get going, output could climb to 320 million tonnes of coal a year. That’s equivalent to expanding global seaborne coal trade by a third, says Tim Buckley, a director of the Institute of Energy Economics and Financial Analysis (IEEFA).

Galilee coal has a relatively high ash and low energy content for Australian coal, he says. The mining industry, though, says Galilee coal is up to 5800 kilocalories per kilogram, better than an average Indian energy content of as much as 4600 kcal/kg.

The Climate Council estimates those mines could lead to an additional 705 million tonnes of carbon dioxide emitted per year when the coal is burnt. That amount of pollution is equivalent to 1.3 times the annual emissions of Australia – although how much is additional depends on the amount by which total coal use increases rather than Galilee bumping other suppliers out of the market.

Mr Adani plans to ship coal from the Galilee Basin to India, where his companies make up the largest private electricity supplier led by the “ultra mega” Mundra power plant, with more than 4000 MW capacity. Adani is betting on forecasts, such as by BP, that India’s power demand will roughly triple between 2017 and 2040.

The Queensland Resources Council notes International Energy Agency estimates point to India’s coal-fired power plant capacity doubling by 2040.

The Queensland government, meanwhile, has downplayed reports that another project in the Galilee Basin, the $6.7-billion China Stone “mega coal mine”, next to Carmichael, was in doubt, with thousands of jobs at risk.

As a new coal-mining province, the Galilee Basin would open up new mining jobs.

As a new coal-mining province, the Galilee Basin would open up new mining jobs. Credit:Peter Braig

How many jobs would the Adani mine create?

Adani says it will generate more than 1500 direct jobs on the mine and rail project – which would transport the coal 200 kilometres to another rail line, from where it would go to Queensland’s northern-most coal port, Abbot Point – with about 6750 indirect jobs in towns such as Rockhampton, Townsville, Mackay and the Isaac region.

The project’s economic impact would be multiplied if other Galilee mines open up.

But the Australia Institute, an opponent of the Carmichael Mine, has noted how industry analysts expect Galilee coal to displace demand for coal elsewhere in Australia. It says Galilee Basin output of 150 million tonnes a year would cut coal volumes from the NSW Hunter Valley by 116 million tonnes by 2035 – something the minerals lobby has typically had little to say about.

What’s been the hold-up?

Adani paid $500 million plus a future coal royalty stream in 2010 to the now disgraced Linc Energy for its Carmichael coal tenements of some 2.3 billion tonnes of coal. The following year it promised to start coal production from 2014.

Adani failed to find banks willing to support its plan for the $16.5 billion “mega mine” that would have produced as much as 60 million tonnes of coal a year. It also hit a series of regulatory and legal challenges, both at the state and federal level, and the project is now a smaller first-stage version that Adani will fund itself at $2 billion.

Melissa Price has approved the environmental aspects of the Carmichael coal mine but many federal approvals are still needed.

Melissa Price has approved the environmental aspects of the Carmichael coal mine but many federal approvals are still needed.Credit:Alex Ellinghausen

The April 9 environmental approval by federal Environment Minister Melissa Price – just days before the election was called – removed one key barrier to the project.

On May 22, Premier Palaszczuk intervened to ask the Coordinator-General to have Adani chief Lucas Dow meet the following day with the environmental authority to set firm timelines for resolving the remaining issues of groundwater and biodiversity impacts. Those timelines will be released the day after that meeting.

Everyone’s had a gutful of this, frankly.

“I think the community is fed up with the [approval] process,” she told a media event at the coal port of Hay Point.

“Everyone’s had a gutful of this, frankly,” adding that the weekend’s election rout in her state for Labor “was definitely a wake-up for everyone”.

By contrast, earlier this week, Leeanne Enoch, Queensland’s environment minister, was holding to a line her government had used for months.

“Environmental approvals are necessary for all major projects. The Department of Environment and Science, as the regulator, are continuing to progress through the necessary processes,” she said. “These decisions are made free of political interference.”

Doongmabulla Springs, south-west of the proposed Carmichael mine.

Doongmabulla Springs, south-west of the proposed Carmichael mine.

What do groundwater and springs have to do with it?

Two key management plans are yet to get the tick from Queensland’s independent environment authority – and the Queensland Premier has now put them under extra pressure to decide.

One of them relates to the Carmichael mine’s impact on water at the nationally significant Doongmabulla Springs, a wetland desert oasis about 11 kilometres from the mine.

The concern is the mine could contaminate or disrupt the aquifers supplying the springs.

The concern is the mine could contaminate or disrupt the aquifers supplying the springs. The state government notes that CSIRO and Geoscience Australia both raised concerns about the groundwater impacts. (The state government had been asking their federal counterparts for the CSIRO report for a month – only to receive it less than half an hour before Minister Price announced her approval.)

Groundwater is the water that seeps into cracks below the Earth’s surface – and which can become contaminated. In Australia, such supplies account for nearly a third of our total water consumption, according to Geoscience Australia. Competitors for the water to be used by the Adani mine include local towns and the region’s farmers.

