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

The AIM Network

7 years ago

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.

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Denis Bright (pictured) is a financial member of the Media, Entertainment and Arts Alliance (MEAA). Denis is committed to consensus-building in these difficult times. Your feedback from readers advances the cause of citizens’ journalism. Full names are not required when making comments. However, a valid email must be submitted if you decide to hit the Replies Button.