This is a guest post by blog commenter Geoff Henderson. It is particularly strong on the structure and standing of Adani as a company, and on the truly pathetic contribution the project would make to both jobs and the coffers of the state government in royalties. I’ve added some links of other recent material at the end. Enjoy!
A Four Corners program[1a] made serious claims about the Adani Conglomerate corporate profile in India. Credible allegations of bribery, corruption, money laundering, environmental destruction, tax/royalty avoidance and more were leveled at Adani.[1b]
Adani’s Australian project is huge. The project comprises of several parts: one, the mine itself, two, a rail line to haul the coal and, three, the Abbot Point export port. Adani is seeking a $1 billion loan from Australian taxpayers to fund the rail line. Abbot Point will be expanded by dredging up to 1.1 million tons of material.
Four Corners exposed Adani’s shocking corporate citizen record in India. What might we expect from Adani Australia?
The Mine, (Carmichael) is set in the Galilee Basin. It is likely the first of up to nine mines proposed for the Basin. To mine up to 60 million tons per year, open pits 40 km long and 10 km wide are intended. Adani is authorized to draw unlimited groundwater for 60 years. Massive environmental risks are apparent.
The Railway is approximately 400 km long reaching from the mine to Abbot Point port. Adani has requested a government loan of $1 billion to establish the railway. The rail line will be owned by separate Adani companies (four companies and two trusts) owned ultimately in the Cayman Islands. This obscures the profit guidance of the rail company, and brings uncertainty to the repayment of a $1 billion rail funding loan. Should other mines be developed in the ‘Basin, they will use the same rail, generating profits that accrue to Adani, Cayman Islands.
Abbot Point is the shipping port for Adani’s Carmichael coal. Adani has already “purchased” the port (99-year lease actually) but the actual ownership entity remains unclear. There is an inconsistency between asset accounts of Indian and Australian reporting. This leads to uncertainty about repayments, guarantees and who are the responsible entities. Government conditions upon the development become worthless if the responsible party is sheltered in a tax haven. Like the rail, it is the intention of Adani to obscure ownership of the Port; – five companies and two trusts, all controlled by companies in the Cayman Islands.
The complex array of companies and trusts of the Adani family in the Cayman Islands provides an opaque view of the company and its dealings. Adani Australia is set up to avoid taxes, royalties and responsibilities.
The Environment. Activist group GetUp is very prominent with its opposing ‘Stop Adani’ campaign. GetUp’s campaign targets the effects on the Great Barrier Reef (GBR) based on the contribution to world CO2 levels. The CO2-equivalent produced by the mine over its lifetime is in the order of 4.7 billion tonnes. It’s about 0.5% of the carbon budget needed to limit warming to 2 degrees. Annualised, that is double the emissions of Tokyo and 20% more than New York city. That level of CO2 emission will completely offset Australia’s carbon reduction goals, or 80% of Canada’s goals or over 50% of Japan’s goals.
A more immediate threat is shipping through the reef – up to 500 ships per year risks groundings and spills. The introduction of exotic marine life to the GBR lagoon via the water ballast of arriving ships is another risk. Maritime rules require that Indian water is purged from the ships before arrival. However, compliance is in the hands of Adani, who show willful disdain for regulations.
Will the mine go ahead? Carmichael may never operate. It has been shown to be unviable in a July 2017 report by Prof. John Quiggin and the Australia Institute. Even under favourable conditions the mine would not generate sufficient funds to repay loans. Another paper released by the Institute for Energy Economics and Financial Analysis (IFFEA) raises concerns about the fiscal position of Adani and especially the Abbot Point coal port. Adani’s global debt is approximately $15 billion. Abandoning the Carmichael mine would remove a $1.4 billion asset from its balance sheet. Adani’s Mundra power station is listed as for sale for the price of just one rupee and a further write down of $1.2 billion off Adani’s balance sheet.
State and Federal politicians of the major parties still support the project, likewise opposition parties and regional local government. In June 2015 Queensland Treasury declared Carmichael as unbankable. Why the support?
Anna Krien cites Ross Gittins saying the media has overinflated the importance of mining. Mining accounts for 7% of Australia’s GDP and 2% of the workforce, 230,000 in total. Adani’s 1460 would amount to 0.006%. Royalties for Queensland last year amounted to $1.63 billion, 3% of state revenue. Perhaps the political thought is that Adani will boost state revenues and satisfy some regional promises.
