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The Adani Factor in the Queensland Elections: Changing to a More Sustainable Coal Export Model

Denis Bright seeks discussion on the implications of the Adani Carmichael Coal Project on the forthcoming state elections. The electoral impact zone of the Adani project will be in the marginal regional state coastal electorates between Townsville and Rockhampton as well as some leafy suburbs of Brisbane and on the Sunshine Coast. The latter attracted significant Green support at the 2015 state elections.

Opponents of Adani are poised to attempt to make the Carmichael Coal Project the central issue in the forthcoming Queensland state election. This confrontational approach has real flaws. Queensland Labor has little to fear from opening this debate about the merits of the current Adani coal export model.

The Queensland minority Labor Government will take the line that qualified support for the project has been a difficult decision which has brought the best possible deal for the living standards of Queenslanders after the failure of the federal LNP to use its export powers to change the preferred development model of the Adani Group.

The Townville Bulletin Online reported that anti-Adani protesters are poised to run a civil disobedience campaign throughout the forthcoming election campaign so that the whole election might become a referendum on this single issue (The Townsville Bulletin Online 13 September 2017).

The Adani Carmichael Project is no simple black and white issue. It has implications for federal state relations and even future international relations. Yet out of present angst about the current Adani Carmichael Project, there may still be windows of opportunity to improve its economic sustainability and contribution to the federal government’s Northern Australia agenda. The full report is available online.

The International Context of the Adani Deal

Under Narendra Modi’s far-right Government, multi-billionaire entrepreneur and chairman of the Adani Group has a symbiotic relationship with the ruling BJP Administration.

India is currently the world’s third largest economy in Purchasing Price Parity (PPP) terms after China and the USA. India is expected to be the world’s second economy in 2050. Commitments to the modernization and militarization of India are a significant component of balance of power strategies for the US Global Alliance and its combat readiness in the wider Indo-Pacific Hemisphere.

While India has its own supplies of nuclear fuels and coal, additional supplies from Australia can only assist in these processes of technological development towards superpower status with China.

Perusal of the article on the Adani Carmichael Coal Mine in The Diplomat Online is highly recommended as its canvasses these broader issues and questions the political wisdom of Prime Minister Turnbull in supporting the current Adani Project (26 April 2017)

Is the Adani Deal Water-tight?

The Adani Group in Brisbane assures me by phone interview that everything is now in place for progress on the coal project in the Galilee Basin, the new rail infrastructure and expansion of the Abbot Point Coal Terminal

This confidence contrasts with reporting on the ABC News Online by Stephen Long (10 July 2017):

Flanked by Commonwealth and Queensland politicians, the giant Indian conglomerate Adani last month announced that its board had given final investment approval to its controversial mega-mine in North Queensland, and declared the “official start” of the Carmichael coal mining project.

But what does that mean in practice? For the moment, it seems, not much.

The ABC has obtained the plan of operations for the Carmichael coal mine project submitted to the Queensland Government last month.

It covers just six months and involves next to nothing: just re-establishing signage at the site, recommissioning an existing temporary camp and installing some additional demountable buildings.

“The plan of operations will be amended in due course to include all early works related to commencement of construction activities for the mine and related infrastructure works,” it says.

The lack of a substantive plan for development of the mine “is a huge embarrassment for the Adani cheer squad including the Prime Minister, the Premier of Queensland and [Minister for Resources and Northern Australia] Matt Canavan, who have bent over backwards to get this project over the line,” said Rick Humphries, co-ordinator of the mine rehabilitation campaign for the Lock the Gate Alliance — a group established by farmers to fight “inappropriate” coal and gas mining.

The electorate needs to know what aspects of the Adani project are still open to re-negotiation should Bill Shorten become Prime Minister or a majority Labor government is installed in Queensland after the forthcoming election.

News on the status of loan negotiations between the Northern Australia Infrastructure Fund (NAIF) is far from finalized (ABC News Online 12 August 2017).

To its credit the Queensland Government has not been prepared to fund the rail extensions from the Adani Mine to the existing coal freight line through Moranbah.

