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Carmichael coal mine

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This is an old revision of this page, as edited by Thombel (talk | contribs) at 05:22, 9 September 2015 (The page was substantially out of date and very brief, which was not appropriate given the very high political profile of this mine and its scale.). The present address (URL) is a permanent link to this revision, which may differ significantly from the current revision.

Carmichael coal mine
Location
Locationabout 160 km northwest of Clermont
Queensland
CountryAustralia
Production
ProductsThermal coal
TypeOpen-pit, underground
Owner
CompanyAdani Group

The Carmichael coal mine is a proposed thermal coal mine in the north of the Galilee Basin in Central Queensland, Australia. Mining is planned to be conducted by both open-cut and underground methods.[1]

The mine is proposed by Adani Mining, a wholly owned subsidiary of India's Adani Group. The development represents a $16.5 billion investment.[2]

At peak capacity the mine would produce 60 million tonnes of coal a year. In court, Adani said it expects the mine to produce 2.3 billion tonnes over 60 years.[3] It would be the largest coal mine in Australia and one of the largest in the world. [4] The mine would be the first of a number of large mines proposed for the Galilee Basin.

Exports are to leave the country via port facilities at Hay Point and Abbot Point after being transported to the coast via rail.[1] The proposal includes a new 189km rail line to connect with the existing Goonyella railway line. Most of the exported coal is planned to be shipped to India.

The mine has drawn significant controversy about its economic benefits, viability, plans for government subsidy and the environmental impacts.

Adani and government supporters point to the 10,000 jobs the mine will allegedly create as evidence "this mine is good for the country".[5] In court Adani’s expert witness said it would create less than 1,500 jobs.[6]

Current low coal prices and trends in seaborne coal markets have raised doubts about viability, including financial analysts[7] and Queensland Treasury officials.[8] The previous Newman Queensland Government planned to 'co-invest' in the project, and the federal government is considering subsidising the project through a fund dedicated for projects that are not commercially viable.[9]

The mine has been staunchly opposed on environmental grounds. Broadly these have been described as its potential impact upon the Great Barrier Reef, groundwater at its site and it carbon emissions.[10] The emissions from burning the expected coal produced from this one mine would be "approximately 0.53-0.56% of the carbon budget that remains after 2015 to have a likely chance of not exceeding 2 degrees warming."[3]

Location

The mining lease mostly covers the Moray Downs cattle station.[11] The majority of the mine lies within the Isaac Region, with a small portion in the Charters Towers Region local government area.[2] Road access is made by the Gregory Developmental Road, an undeveloped section of the Gregory Highway.[11]

History

In 2010 the Queensland Premier Anna Bligh announced the Coordinator-General declared the proposed Carmichael Coal Mine and Rail Project was being assessed as a 'Significant Project'.[12]

Since then proposal has gone through many changes. The operational life was originally proposed for 150 years.[13] This was later reduced to 90 years and is now proposed for 60 years.[3]

On 8 May 2014, Queensland’s Coordinator-General gave approval for the project to proceed.[14] 190 conditions were set by the state during both construction and operations phases of the mine with particular attention paid to groundwater and water bores which may be potentially affected.[14]

On the 29 July 2014, federal Minister for Environment, Greg Hunt gave approval for the mine to proceed. Federal approval was granted after 36 conditions were stipulated.[15]

Exporting coal from the Carmichael mines requires new terminals and seabed dredging at the Abbot Point coal port. In early September 2014, it was reported the plan to dump dredge spoil in the Great Barrier Reef Marine Park area had been scrapped.[16][17] The plan to dump the spoil at sea was widely rejected on the grounds that the fragile coral and seagrass ecosystem could be damaged. Documents released under Freedom of Information showed Great Barrier Reef Marine Park Authority scientists had opposing the dumping plan.[17] Following the election of the Palaszczuk Queensland Government, the government is now the development proponent for a proposal to dump dredge spoil on land within the terminal site.[18]

On 5 August 2015, the federal Department of Environment and Adani signed consent orders in the Federal Court to set aside approval of the Carmichael project.[19] The Department did not correctly follow requirements to consider conservation advice regarding two endangered species affected by the proposal, the Yakka Skink and the Ornamental Snake. The Department is presently reconsidering the proposal.