Job promises lured politicians. Adani’s strategic promise was 10,000 jobs. Under oath though Adani revised that back to 1460 jobs.
Independent MP Rob Pyne said politicians were protecting their jobs first – they seek re-election. The incumbent government wants re-election. Policy reflects that the pro-Carmichael coal belt (Gladstone – Townsville) is critical to re-election. Labor MP Craig Crawford said little to suggest another rationale but was coy about his own re-election as motive. He was personally against Adani, but had to toe the party line.
Evidence is overwhelmingly against the Adani Project going ahead. Serious issues with environment, governance and high financial risk for Australia weigh convincingly against the project.
1a. Four Corners, ABC, Oct 2 2017
1b. The Adani Files, https://adanifiles.com.au Accessed 28/9/17
http://www.abc.net.au/news/2017-06-06/questions-raised-by-adanis-green-light-on-carmichael-coal-mine/8594060 Accessed 22/9/17
https://adanifiles.com.au Accessed 28/9/17
ABC News 21/12/2016, Accessed 22/9/17 from: http://www.abc.net.au/news/2016-12-21/adani-corporate-web-spreads-to-tax-havens/8135700
1a. Four Corners, ABC, Oct 2 2017
1b.The Adani Files, https://adanifiles.com.au Accessed 28/9/17
2. http://www.abc.net.au/news/2017-06-06/questions-raised-by-adanis-green-light-on-carmichael-coal-mine/8594060 Accessed 22/9/17
3. https://adanifiles.com.au Accessed 28/9/17
4. ABC News 21/12/2016, Accessed 22/9/17 from: http://www.abc.net.au/news/2016-12-21/adani-corporate-web-spreads-to-tax-havens/8135700
5. https://envirojustice.org.au/sites/default/files/files/Submissions%20and%20reports/The_Adani_Brief_by_Environmental_Justice_Australia.pdf Accessed 7/9/17
6. http://www.abc.net.au/news/2016-12-21/adani-corporate-web-spreads-to-tax-havens/8135700 Accessed 28/9/17
7. https://www.getup.org.au/campaigns/great-barrier-reef–3/adani-video-report/help-stop-adani-from-destroying-the-great-barrier-reef Accessed 8/9/17
8. http://www.tai.org.au/sites/defualt/files/Amos%202015%20Carmichael%20in%20context%20-.pdf Accessed 28/9/17
9. http://www.tai.org.au/sites/defualt/files/The%20economic%20non%20viability%20of%20the%20Adani%20Galilee%20Basin%20Project.pdf Accessed 8/9/17
10. http://ieefa.org/wp-content/uploads/2017/10/Escalating-Financial-Risk-of-Adanis-Abbot-Point-Coal-Terminal.pdf Accessed 3/10/17
11. http://www.smh.com.au/comment/mine-games-why-adani-is-banking-on-the-unbankable-20170531-gwgzvb.html Accessed 25/9/2017
12. Anna Krien, Quarterly Essay 65, The Long Goodbye: Coal, Coral and Australia’s Climate Deadlock
14. http://adanijobs.com/ Accessed 25/9/2017
15. Cairns independent MP, face-to-face interview Sept 19 2017.
16. Labor MP, personal interview 24/9/2017
Geoff prepared this originally as a university assignment. Part of the requirement was that the finished product should have a prospect of being published. I happily undertook to do so. Minor alterations have been made to the assignment as submitted.
It was prepared in a standard assignment format with references. Geoff changed that to endnotes. Obviously it would be preferable online to have live links, but the time to set that up is simply not available. Sorry.
One small observation of my own is that the railway line crosses an expansive flood plain devoted to grazing. The line will interrupt the natural movement of water across the plain and create significant inconvenience for landholders.
In breaking news:
- The ABC has learned that a Chinese state-owned enterprise, China Machinery Engineering Corporation (CMEC), is in negotiations with Adani and its principal engineering and procurement contractor, Downer EDI.
If the deal goes ahead, it would see CMEC awarded contracts to build key mining plant and equipment in return for China’s financial backing of the Carmichael mine.
