After almost a decade of planning, the controversial Carmichael mine project in Australia’s northeast state of Queensland finally looks set to get underway, with a key environmental approval decision made on Thursday.
The mine, which will be one of the world’s largest, is projected to see up to 2.3 billion tonnes of coal extracted from an area five times the size of Sydney Harbour over 60 years, equivalent to emitting 7.7 billion tonnes of greenhouse gases.
The decision to approve the mine, owned by Indian conglomerate Adani, came after years of legal battles, corporate wrangling and public outcry, but has been welcomed by the federal Coalition government and state-level opposition in the Labor party.
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The mine has attracted massive public attention in an age when Australian society is increasingly divided on the issue of climate change. Extraction industry supporters argue that Australia is economically reliant on exporting primary resources, and that, with a small population base, Australia’s impact on reducing global emissions will never be substantial.
However, green groups and activist shareholders are increasingly wielding public influence and divestment tactics to deprive coal industries of customers, partners and finance. The original Adani proposal, costing AU$16 billion (US$11 billion) and producing 60 million tonnes of thermal coal per annum, has been reduced in scope to 27.5 million tonnes a year with initial outlay of $2 billion. After failing to find finance with major Australian and Chinese banks, it will reportedly be self-financed by Indian billionaire Gautam Adani’s group of companies.
Tensions boiled over in April, when a convoy of ‘Stop Adani’ protestors in Queensland, led by environmentalist Bob Brown, was met by local supporters of the project. Public contention over the mine reached its height during the recent federal election, billed by some analysts as a ‘climate election’, when Adani played a part in the Coalition’s win.
The ‘climate election’ that wasn’t
The May election saw the unexpected return of the coal-friendly Coalition government. Adani proponent Senator Matt Canavan, Minister for Northern Australia and Resources, was among many who interpreted the result as an endorsement of the mine project and the supposed employment boom it would generate.
Immediately following federal Labor’s unexpected losses in primary industry-dominated electorates, the Queensland Labor government—historically the party ranged against the Coalition—came out heavily in support of the Adani mine.
Meanwhile, mining billionaire and sometime parliamentarian Clive Palmer has claimed his advertising campaign won the election for the Coalition. Palmer has long fought for his Galilee mine interests in and out of parliament.
Initial construction on roadworks for the mine were expected to begin as early as 15 June. Although some legal hurdles still remain before operations can commence, momentum is swinging behind Adani.
Coal financially suspect, but subsidised
The hazy financial logic behind the Adani mine has drawn plenty of public scrutiny. In a November 2018 statement, Adani Mining chief executive Lucas Dow argued that a slimmed-down mine means “we’ve minimised our execution risk and initial capital outlay. The sharpening of the mine plan has kept operating costs to a minimum and ensures the project remains within the first quartile of the global cost curve.”
“The project stacks up both environmentally and financially,” he said.
But with new coal mines and generators increasingly risky propositions, the Adani Group will struggle to achieve profitability despite owning port assets in Queensland, and coal plants in India. Queensland government backing in the form of royalty concessions may help.
“The Adani saga has been reflective of the big shifts in global finance,” Tom Swann told Eco-Business. Swann is a senior researcher at think tank The Australia Institute’s Climate & Energy Program.
“You’ve got big banks and big insurers increasingly turning away from coal, particularly thermal coal. You’ve got this project that’s marginal at best, and relying on government support at both ends of the supply chain to get it over the line. So it’s really reflective of a big tipping point in global energy systems.”
“And I think this is why we’re seeing so much attention on the subsidies,” he said.
A recent report from the Australian Department of Foreign Affairs and Trade argued that “there is no market over the next 20 years which offers more growth opportunities for Australian business than India.”
With energy consumption outpacing population growth as India improves access to electricity, coal-rich Australia could be an obvious partner. The Adani project represents the largest investment yet by an Indian source into Australia.
But Bodhisattwa Mukherjee, joint director of the Indian Chamber of Commerce, told Eco-Business that “Adani is a very specific example [of foreign direct investment]… I think the focus for India is renewables now.”
“We’re looking at various forms of energy which are more environment-friendly and less hazardous for the planet,” he said.
Social, environmental conflict in the Galilee Basin
The Adani mine is the most high-profile and developed project, but it’s also an enabler for other proposals in the Galilee Basin region put forward by private, unlisted companies and foreign-owned mining interests. Estimates are rough, but their projected output could be over 250 million tonnes per annum.
In part, Adani would provide the foundation of logistics infrastructure in the area; the Carmichael mine would also form a test case in environmental approvals and public engagement, and in garnering government backing.
“The view is that if this first mine goes ahead with the associated transport infrastructure, it’ll be easier to get the other ones off the ground,” says Swann.
“This is such a huge amount of carbon dioxide, such a huge amount of coal, that it will really have an enormous impact on the climate but also on existing coal mines in Australia and other parts of the world.”
Opening the Galilee Basin to open-cut and underground coal mining will expose communities, ecosystems and threatened species to impacts including groundwater depletion and contamination, land clearing, pollution and climate change, according to a wide range of stakeholders.
Approvals for environmental management plans for groundwater, and the endangered black-throated finch, were pushed through despite the concerns of government scientists at the CSIRO and Geoscience Australia, among others.
Adani has also put forward contentious plans to expand its Queensland port asset, which are disputed by traditional landowners, and environmental groups concerned about impacts on the Great Barrier Reef. The proposed rail corridor and other infrastructure have also run up against local communities, traditional landowners and environmentalists.