Adani Australia says the loan it is seeking from the Federal Government for its proposed Carmichael coal project could be less than half of the reported $1 billion. Even this loan deal is not finalized and there was no reply to my inquiries with the NAIF in Cairns by phone and email. This coyness is understandable as NAIF funding of the project would indeed be in breach of the investment mandate of the NAIF according to the Climate Council Online (Climate Council Online 6 July 2017):

Specifically, the Investment Mandate of NAIF states that:

“The Facility must not act in a way that is likely to cause damage to the Commonwealth Government’s reputation, or that of a relevant State or Territory government.” (Section 16)

“The Facility must have regard to Australian best practice government governance principles, and Australian best practice corporate governance for Commercial Financiers, when performing its functions, including developing and annually reviewing policies with regard to:

(a) environmental issues;

(b) social issues; and

(c) governance issues”. (Section 17)

Given the NAIF’s responsibility to not act in a way that is “likely to cause damage,” this effectively forbids any such loans to finance coal mines and their associated infrastructure. Additionally, the Queensland Government’s recent announcement of a no royalty holiday for Adani means, according to Environmental Justice Australia, that the Commonwealth could not legally fund projects through NAIF without the provision of the states.

Despite claims from the federal LNP about the meticulous finances of instrumentalities, the amount that is required from the NAIF loans to Adani is now in a state of flux (ABC News Online 2 August 2017):

Adani Australia says the loan it is seeking from the Federal Government for its proposed Carmichael coal project could be less than half of the reported $1 billion.

“It may be more than $500 million, it may be less than $500 million,” company spokesman Ron Watson told 7.30.

“It all depends on our financial arrangements, which we’ve yet to finalise.”

Adani Australia applied for funding under the Federal Government’s Northern Australia Infrastructure Facility (NAIF) in December, to help with the construction of a 380-kilometre railway line linking its proposed central Queensland coal mine to the coast.

It was widely reported at the time that the then-minister for Northern Australia, Senator Matt Canavan, had confirmed the loan application was for $1 billion.

But this was called into question in a recent interview Adani Australia’s chief executive Jeyakumar Jana Karaj gave to Queensland’s Courier Mail.

“Even I don’t know the number,” he was quoted as saying. “It could be anything.”

When Caution Prevailed in the Rudd-Gillard Years

The Queensland Government had indeed supported earlier versions of the Adani Project with rail transport links to the Gulf of Carpentaria which offered greater support for Inland Regional Development and future rail connections to Darwin (The Fifth Estate Online, 5 August 2015).

Federal export powers could have facilitated these changes which required more government financial support. There are historical precedents for the use of export licencing agreements to achieve more sustainable environmental outcomes. These included the ban on exports of mineral sands from Fraser Island in the 1970s and the closure of Gunn’s pulp mill in Tasmania.

Constituents should quiz both federal and state candidates at forthcoming elections on their willingness to work towards a review of this least environmentally friendly coal export model at a time when the future of the Reef and humanity are in danger from global warming. The least cost coal export model is now the least unsustainable.

Denis Bright is a registered teacher and a member of the Media, Entertainment and Arts Alliance (MEAA). Denis has recent postgraduate qualifications in journalism, public policy and international relations. He is interested in promoting discussion to evaluate pragmatic public policies that are compatible with contemporary globalization.


15 comments

  1. Ricardo29

    I continue to be surprised by the Queensland Labor Government’s support for the Adani project. It is as if they are blind to what seems to be incontrovertible evidence that there is little to no economic support for this project and that without federal or Queensland government money it is dead in the water. All of the claims about its likely benefits via employment or payments have been debunked so why does Qld Labor continue on what looks like a path to electoral suicide, even though it believes there might be support from coal mining electorates. I think even those who work in the industry must see that it is a resource with a limited future. The fed and qld goats should be working on strategies to prepare for coal’s inevitable demise.Further, if India is to ban coal imports as reported, where would Adani find markets which don’t impact such export markets as already exist? It stands out like the proverbials that Australia doesn’t need another coal mine, of any size in any location.

  2. Patrick

    The good news from Denis’ article is that the details of the Adani project are not set in contrete. If the 380 km rail link to an existing coal export line is not finalized there is no operational project. Q has the best deal possible under existing federal LNP guidelines for a project on the cheap that ignores better regional development options for Northern Australia. The election of Bill Shorten can change the federal guidelines and win seats like Dawson, Flynn, Capricornia and Leichhardt in the process.Time for the Greens to work with Labor for a better deal here.

  3. brisbanej

    Fantastic article Denis on a really topical issue in Queensland. Thanks for your insights on the issue.