Senate hearings confirmed that Australian government ministers had written to the Chinese Government in support of the Adani mine, confirming it had all necessary approvals, in a bid to help secure finance.
It means the carmichael mine could in fact go ahead with Chines government backing. What are they up to?
Julien Vincent at The Age:
CMEC is part of Chinese Government-owned Sinomach, one of the world’s biggest providers of machinery and equipment for infrastructure projects. It has been busily building coal-fired power stations in key strategic countries such as Pakistan, Bangladesh and others across South and South-East Asia as part of China’s One Belt One Road plan.
India pointedly ignored China’s Belt and Road initiative. Now the Chinese are enabling Gautam Adani, close mate of Indian President Narendra Modi, to supply Australian coal for their strategy of outflanking India.
Australia has decisively chosen China over India in a regional battle for influence.
Vincent also points out that the Northern Australia Infrastructure Facility (NAIF) would be a last-in-line creditor, effectively a quasi- equity holder. Another way of looking at this is the Australia taxpayer is subsidising the Chinese government in its regional power games.
Thankyou Barnaby Joyce and Steve Ciobo.
It makes China look distinctly hypocritical on climate change efforts, not that our bozos would care.
Michael West at The Conversation didn’t know this when he asked:
- the most compelling explanation is that neither of the major parties is prepared to be “wedged” on jobs, accused of being anti-business or anti-Queensland.
Alternatively, Adani does have a track record of corrupting officials and West points out that:
There are votes in Queensland’s north at stake. Furthermore, the fingerprints of Adani’s lobbyists are everywhere.
Adani lobbyist and Bill Shorten’s former chief of staff Cameron Milner helped run the re-election campaign of Premier Annastacia Palaszczuk. This support, according to The Australian, has been given free of charge…
Milner volunteers for the ALP while keeping his day job as director and registered lobbyist at Next Level Strategic Services, which works for Adani.
- “Next Level Strategic Services co-director David Moore — an LNP stalwart who was Mr Newman’s chief of staff during his successful 2012 election campaign — is also expected to volunteer with the LNP campaign.”
This is getting spooky! At one level it sounds as though our politicians are so cheap you don’t even have to buy them. West does rather think it is really about jobs, however.
West also points out that the Adani family will always extract cash even if one of these dodgy companies goes broke.
Alan Jones is outraged:
- “This is smelly no matter how it’s viewed.”
Jones thinks it’s about donations to political parties.
Van Badham is with him about the mine “but it sure feels awkward and strange agreeing with Alan Jones.”
That was on Q&A where we also had Kevin Rudd who said it was all wrong, in particular the Northern Australian Infrastructure Facility’s (NAIF) $1 billion funding was “wrong, wrong, wrong”. It’s about climate change, stupid, and we can’t keep burning coal. He says Indian, Chinese and South Korean companies represent 70 percent of the global investment in new coal mines across the world.
This makes me wonder whether Peter Garrett, working for Rudd, might have knocked the project on the head. Garrett famously nixed the Traveston Dam project in 2009 when his Queensland Labor mates had spent a half a million bucks on land reclamation.
The Jones article links to:
It says the only support comes from suburban conservative elites. The ReachTEL survey, done after the Four Corners program, shows One Nation oppose the mine 44.9% to 37.7%. Nationals oppose it 57.9% to 21.7%. Overall it’s 55.6% against to 26.1% in favour. The Australian Conservatives come out 57-31.7 in favour.
Overall nearly two-thirds of Australian want the Queensland government to veto the loan for the railway.
The Jones article also links to:
There are 10 electorates that either border the mine site, or are located in nearby areas where economic stimulus could be expected to flow on. Four – Mundingburra, Townsville, Thuringowa and Mirani – changed hands last election, swinging to Labor by about 10%. They could easily swing back, and you can be sure the parties have done their homework. So we had this:
That photo, I think, will remain as a classic.
