What will it take to stop Adani?

A stop Adani rally in Marrickville, Sydney on May 19. Photo: Zeb Parkes

The last legal roadblock Adani faces, the challenge by the Wangan and Jagalingou Traditional Owners of the Galilee Basin to the Indigenous Land Use Agreement, is likely to be resolved this month. While the proposed Carmichael mine in central Queensland is often deemed “a stranded asset”, as Adani has not succeeded in securing finance for the $16.5 billion project, it will not just walk away.

The latest attempt to secure finance has been to seek partners for the Abbot Point coal handing facility. The port facility currently servicing existing coalmines is operating at 50% capacity. The construction of a rail link from mine to port is essential for the success of both the mining project and the profitable operation of the port.

To shore up both projects Adani has appointed investment bank Rothschild to sell a stake in its Abbot Point port operations. An unnamed banker at a large international firm told Fairfax Media that Adani tried to sell a stake in the port 18 months ago, but its price expectations were too high. There were also questions about its financial forecasts.

Several big banks looked at it, but decided "they didn't want Greenpeace parked in the foyers", he said. The banker also said Adani looked at issuing bonds last year to raise funds, but investment banks didn't go for it.

A May 21 report that Adani’s parent company has written down US$13.3 million on its accounts on the Mumbai Stock Exchange demonstrates the financial difficulties it is facing.

The potential for the Adani project to fail because it is not financial is being used by Labor as an excuse for not opposing the mine or committing to cancelling approvals.

It is not good enough for Labor to promote policies to combat climate change while remaining silent on the question of new coalmines. Bill Shorten and his pretender Anthony Albanese have raised the bogey of “sovereign risk” when challenged to make a commitment to cancelling the existing approvals for mines in the Galilee Basin. Legal advice given by Environmental Defenders Office QLD showed this to be a furphy.

In a paper commissioned by the Australian Conservation Foundation (ACF), economist Saul Eslake said that politicians on both sides were willingly misleading people into thinking Stopping the Adani coal mine would pose a ‘sovereign risk’ to Australia.

Eslake found there was "absolutely no reason" the country's sovereign risk would be affected if a future government stopped the Adani mine proceeding for environmental reasons. "Sovereign risk is not the risk a government might change its mind or make a decision I don't like."

Nor are the banks likely to downgrade Australia's risk rating: "Banks wouldn’t be concerned because banks don’t want to loan to it anyway."

Eslake pointed out "there is no contract" between the Commonwealth and Adani. He said the term "sovereign risk" has a specific meaning — the chance that a government will default on its debt — and politicians are abusing it to confuse and mislead voters.

Governments regularly make environmental decisions that do not affect sovereign risk, Eslake said, such as bans on uranium mining, domestic gas controls and logging restrictions.

ACF chief executive Kelly O'Shanassy said Eslake's report was further evidence that "attempts to justify support for Adani’s dirty coal mine are falling like dominoes".

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