Government Ministers criticised environment groups bringing cases under federal environment law as “vigilante litigants” and is seeking to change the law to prevent cases from ‘third parties’ who are not directly impacted by the proposal.[20] Prime Minister Tony Abbott urged the business community to get behind these changes, saying “if the Adani mine does not go ahead soon, we are crazy.”[21]

Project Size and Operations

Mine

The mine is planned to contain six open-cut pits and five underground mines.[2]

The mine site covers an area of 44,700 ha, around 450 square kilometers, and is about 50km long.[22] This is bigger than many capital cities. For example if the mine site are is placed over Paris, it covers the central area of the city and stretches to its outer edges.[23]

Operations at the mine are expected to consume 12 billion litres of water each year.[15]

The Carmichael River runs through the middle of the mine site. Bridges and flood levees must be built before the Southern mines are constructed.[24]

In QLD Land and Environment Court, Adani said it expects the mine to produce 2.3 billion tonnes of coal over 60 years.[3] This implies average production of around 40 million tonnes a year. This would be enough coal to make a road of coal 10 metres wide, one metre deep and 200,000 kilometres long. Such a road could stretch around the world five times.[23]

According to the current Environmental Impact Statement, the Carmichael mine would produce 60 million tonnes of coal per year over 90 years.[25]

Rail line

A new 189 kilometre railway line is needed to transport coal to port facilities. The line will join the existing Goonyella railway line at Moranbah.[2]

Port expansion

The mine requires a significant expansion of port facilities. Deutsche Bank and HSBC declined to fund the Abbott Point port expansion due to environmental concerns affecting their reputation.[15]

Financing and viability

To date, Adani Mining has struggled to secure financing for the project. Due to current low prices and risks of falling demand for seaborne coal, there have been doubts the project is viable. The Australian government has indicated this is why it may subsidise the project.

Difficulty raising capital

State Bank of India

The Government-owned State Bank of India has signed a MOU with Adani that it will offer a $1 billion loan to the project. It was widely reported that the Bank had withdrawn this offer.[26] This was later rejected by the bank’s chairman.[27]

Major international banks rule out funding

A number of major international banks have publicly ruled out financing or distanced themselves from the Carmichael Mine and Rail Project, or the Abbot Point Coal Terminal on which the Carmichael mine depends, at least until current controversies are resolved. This includes more than half of the top 20 coal financing banks globally.[28] Banks currently ruling out funding include:

  • Citigroup
  • JP Morgan Chase
  • Goldman Sachs
  • Deutsche Bank
  • Royal Bank of Scotland
  • HSBC
  • Barclays
  • BNP Paribas
  • Credit Agrilcole
  • Societe Generale
  • National Australia Bank

Adani spokespeople have said statements from banks they have not approached have “no bearing” on the project.[29] It is unclear which banks Adani has approached.

Standard Chartered was previously was involved in providing financing. Adani has ended the bank’s advisory contract.[30]

Australian Banks

Large coal projects in Australia typically one and often more of the ‘big four’ Australian banks, either in arranging or providing debt.

On 5 August 2015 Commonwealth Bank announced that its advisory contract with Adani had ended.[31]

On 3 September 2015 National Australia Bank announced it would not fund the project.[32]

Financial Viability

Analysts question whether the mine is viable given current seaborne thermal coal prices and market trends.

In November 2014 Daniel Morgan, global commodities analyst at investment bank UBS, said

"On a standalone basis, the economics just don't stack up – I'm talking about costs and return on capital. You'd need a price of about $100-$110 a tonne for it to stack up".[33]

Seaborne thermal coal prices (Newcastle benchmark) have dropped from highs of around US$140/t in 2012 to around US$60/t in 2015.[34] This is due recent increases in new production and reduction in seaborne coal demand. UBS now says "no new coal mines needed on 5+ year view" and projects prices recovering to $88/t by 2019, still below the required price for Carmichael.[34]

Tim Buckley, director of energy finance studies Australasia at the Institute of Energy Economics and Financial Analysis, argues that the Carmichael mine is a 'stranded asset'.[35] Buckley cites a range of factors including: structural decline in seaborne coal markets; Adani's already high debt gearing; difficulty raising capital, a recent company restructure; approval delays.

Documents from Queensland Treasury released under Freedom of Information showed senior officials advising Ministers that Carmichael "is unlikely to stack up on a conventional project finance assessment".[36]

Proposed government subsidies

The Queensland and Australian Governments have proposed various forms of assistance to the project.

