Under pressure, Adani scales down its coalmine project

November 8, 2018
A protest outside Adani's office in Brisbane on September 13. Photo: Alex Bainbridge

Strong support for climate action is adding to the nationwide pressure on proponents of the controversial Adani coalmine in central Queensland.

On November 1 new Adani chief executive Lucas Dow (formerly of BHP Billiton) announced that its proposed mega coalmine for Queensland’s Galilee Basin would be “scaled down” and “staged”.

Dow was coy about a starting date saying it was “not too far away”. Asked about the still-to-be-secured finance, he gave the same reply.

Adani now plans to export an initial 10-15 million tonnes a year, with a capacity to expand up to 27 million tonnes. This is less than half of what the company spruiked when it first proposed the project in October 2010.

Coal enthusiasts are trying to spin the scaled down mine as a “win-win” situation. Queensland Resources Council chief executive (and former Liberal MP) Ian Macfarlane welcomed Adani’s plans saying it gave it a better chance of getting across the line.

A cheaper rail plan and phased-mine development means that Adani will also need to secure less finance. Given that the four major banks have now distanced themselves from loaning to Adani, this was the most viable option for the project to stay on the table.

Adani has already spent about $3.3 billion in Australia, including more than $1 billion on preparing to build the Carmichael mine.

Federal resources minister Matt Canavan revealed just how important having Adani is, in whatever size, for the coal-loving Coalition government, when he told the Australian Financial Review on November 1: “The main thing for me is to get the first coal basin in 50 years opened up in Australia and once that’s opened, once infrastructure is built connecting that, other investments will be possible as well.

“This has never just been about just the Adani investment. It is about opening up a whole new region of opportunity for Australia as well.”

Those opposing the mine already know what is at stake.

The movement to stop Adani is continuing to grow and diversify. There are now about 150 local groups, a third of which are located in Queensland. They organise door-knocking, street actions, information stalls, visits to local MPs, film screenings and have blanketed neighbourhoods with Stop Adani signs.

The movement includes Galilee Blockade and Frontline Action Against Coal, which organise direct actions including stopping coal trains, and high school students who are organising a national walk-out for November 30. 

The #StopAdani movement is also preparing a series of actions from mid-November to December 1, in the lead up to Labor’s National Conference in Adelaide over December 16-18. It has plans to maintain and grow the pressure until the federal election, due by May next year.

With defeat for the Coalition growing more likely, the movement against the mine is now focusing on Labor, at the federal and state level.

Adani still faces many obstacles. It is being investigated for breaches of existing agreements and has yet to sign an agreement with the Queensland government for a royalty holiday. 

While Adani insists it can start the mine for a fraction of the investment it previously sought, the Queensland government has questioned Adani’s eligibility to delay its payment of royalties.

Queensland Treasurer Jackie Trad confirmed that Adani has not yet signed any royalties deal.

The state government and Adani were said to have reached an in-principle agreement over royalties 18 months ago, that would have allowed Adani to defer paying $315 million in royalties. Adani was also given an extra year to pay for a water licence due to “project delays”.

Institute for Energy Economics and Financial Analysis director of energy finance studies Tim Buckley said Adani’s Australian mining, rail and port operations are “a rolling series of financial shell games”. Its recent accounts show very few tangible assets, he said, and a debt of $1.6 billion to its Indian parent.

Buckley said that meant governments, suppliers and contractors risked non-payment if the project falls over. “What [Adani’s] done is pursued this ultra-capital light plan, where they use heavy financial leverage to avoid spending equity capital.”

“The government would be right to ask for some protection or security in a royalties deal. If the company goes bankrupt you don’t get repaid and Carmichael becomes a stranded asset. The risk here, global action on climate change, is a known and quantifiable risk.”

Buckley said Adani would need to secure a royalties deferral deal for the Carmichael project to be viable.

Stop Adani campaigners want the Queensland government to rule out any such agreement. “Queensland Labor has already given Adani free water and a free road,” Stop Adani’s Ben Pennings said. “Trad must rule out giving Adani a royalty holiday too.

“Adani can’t be trusted to ever pay Queenslanders back, and we can’t afford the dangerous climate change impacts of their disastrous mine.”

Blair Palese from 350.org said Adani is “playing chicken with Australia”. “The company is desperate to start operations while the coal-loving Coalition is still in power in Canberra, because it needs to get to financial close before the next federal election.

“We will do all we can to ensure there is no financial close, [and] this mine is killed off.”

Imogen Zethoven from the Australian Marine Conservation Society said it was “beyond belief” that Adani announced its plan to start digging within months less than a week after urgent warnings that there could be another severe coral bleaching event this summer.

“If Adani’s monstrous coalmine goes ahead, it will accelerate dangerous climate change, put our Reef in even more danger and threaten 64,000 tourism jobs.

She said Adani cannot be trusted, given that it is facing charges over allegedly polluting the reef with coal-contaminated water and is under investigation for potential illegal drilling at the mine site. “This is not a company that can be trusted with our reef,” Zethoven said.

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