Queensland’s environment authority wants Adani to demonstrate the sources of the Doongmabulla Springs, and show how its mine will affect them.

A black-throated finch.

A black-throated finch.Credit:Alamy

And what about those finches?

The second remaining plan awaiting approval – and which has also been given the hurry up – is the mine’s impact on fauna such as the endangered black-throated finch, a tiny bird that has not been seen in NSW since the ’90s as its habitat has been steadily cleared. Adani’s detailing of the mine’s impact on the finches has so far been deemed inadequate.

Jo-Anne Bragg, chief executive of the Environment Defenders Office Queensland, said the state government was right to take a firm line on Adani given its poor track record on the environment both at home and in Australia. She noted the company’s Abbot Point coal port had dumped coal-laden water into nearby wetlands and the ocean, and had begun stage-2 site construction at Carmichael without appropriate approvals.

“These are all highly relevant to the approach the government should be taking to the Adani mine,” Ms Bragg said.

Any acceleration of the approval process to meet an artificial deadline “would make a highly environmentally risky coal mine even more risky”, she said.

Abbot Point coal terminal.

Abbot Point coal terminal.Credit:Glenn Hunt

And there’s a rail link still being debated too?

The original 388-kilometre tracks planned to connect the mine to Adani’s Abbot Point coal terminal has been ditched by Adani in favour of the cheaper option of a 200-kilometre spur to join Aurizon’s network near Moranbah, in Central Queensland.

It is understood Aurizon has up to 12 months to assess the proposal it received from Adani last November – and is in no hurry.

Aurizon said it had a legal requirement to “consider all access and connection requests” and treat them all confidentially.

It is understood Aurizon has up to 12 months to assess the proposal it received from Adani last November – and is in no hurry.

One concern, from a business perspective, is the possibility Adani will proceed to build its own monopoly railway to the coast once the mine starts, allowing it to raise finance for a larger stage two development – a result that would harm Aurizon’s interests.

Adani Australia CEO Lucas Dow.

Adani Australia CEO Lucas Dow.Credit:Attila Csaszar

What does Adani say?

Adani says its decade-long battle for Carmichael’s approval is unfair, although other controversial projects – such as Santos’ proposed Narrabri coal-seam gas venture in NSW is of a similar vintage without a clear green light. Shenhua’s coal mine for the Liverpool Plains of NSW has also taken a decade of approvals – so far.

Any timeframe longer than the next two weeks is nothing more than another delaying tactic.

After the federal election, Adani Mining CEO Lucas Dow said it was time for the state government – which is up for re-election by October 2020 – to read the room and get out of their way: “Even after the weekend’s election, where Queenslanders had their say, the Premier and Deputy Premier still have a tin ear to their own voters. They refuse to hear the concerns of people wanting them to back the Queensland mining industry, back regional communities, and stop shifting the goal posts.”

Mr Dow said the government had had long enough to settle the approvals, and he would be demanding “a conclusion” within the next fortnight. “Any timeframe longer than the next two weeks is nothing more than another delaying tactic by the Queensland Labor Government designed to delay thousands of jobs for regional Queenslanders.”

Minister for resources and northern Australia Matthew Canavan with minister for energy Angus Taylor in April.

Minister for resources and northern Australia Matthew Canavan with minister for energy Angus Taylor in April.Credit:Alex Ellinghausen

And Canberra?

While the Morrison government, including Resources Minister Matt Canavan, have been quick to seize on pro-Adani sentiment, especially in regional Queensland, after the election trouncing Labor too will likely review its stance on the mine.

Joel Fitzgibbon, Labor’s agriculture spokesman, on Monday warned that the party’s emphasis on climate change over coal jobs cost it heavily, including a 10 per cent swing in his own seat in the Hunter.

But the fight is not likely to go away.

As little as 1 per cent of the Great Barrier Reef will remain if global temperatures rise 2 degrees above pre-industrial levels, and we are halfway there, the UN reported earlier this month in a landmark report on global biodiversity.

And the climate risks aren’t restricted to the reef. The Reserve Bank’s deputy governor, Guy Debelle, has warned that climate change could cause financial shocks if companies didn’t take the risks seriously in their planning. 

By risks, he was meaning everything from reputational damage to the damages from bushfires and cyclones, events worsened by climate change. It’s for reasons such as this that major lenders QBE, Japanese trading companies and China’s State Development and Investment Corporation have all reduced their investment exposure to coal.

A Stop Adani protestor takes to the stage with Prime Minister Scott Morrison during the campaign.

A Stop Adani protestor takes to the stage with Prime Minister Scott Morrison during the campaign.Credit:Dave Hunt

Are anti-mine activists about to give up?

The Stop Adani campaign says it’s not going to give up its national efforts.

“We’re not going to let that basin be mined,” a spokesperson for the movement said.

Stop Adani’s local organisations have increased to 190 across the country and these groups won’t be put off by the election outcome.

“These kinds of moments are when movements grow,” the spokesperson said. “Nothing has changed about the science nor what’s at stake.”

With Cole Latimer

 



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