Over the past few days, I’ve read a lot of concern about the potential for environmental damage that Adani may cause in Queensland. I suspect that this concern may be misplaced.
Let’s take the facts as we know them:
- Adani greatly exaggerated the number of jobs that the mine was liable to create when proposing the mine and has since revised it down from 10,000 to around 1400.
- Adani is having trouble obtaining finance from the banks. While there are a number of reasons for this, including banks not wanting to establish new associations with “dirty” industries in the current environment, the main reason is that banks have a long history of refusing to lend money to businesses who look unlikely to have a profitable future.
- Coal prices are tanking.
- The only way that Adani is likely to actually raise the money to go ahead with their mine is with a large Federal “loan”. Or subsidy.
Now, when you put these facts together, the following scenario seems the most likely:
Adani tells the Turnbull government that it’s having trouble raising finance. The Turnbull government makes a grand announcement that it’s using its North Australia Development Fund to lend or give the company the money to go ahead because they’re all about jobs and growth and this will enable the people of India to lift themselves out of poverty, so we can use some of the Foreign Aid Budget as well. Adani does some surveying, some feasibility studies, some ground work, some leg work, pays several related firms for related work, before declaring that the Queensland mine isn’t economically viable and the money’s all gone, but hey, thanks for thinking of us and while we didn’t actually make any money, you kept a lot of our subsidiary companies in work and everything falls apart before any port is built at Abbot Point.
Now if I can see this, why can’t the Federal Government? Well, there’s two possibilities: One is that they’re corrupt and happy to transfer money from the public sector to private firms in order for any largesse they may receive in return. The other is that they’re as stupid as they appear when they mumble their three word slogans and suggest that to get the Budget back on track we need get the economy growing because that’ll give us more revenue even though we keep insisting that we don’t have a revenue problem.
Of course, I am overlooking the possibility that when Adani tells them that mine is no longer viable that they decide that – unlike the car industry – it’d be a really, really good idea to subsidise them because of all the 457 jobs that the mine is likely to create.
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