Australia’s most controversial coal mine continues to face huge challenges, in spite of the remonstrations sure to follow the re-issuing of its Federal environmental approval this afternoon, writes Thom Mitchell.
Greg Hunt has brought Indian mining giant Adani’s $16.5 billion Carmichael coal mine, which would be the largest Australia has ever seen if it proceeds, one step closer to approval.
The Federal Environment Minister issued a press release this afternoon announcing he had re-approved the mammoth project, which would also give rise to the largest coal terminal in the world at Abbott Point, near Bowen, adjacent to the Great Barrier Reef, if it goes ahead.
Hunt had granted the project environmental authority last year, but it was cancelled with the government’s consent in August after it realised it would lose a Federal Court challenge because the minister had failed to properly consider conservation advise relating to two threatened species that will be impacted.
But in reality, Adani’s mega-mine is no closer to going ahead than it was yesterday.
Immediately after the government’s court defeat, the Department of Environment announced that it expected the environmental approval would be reissued within two months, and it turns out they were about right.
So how far are the shovels from the Galilee Basin ground where Adani wants to dig 60 million tonnes of coal each year? After more than five years in the planning stage the reality is that, from Adani’s perspective, they’re still about as remote as the proposed inland Queensland project site.
Here are three of the most compelling reasons why.
The Mine Does Not Have State Approval
The project needs both State and Federal approval, and while it’s now regained its green tick from the Commonwealth, the Queensland government is yet to give it the go-ahead.
Although Queensland Labor is highly supportive of the Carmichael mine, the state approval is still tied up in the courts as a result of a separate legal challenge to the one which skewered its Federal authority.
The Queensland Land Court heard evidence earlier this year that eviscerated many of the key claims Adani had relied on to market its project to the state government.
They include embarrassing disparities around job creation figures, groundwater impacts, the endangered Black Throated Finch, and how much the company will actually be forking out in company tax and royalties.
The Land Court is yet to make a recommendation to the state government on whether it should approve the mine, and although the Queensland government is not bound by the recommendation, no environmental authority or mining lease can be granted until that happens.
Although the state government likely wants to approve the mine, it could be politically difficult to go against a negative recommendation from the courts.
And the whole process is likely to take time, which is something Adani no doubt wishes it had more of as it struggles to pin down funds to back the project.
Adani Needs To Find Mountains Of Cash, And It’s Having A Hard Time
Perhaps the greatest risk to the project’s ultimate success is the need for Adani to reach financial close. A pack of 14 major global financial institutions, many of them the top lenders for Australian coal projects, have already ruled out funding the Carmichael coal mine.
The Australasia Director of Finance Studies at the Institute of Energy Economics and Financial Analysis, Tim Buckley said that Adani faces “a $10 billion funding requirement, and you can’t create $10 billion without a bank”.
“There’s not a single bank that has said they’ll provide any [funds],” he said. “It’s not even a question of how much more money they need; Adani haven’t got any money yet.”
“They do not have the financial resources to fund this without the external financial institutions.”
“I was arguing the project was total un-bankable and unviable at the start of this year, and my argument is only more compelling today with the [continuing]collapse in the coal price,” he said.
The bottom line is that when Adani started out on its Galilee gamble around half a decade ago, coal prices were at record highs.
At prices around — or as they often were throughout 2010 and 2011, above — the hundred dollar mark per tonne, most analysts say the project would be viable.
They’ve been hovering in the low sixty dollar range for a while now, and major banks like Goldman Sachs are joining bearish forecasters like Buckley in heralding the structural decline of the coal market.
Documents obtained under freedom of information laws have previously revealed that the Queensland Treasury didn’t think the project was a winner either.
The Federal Environmental Approval May Be Challenged
There is also a very real risk that the Carmichael mine — which has become a focal point for green groups opposed to opening up the virgin coal deposits of the Galilee Basin — will face fresh challenges to its Federal environmental approvals.
The Federal Court case that saw Adani’s approval revoked, brought by the Mackay Conservation Group, was a three-pronged attack. The conservation advise relating to two species, the Yakka Skink and Ornamental Snake, which Hunt failed to adequately consider, was just one of these.
The other two — the impact Adani’s plans to export coal, which would create four time the carbon emissions of New Zealand, and the company’s proven record of poor environmental stewardship in its home state of India — never made it before the Court.
As New Matilda reported back in August, it’s likely that the Mackay Conservation Group will be keen to return to court to probe those issues now that the approval has been reinstated.
On top of that, Acting Principle Solicitor Andrew Kwan told New Matilda that the Queensland Environmental Defenders Office is “revising the statement of reasons Minister Hunt issued with his decision today”.
He said the public interest law firm is already “advising a number of clients in relation to the legal validity of [Hunt’s] decision”.
In other words, Attorney General George Brandis may soon rue the day he shelved his offensive against “vigilante lawfare” after former Prime Minister Tony Abbott was ousted.