  4. Mia

    I do not think the Adani project should go ahead but if it does it must contribute more to our Northern Australia initiative to assist residents in the regions through economic diversification.

  5. Moya

    A very topical article – it seems that it has been in the news for years. We can only wait patiently for a decision.

  6. Leila Smith

    Excellent article Denis, Queensland economy can certainly do with a boost at present , but the factors you have raised about environmental concerns and how much Queensland ultimately gains financially are of concern.
    Hopefully these issues will be addressed before the mine goes ahead.

  7. Tessa

    How could Turnbull allow this project at Adani Carmichael?

  8. Rubio@Coast

    Could not agree more Tessa: the National Liberals approved the export licence for the Adani Mine: The alternative transport routes shown in this article could have avoided the Reef and assisted with jobs in Regional Queensland

  9. Paul

    Thanks for the article Denis!

    It’s time to put the brakes on this project! The state and federal government should be looking at a huge renewable project in Qld – plenty of jobs in that! It’s not either of it’s both and more! Why can’t you protect the environment and stimulate the economy?!??

  10. Maria H

    Great to look at this from a fresh perspective Denis. Well done.

  11. win jeavons

    No new coal mine can possibly be environmentally friendly at this time , as catastrophic hurricane and fires illustrate our near future prospects, with NSW already in this fire season too, in early spring! Perhaps, in the far future if another ice age comes, and humans still exist, that coal may prove invaluable. Leave it n the ground! India has lots of sunshine. Current coal miners are merely trying to grab the loot before it is foreclosed .

  12. Kyran

    “News on the status of loan negotiations between the Northern Australia Infrastructure Fund (NAIF) is far from finalized (ABC News Online 12 August 2017).”

    “Given the NAIF’s responsibility to not act in a way that is “likely to cause damage,” this effectively forbids any such loans to finance coal mines and their associated infrastructure.”

    In the category of ‘would you trust these bastards?’, the NAIF appears to have a few problems in its structure and composition.

    “Exclusive: Half of the directors of the Northern Australia Infrastructure Facility face questions over links to mining industry.
    The independent board overseeing Australia’s $5bn infrastructure agency is again under fire over potential conflicts of interest that now involve half of its directors as a result of mining industry links.”

    So, is the ‘independent board’ independent? Well, it sort of goes like this. They may be, they may not be, but they don’t have to tell us (‘us’ being the ones whose money is being spent).

    “In a statement Warburton said Naif “in accordance with good governance”, including guidelines issued by the Australian National Audit Office, “does not release details of specific recusals” made by its directors.
    She said directors were aware of their obligations to disclose and manage conflicts, and had “significant experience in deciding whether their personal circumstances give rise to an actual, apparent or potential conflict of interest”.”

    Hmmm, anyone else smell a rodent?

    “Nikola Casule, a Greenpeace climate and energy campaigner, said the revelations of more possible conflicts of interest at Naif were “disappointing but sadly not surprising”.
    “When you fill a board almost entirely with current or former mining executives and ask them to make decisions about distributing $5bn in taxpayer money, largely to mining companies, you can’t be surprised when you find yourself in this situation,” Casule said.”

    https://www.theguardian.com/australia-news/2017/sep/13/infrastructure-fund-directors-under-fire-again-over-potential-conflicts-of-interest

    The rest of the article is a tad depressing. These miscreants, devoid of conscience, seem entirely capable of performing the unconscionable. Rules? What rules?
    Thank you Mr Bright and commenters. Take care

  13. Jim

    Definitely a poor effort from the Turnbull Government with cheers from the usual far-right people like Pauline Hanson.

  14. Tristan Ewins

    Surely the Turnbull Govt has better things to do with our money than this ; Consider the cuts to Higher Education alone ; with the lowering of the HECS-HELP repayment threshold. Do we really want to encourage this given the imminence of global warming?

  15. Greener

    Four Corners ‘Adani’ story last night highlights the lack of policy understanding across all tiers of government in Australia. Adani has built the largest coal fired power station in the world and it’s up for sale, asking price of 1 India rupee or about 2 cents Australian. The viability of the Carmichael project, which is rolling in negative equity, is zero. Yet public funding of a $1 billion concessional loan from the NAIF is still in the pipeline.
    Are politicians deliberately trying to destroy Australia through reckless spending and debt as part of some neo-con agenda or are they virtually sleeping walking through life?
    http://www.abc.net.au/4corners/digging-into-adani/9008500

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