Queensland state subsidy

Queensland Government budget papers show spending assisting the mining industry of $9.5 billion between 2008 and 2014.[37] Queensland Treasury wrote, in a submission to the Commonwealth Grants Commission:

Governments face budget constraints and spending on mining-related infrastructure means less infrastructure spending in other areas, including social infrastructure such as hospitals and schools.[38]

The Newman Queensland Government initially claimed it would not support the Carmichael project. But in 2014 it proposed a "royalty holiday" or reduced royalty rates,[39] as well as proposing to "co-invest" in infrastructure.[40] The Labor Opposition criticised this as a "blank cheque".[41] Treasurer Jeff Seeney argued

“The Queensland government, like governments across the world, have always provided some major incentives and the incentive we have decided to provide relates to infrastructure rather than the traditional handing out of grants.”

During the 2015 Queensland Election, the Labor Opposition promised not to fund the rail project linking the mine to the port.[42] Since Labor's election victory, the new Queensland Treasurer confirmed the government will not fund the rail line but did not rule out other forms of support such as a royalty holiday.[43] Premier Palaszczuk said she is "absolutely committed" to the project going ahead and called for federal funding for the rail line.[44]

Federal subsidy

The 2015-16 Federal Budget outlined the $5 billion Northern Australia Infrastructure Facility "to provide large concessional loans for the construction of ports, pipelines, electricity and water infrastructure that will open our northern frontier for business."[45] [46] The website states "The Commonwealth will not lend to projects that are commercially viable without Government assistance."[47]

The Abbott government may be planning to use this fund to ensure the Carmichael rail line is built, opening up the rest of the Galilee.[48]

Environmental Impacts

Greenhouse gas emissions

According to the mine’s environmental impact statement it will produce 200 million tonnes of carbon dioxide over the expected 60-year life of the mine.[49] This includes gases produced during the mining process and from emissions created from the mining and transportation of the coal.

The burning of that coal has been estimated to produce another 130 m tonnes of carbon dioxide every year.[49]

