Why is the government considering giving Adani a billion dollars? According to Richard Denniss, it’s a muscle-flexing exercise for Barnaby’s boys.
“Subsidising the world’s largest export coal mine at a time of declining world demand for coal…has become a way to prove the Nats can get things built and to show their rivals in the Coalition that the junior partner has some real power.”
Barnaby concedes that they might cop “some flak” from environmentalists whilst completely ignoring the concerns from other coal producers.
Glencore’s head of Australian coal said in 2015 that “bringing on additional tonnes with the aid of taxpayer money would materially increase the risk to existing coal operations”.
Even the former Coalition resources minister, Ian Macfarlane, now the head of the Queensland Minerals Council, admits that some mining companies are opposed to Adani’s subsidies, stating “it’s a competitive world and some of our members see it as giving an advantage to one of their competitors”.
Thankfully, the decision on whether to give Adani the money is not up to Barnaby or his former staffer and cheerleader for coal, Matt Canavan. In order to be eligible for a ‘loan’ from the Northern Australia Investment Facility, the project must be uncommercial. NAIF’s rules require it to only lend to projects that “would not otherwise have received sufficient financing from other financiers”.
But the man running the Carmichael project for Adani, Jeyakumar Janakaraj, told a CEDA function a few weeks ago that they have plenty of financing options including selling off 49% of the Abbott Point port.
“There is a lot of sources of funds which are available to Adani and we will use these shareholder options as and when required. This project will get funded, this project will see execution this year.”
This reinforced what Adani spokesman Ron Watson said late last year when speaking about Adani’s application to NAIF for funding for the railway.
“It’s not critical. We have obviously applied for it because it’s available,” he told Fairfax Media. “This is something that governments of all political persuasions have done in the past and I assume will do in the future. It doesn’t necessarily mean it’s make or break for the project.”
So how to get subsidies for a project that claims it doesn’t need them? Richard Denniss revealed Barnaby’s cunning idea.
Joyce’s solution is to argue that while the mine will be profitable, the monopoly railway line that would connect the coal mine to the port will not be commercial and, in turn, that the railway line will be eligible for a NAIF subsidy. Perhaps a court will have to decide if the monopoly railway between a profitable mine and a healthy world market could ever be considered “uncommercial”.
Adani’s political support, at state and federal level, is driven by the supposed number of jobs that will be created by the project.
Adani claims that 8291 jobs will be created in construction, while there will be 11,834 operational jobs, which is in stark contrast to the testimony given by their own economic advisers ACIL Allen who caused a stir in 2015 when they told Queensland’s Land Court that just 1464 direct and indirect jobs would be created with only 483 of those jobs in the Local MIW Region.
Adani has insisted that those comments were in relation to the mine only, not the other parts of the project like the railway and the port, but the report clearly states that they are modelling “the economic impacts of the Carmichael coal mine and rail project (the Project) proposed by Adani Mining Pty Ltd (Adani).”
“The Carmichael mine is to be located in the Galilee Basin, in Queensland, with the coal to be transported by rail to the Port of Abbot Point. This report does not consider the economic impact of any expansion of the port at Abbot Point. My understanding is that this is a separate project subject to different commercial considerations from the Carmichael Project.”
According to the EIS for the Abbott Point port expansion, it will create between 82 and 164 direct and indirect jobs for less than a year of construction with ongoing employment of 1 direct job and 1.1 indirect jobs into the future.
Since those reports were produced, Adani have significantly scaled back the first phase of the mine.
“The first phase obviously will be very small, we have a 25-million-tonne open-pit mine to run,” Janakaraj said.
Carmichael’s smaller scale will reduce the power challenges in the near term, with the first stage small enough to be powered by diesel generators.
This might put a dint in Clive Palmer’s hunt for public money from the Clean Energy Finance Corporation to fund a $1.25 billion coal-fired power station and carbon capture and storage facility linked to his Galilee Basin China First project, which has not yet started.
Also relevant to the discussion is the fact that Indian coal imports fell 22 per cent in January 2017 year on year. This is now the second financial year in a row of decline and the rate is accelerating.
When asked what he hoped Adani would deliver for Queensland, the state’s Natural Resources Minister Anthony Lynham suggested jobs were a bigger priority than royalty flows.
“The main thing is obviously the jobs it will deliver to the state, both in construction and in long-term development of the Galillee Basin, there is no doubt about that, it is the jobs we are focused on,” he said.
Perhaps he is unaware of Janakaraj’s boasting to shareholders about his true intentions.
“We will be utilizing at least fourty-five 400-tonne driverless trucks. All the vehicles will be capable of automation. When we ramp up the mine, everything will be autonomous from mine to port. In our eyes, this is the mine of the future.”
When Malcolm Turnbull challenged for the leadership, he said “There must be an end to policy on the run and captain’s calls. We need to be truly consultative with colleagues, members of Parliament, senators and the wider public. We need an open government, an open government that recognises that there is an enormous sum of wisdom both within our colleagues in this building and, of course, further afield.”
If Gina’s boy Barnaby wins this one, we will know that evidence-based decision making is well and truly dead in Australia and that the man who said in 2010 “A zero emission future … is absolutely essential if we are to leave a safe planet to our children and the generations that come after them” is now totally impotent.