If anything highlights the self-serving nature of politics, it is the unseemly stampede by scared politicians to throw out the science, ignore the independent authorities, bypass the judicial process, forget our international obligations, and disregard the future in their haste to embrace all things coal.
Peter Hannam’s explainer in the SMH gives a good rundown of the current state of play for Adani’s mine. Personally, I can’t see them going ahead without some government money which Matt Canavan has been itching to give them from his secretive NAIF fund.
But there are other things which should give the government some pause. They are setting themselves, and us, up for failure again.
According to The Australian Industry and Skills Committee,
“Since the mining boom peaked, there has been a shift in focus towards productivity and efficiency gains in the Coal Mining sector. The focus on productivity, has led to an increased uptake of technology and automation within the sector, reducing demand for low-skilled labour. The move towards remote operations centres in the sector has increased the need for skills in interpreting data from machines.
Future demand for thermal coal is expected to decrease as China and the Asia region looks to develop renewable energies, this in turn will likely reduce demand for thermal coal miners.”
On Wednesday, BHP’s CEO Peter Beaven delivered a strategy briefing to analysts in which he recognised the core areas that it needs to address to ensure its future operations, including the decarbonisation of electricity generation, the electrification of transport, the need for biodiversity conservation and greater obligations to be part of a circular economy.
BHP says it cannot see a case for new thermal coal investments, noting there is “no appetite” for such investments, and it also warns that gas is likely to be leapfrogged by renewables, particularly in developing countries, and the long pay-back for LNG projects carries significant risks.
Rio Tinto, which sold off the last of its coal assets less than a year ago, has pledged to support renewable energy and climate action – and to “publicly argue against” government subsidisation of coal power – while using its significant clout to urge associated industry groups to do the same.
Globally renowned resource analytics firm Wood Mackenzie’s research found that jobs and exports from existing coal regions will be decimated if the Galilee Basin is developed for coal mining.
And it is inferior coal.
…the low energy, high ash coal in the Galilee Basin is inferior to the Australian / Indonesian / South African / Columbian export market average
IEEFA estimates that Adani’s proposed Carmichael coal of 4,950kcal energy and 26% raw ash content would currently be valued at a 60.5% discount to the Newcastle 6,000kcal benchmark, suggesting a current price of ~US$39.50/t.
Mining operators at the Galilee Basin could wash the raw coal, marginally reducing the ash content and boosting the energy content, but this would significantly increase production costs and would be subject to seasonal variations including water availability.
Of concern to the drought-stricken Queensland community are the severe water draw-down risks posed by the cumulative impact of multiple, huge coal mining plans for the Galilee Basin. The Adani Group alone wants to extract up to 12.5-billion-litres per year to 2077 from the Galilee Basin’s Belyando River for use at their proposed Carmichael mine, with the maximum total water potentially doubling this amount when coal “dewatering” is included.
So to sum up, automation means there would be very few jobs provided by a mine producing inferior coal which would use an enormous amount of water and cause job losses and production cuts in existing coal-mining areas as the market for thermal coal declines due to the global movement towards renewable energy.
And then there’s climate change…
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