See also

References

  1. ^ a b "Carmichael Coal Mine and Rail Project". Adani Mining. Retrieved 2 August 2014.
  2. ^ a b c d "Carmichael Coal Mine and Rail Project: Project Overview". Completed EIS projects. Department of State Development, Infrastructure and Planning. 9 July 2014. Retrieved 2 August 2014.
  3. ^ a b c d "JOINT REPORT to the Land Court of Queensland on "Climate Change – Emissions", (2015) Adani Mining Pty Ltd (Adani) v Land Services of Coast and Country Inc & Ors" (PDF).
  4. ^ "Business Spectator news". www.businessspectator.com.au. Retrieved 2015-09-09.
  5. ^ "PM:Stopping Adani mine 'bad for the country'". Retrieved 2015-09-09.
  6. ^ "Adani Carmichael mine to create 1464 jobs, not 10,000". Retrieved 2015-09-09.
  7. ^ Milman, Oliver. "Carmichael mine's new hurdle: analysts predict India's coal imports zero by 2021". the Guardian. Retrieved 2015-09-09.
  8. ^ "Adani's Carmichael Mine is unbankable says Queensland Treasury". Retrieved 2015-09-09.
  9. ^ "Abbott government aid for coal industry 'unwise': ex-EU climate chief". Retrieved 2015-09-09.
  10. ^ Oliver Milman (28 July 2014). "Largest coal mine in Australia: federal government gives Carmichael go-ahead". theguardian. Guardian News and Media. Retrieved 2 August 2014.
  11. ^ a b "Mine location". Adani Mining. Retrieved 2 August 2014.
  12. ^ "Carmichael Coal Mine and Rail Project declared 'significant project'". Retrieved 2015-09-09.
  13. ^ "Adani Mining Pty Ltd - Carmichael Coal Mine and Rail Project - Initial Advice Statement, 22 October 2010" (PDF).
  14. ^ a b "Coordinator-General decides on Galilee Mine". Media Statement. Department of the Premier and Cabinet. 8 May 2014. Retrieved 2 August 2014.
  15. ^ a b c Ben Hagemann (29 July 2014). "Carmichael coal mine means more jobs, less water for Queensland". Australian Mining. Cirrus Media. Retrieved 2 August 2014.
  16. ^ Ben Hagemann (2 September 2014). "Abbott Point dredge dumping plans on the rocks". Mining Australia. Cirrus Media. Retrieved 21 January 2015.
  17. ^ a b Oliver Milman (2 September 2014). "Abbot Point port developers to ditch Great Barrier Reef seabed dumping pla". The Guardian. Retrieved 21 January 2015.
  18. ^ "Expanding the Port of Abbot Point". www.statedevelopment.qld.gov.au. Retrieved 2015-09-09.
  19. ^ "$16 billion Carmichael coal mine approval set aside over 'technical matter'". ABC News. Retrieved 2015-09-09.
  20. ^ "18 August 2015—Government acts to protect jobs from vigilante litigants". www.attorneygeneral.gov.au. Retrieved 2015-09-09.
  21. ^ "Abbott Tells Business: Forget Talk, Time to Act on Trade Pact and Adani".
  22. ^ "adaniaustralia.com.au". www.adaniaustralia.com.au. Retrieved 2015-09-09.
  23. ^ a b "Carmichael coal mine deeper in doubt as NAB, LG walk away". Retrieved 2015-09-09.
  24. ^ "adaniaustralia.com.au". www.adaniaustralia.com.au. Retrieved 2015-09-09.
  25. ^ "adaniaustralia.com.au". www.adaniaustralia.com.au. Retrieved 2015-09-09.
  26. ^ "SBI to turn down Adani's $1 billion Australian loan request - sources". Retrieved 2015-09-09.
  27. ^ "SBI rejects report of scrapping $1 bn loan pact with Adani". www.moneycontrol.com. Retrieved 2015-09-09.
  28. ^ "Eleven International Banks Rule Out Funding Adani's Coal Project". 2015 – via Courier Mail.
  29. ^ "Three French banks refuse to fund Adani project in Australia - The Times of India". Retrieved 2015-09-09.
  30. ^ "Standard Chartered backs off Adani coal mining project". Retrieved 2015-09-09.
  31. ^ "Adani and Commonwealth Bank part ways, casting further doubt on Carmichael coal project". Retrieved 2015-09-09.
  32. ^ "National Australia Bank rules out funding Adani's Carmichael coal mine". Retrieved 2015-09-09.
  33. ^ "Adani steps up Australia coal plans ahead of Modi visit". Reuters. 2014-11-12. Retrieved 2015-09-09.
  34. ^ a b Shaw, Lachlan. "Thermal Coal Markets - Opportunity for Japan?" (PDF). UBS.
  35. ^ Buckley, Tim (May 2015). "Galilee Coal Basin:Carmichael – A Stranded Asset?" (PDF). IEEFA.
  36. ^ "Adani's Carmichael Mine is unbankable says Queensland Treasury". Retrieved 2015-09-09.
  37. ^ "Mining the age of entitlement | The Australia Institute". www.tai.org.au. Retrieved 2015-09-09.
  38. ^ Queensland Treasury (July 2013). "Queensland Treasury Response to Commonwealth Grants Commission. Response to Terms of Reference for Commonwealth Grants Commission 2015 Methodology Review".
  39. ^ Taylor, Lenore; Editor, Political. "Hey, big spender: why Campbell Newman loves his election hard-hat". the Guardian. Retrieved 2015-09-09. {{cite web}}: |last2= has generic name (help)
  40. ^ "Gautam Adani says Queensland to co-invest in Australia project, govt defends SBI loan - Firstpost". Retrieved 2015-09-09.
  41. ^ "Rail line deal could cost taxpayers $1 billion-plus « Curtis Pitt MP ::: State Member for Mulgrave". Retrieved 2015-09-09.
  42. ^ "Adani underlines commitment to Galilee Basin coal mine plans". ABC News. Retrieved 2015-09-09.
  43. ^ "Queensland Labor backs Adani's Carmichael coal project". Retrieved 2015-09-09.
  44. ^ "State won't say why it wants federal funding for coal project". Retrieved 2015-09-09.
  45. ^ "Government offers concessional loans for northern development". ABC Rural. Retrieved 2015-09-09.
  46. ^ "Federal budget 2015: Northern Australia to receive $5 billion in infrastructure loans". Retrieved 2015-09-09.
  47. ^ "Frequently asked questions | Northern Australia Infrastructure Facility". naif.treasury.gov.au. Retrieved 2015-09-09.
  48. ^ "Abbott government hints Adani could be considered for rail funding". Retrieved 2015-09-09.
  49. ^ a b Lenore Taylor (14 January 2015). "Federal court asked to overturn Adani mine approval due to impact on Great Barrier Reef". The Guardian. Retrieved 21 January 2015.

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