QUEENSLAND GOVERNMENT PUSHING FOR ADANI'S CARMICHAEL COAL MINE IN THE GALILEE BASIN

The proposed Carmichael coal mine in central Queensland’s Galilee Basin has recently been given a boost by the Queensland Government which has declared it ‘critical infrastructure’.  This designation means fast tracking the remaining project approvals and removing  the power of the community to challenge it in court as well as enabling the company to forcibly acquire land.

The last time this designation was given to a development in Queensland was in 2008 when parts of the South East Queensland Water Grid were declared critical infrastructure because water supplies in this heavily populated area were at critically low levels because of drought. There’s a great deal of difference between the critical infrastructure of a water supply grid and a massive coal mine!

The mine, proposed by Indian company Adani, gained most of the necessary state and federal approvals in 2014.  However, the project is controversial and has been subject to a number of court challenges.

Two concerns encouraging opponents to undertake court challenges are the threat the mine and its associated port developments (at Abbot Point, 25 km north of Bowen) pose to the Great Barrier Reef and to groundwater in the Basin. 

Another major concern is the carbon emissions this project will see released into the atmosphere at a time when the world should be drastically cutting its emissions. When peak production is reached, Adani expects to mine 60 million tonnes of coal per year.  Over its estimated 60 year life it expects 2.3 billion tonnes to be extracted. Whether the mine, if it goes ahead, will have a life of 60 years is problematic, given moves around the world to limit coal production, moves which are likely to become more influential in future years as concern rises about the necessity of limiting emissions to combat climate change.

There are other concerns in relation to Adani. These involve corruption, illegal activity, human rights abuses, tax evasion and environmental destruction

 (1. The Sydney Morning Herald 3 October 2015 -   Adani faces questions over conduct at home 

  2.  Times of India 13 September 2016  - Adani, Essar get DRI notice for overvaluing imports

  3.  The Sydney Morning Herald 5 September 2014 - Concerns at Barrier Reef contractor's humanitarian, environment record  )

While the unsuccessful court challenges may have slowed Adani’s start, another major problem has been its inability to obtain project funding - the result of a very successful lobbying campaign targeting major banks and other financial sources.

The Queensland Government’s recent encouragement stems from concerns about job losses in central Queensland following the general mining downturn in the last year or so.  The Government appears to believe the original company spiel of 10,000 jobs - even though Adani’s own economic expert recently put the job number at 1464.

The Queensland Mines Minister Anthony Lynham sees the project starting construction in mid  to late 2017.

The Queensland Government should be looking at the big picture.  This is not a time when governments should be encouraging the development of new coal mines - particularly  one as large as this.  Those opposing the mine are concerned that if all the coal from Carmichael was burned, it would register on a global scale - amounting to about 0.5% of the "budget" of carbon dioxide that can be emitted before the world tips past global warming of 2 degrees celsius.

As well as the climate change scenario, the  Government - anxious as it apparently is about jobs - should be considering  the 69,000 Barrier Reef tourism jobs that will be put at risk by this mine.

THE WRITING IS ON THE WALL FOR COAL

Why are some Australian Governments ignoring the writing on the wall about the future of coal?

Just recently federal Resources Minister Josh Frydenberg gave a very upbeat assessment for coal in an address to the National Press Club. 

The governments of both NSW and Queensland obviously share his optimism.  In these two states almost 20 new coal developments are being considered by their mining departments. These proposals include Adani’s Carmichael in the Galilee Basin, and Shenhua’s Watermark and BHP’s Caroona on the Liverpool Plains as well as other mines in the Hunter and Wollongong areas.

In addition there are also requests for the expansion of existing mines.

Given the current price of coal and the continuing decline in our export markets, this optimism seems nonsensical.

According to business columnist Michael West:  “That, at a coal price 0f $US52 a tonne [the price at the end of December], half of the coal industry is in the red at the gross level suggests nobody globally is making a profit at the net level.

“There are mines for sale everywhere, yet here are the governments of NSW and Queensland backing new mines all over the place.”

Highlighting the poor financial situation of the coal sector, peak mining body the Queensland Resources Council wants government support.  “Its chief, Michael Roche, denies this means subsidies, but subsidies are precisely what they are chasing: lower council rates, royalty breaks, tax breaks, discounts from rail and port operators,” said Michael West.

In addition to the low price for coal there has been a decline in demand.  Net Chinese coal imports declined over the last three years.  While Minister Frydenberg is pinning his hopes on India, imports from that country are also declining.

Tim Buckley, Director of the Australasia Institute of Energy Economics and Financial Analysis (IEEFA), thinks it would be sensible to have a temporary moratorium on new coal mines.  He points out that this would be in the national interest because coal mines currently are in a state of over-supply.

As well as the glut, other issues with coal include climate change and stranded assets.

-          Leonie Blain 
This post originally appeared in the VOICES FOR THE EARTH column in The Daily Examiner on 29th February, 2016.

IS THE SHENHUA COAL MINE WORTH THE RISK?

Federal Environment Minister Greg Hunt announced his government’s approval of the Shenhua Watermark coal mine on July 4.  If it receives final approval from the NSW Government, this controversial mine near Breeza in the Liverpool Plains is expected to produce up to 268 million tonnes of coal over a 30 year period. 

Shenhua is a state-controlled Chinese company.   

The Liverpool Plains are one of the richest agricultural areas in the nation. For years local farmers, with fears about the impact of this industry on their livelihoods and the future viability of the area for agriculture, have been campaigning strongly against the mine.

A major concern of the farmers is the damage that this huge open cut mine – 35 square km in the middle of the plains – will have on groundwater.  Coal mines use water but the issue for local farmer Tim Duddy is not the water they extract for their operations but the likely damage the mine will do to the groundwater which is vital to local agriculture.

Health impacts are another concern for locals – something that is obvious in other areas such as the Hunter Valley where there are large open-cut coal mines.

There is also the loss of remnant native vegetation and the biodiversity that relies on it - a significant 789 ha of an endangered ecological community and 148 ha of other woodland.

Federal Minister for Agriculture Barnaby Joyce, in whose electorate of New England the mine will be, slammed the Environment Minister’s approval of the project. He is now hoping that the NSW Government will not issue its final approvals and the mine will then not go ahead.  Given the state government’s track record on approving coal mines (including their expansion), it seems a forlorn hope for Joyce. It is likely that he will be under considerable political pressure in his electorate.

And there is another issue.  Use of coal is expected to decline steadily as current users switch to less carbon intensive fuels in order to combat climate change. As this happens, will this project be worth the investment when it comes on line or will it become a stranded asset ?

THE WISDOM OF INVESTING IN MORE AUSTRALIAN COAL MINES

Australian-based companies and state governments have made billions from the export coal industry. Australia, the world's biggest coal exporter, is set to double exports by 2020 as there are 89 new projects in the pipeline.  The investment is not only in the mines because servicing this expansion requires development of major infrastructure in the form of rail lines and ports such as the new coal terminals at Abbot Point on the Barrier Reef coastline.

China's coal imports have grown rapidly over the last decade and it now consumes half of the world's coal, obtaining 30% of its needs from Australia. 

Companies making coal investment decisions expect this demand to continue to grow well into the future.  State Governments are also looking to share in the bonanza as the royalties derived from the industry are very important to their tax base.  Just how lucrative this is for Queensland and NSW is shown by their coal royalty incomes for 2008-9 - $1.3 billion for NSW and $3.1 billion for Queensland.

Given the impact that burning coal has in contributing to carbon emissions and thence to climate change, all Australian governments should be working towards phasing out the industry rather than encouraging its major expansion.  It appears that all that the federal and state governments can see are the dollars to be made and the benefits to the state and the national economies. From those anxious to support the expansion of fossil fuel mining the term "the national interest" is frequently quoted as a reason  to have as much develoment of coal reserves as possible and to expedite this development. 

Downsides  such as the impacts on lifestyles and health of those living in close proximity to the huge open cut mines and the devastating effects on natural biodiversity are of minor interest to the  proponents and their government supporters as are the effects of coal use on climate change.

The interests of future generations (sometimes referred to as "intergenerational equity") simply are not relevant to most Australian politicians. Most of them obviously think in the short term - and some clearly still do not accept that climate change is real and that there is an urgent need to do something effective about it.

But aside from these major reasons for re-assessing whether we should continue digging up coal, there is another significant reason for re-assessment.

This has been clearly stated in a recent report Stranded Down Under? Environment-related factors changing China's demand for coal and what this means for Australian coal assets

"It is clear that China's coal demand patterns are changing as a result of environment-related factors and consequently less coal will be consumed than is currently expected by many owners and operators of coal assets.  Given China's current role as the price setter in global and regional coal markets, falling demand will, all things being equal, reduce coal prices.  This would result in coal assets under development becoming stranded, or operating mines only covering their marginal costs and subsequently failing to provide a sufficient return on investment."

Obviously  there are significant risks in going ahead with future mines and the necessary expensive infrastructure.  

Just how carefully have investors and governments considered this?  It would appear that both the federal and various state governments do not see this as an issue.  Obviously many mining developers hold similar views.  Perhaps reality will finally hit when these mining proponents find it difficult to access capital to fund their ventures.