Then, when the Queensland state election was called Premier Palaszczuk kept getting this:
The Greens piggy-backed on the protests politically, making a coal mine supported by both major parties an election issue. Then came the bombshell:
Palaszczuk says her chief of staff David Barbagallo had become aware of a plan being hatched by Canberra LNP politicians to “smear” her because her partner Shaun Drabsch in his job at Price Waterhouse had done work on the Adani railway proposal to NAIF. Palaszczuk said they don’t talk about his work, and she did everything by the book in consultation with the parliamentary Integrity Commissioner. She now announced that the Queensland government would veto the NAIF loan deal, which she actually can’t in caretaker mode without the support of opposition leader Tim Nicholls, who said on TV that he would do business with anyone at all without any discrimination whatsoever. So he reckons it is a stunt, but if re-elected I can’t imagine Palaszczuk changing her stance.
Mind, she still supports the mine, just not the use of taxpayer funds. Of course, back in May there was this:
- Queensland Government offers Adani mining group a ‘royalties holiday’ that could cost state $320 million
- The Queensland Government is offering Indian mining company Adani a “royalties holiday” worth hundreds of millions of dollars for its massive Carmichael coal mine in the state’s north.
Royalties start at $2 million in the first year, ramp up to be paid in full eventually, but numbers people reckon the state will end up short.
Around that time we also got this:
Earlier Adani said the loan was not critical. I think it has to be to fall within the NAIF charter, so that might explain its convenient change in status.
Adani doesn’t mind a bit of help here and there, so we had this:
Townsville and Rockhampton, the designated support cities, will fund an airstrip next to the mine.
That was just last week, I think. No-one was pleased outside Adani.
Nearly done here. A bunch of articles:
I could go on forever. I think the question asked by Geoff can be answered decisively in the negative. Ben Eltham, at his awesome best, concludes that:
- Vale an Australian political system that can approve a mining project so clearly against the national interest. Ben Eltham explains.
Let us assume for a moment that the Carmichael coal mine in Queensland does go ahead. Leaving aside the huge hurdle of finance, the mine has cleared all necessary approvals.
What does that say about the health of Australia’s democracy?
The answers to that question are worrying. Australia’s system of regulatory and environmental approvals has failed in the case of the Carmichael mine, letting a development through that no sane policy could justify.
Carmichael illustrates what is broken in Australian politics, like few other issues. The planned mine is so large, it will materially affect the future of global warming. It will help destroy the Great Barrier Reef. As climate campaigner Bill McKibben wrote in 2016, “you can’t have both the Paris climate agreement and Adani’s Carmichael coalmine. Full stop.”
Yet there is another question, we have not seriously begun to ask. What about the rest of the coal industry, numbered at around 100 mines, and more particularly its plans for expansion?
This article explains that the opening the Galilee basin will negatively impact on plans in the Bowen and Surat basins as well as the Hunter valley:
The study was commissioned by The Infrastructure Fund, which owns a 50 per cent stake in the privatised Port of Newcastle. It found:
- Ten new mining projects or mine expansions in the NSW Hunter Valley would be displaced by the Galilee Basin output and shelved or delayed
- Eight mining projects or expansions would be delayed or shelved in Queensland
- Hunter Valley thermal coal output would fall by some 86 million tonnes, or 37 per cent
- Bowen Basin output would decline by nearly a third, with 17 million fewer tonnes mined
- The Surat Basin in south-east Queensland, which is yet to be developed, would produce 37 per cent less coal than it otherwise would
Take a look at these truly gruesome graphs:
That was the Bowen Basin, but look at the Hunter Valley:
And here is the Surat, I think mainly the deferred large Wandoan mine, where a lot of the land resumption has already occurred:
The mining lease was granted on 7 August this year.
The town is near where I grew up. We used to go to the movies there. 32,000 hectares swallowed up. I believe the mine goes to within 2 km of the town centre:
Can’t help but being a bit emotional about that one.
However the general point is that we should not stop the Adani mine so that we can, in an orderly way, nix the Great Barrier Reef from business as usual.
There is a general point to be made about legal responsibility here. Fred Pearce has this article in the New Scientist (pay-walled):
Pearce looks at the work of Oxford University modeller Myles Allen:
- Allen’s most recent paper listed fossil-fuel companies in order of what he has calculated is their responsibility for CO2 emissions. Saudi Aramco tops the list, closely followed by Chevron, ExxonMobil, BP and Gazprom. His team’s meticulous modelling showed, for instance, that 30 per cent of the sea level rise since 1880 is down to just 90 carbon emitters. “Their products are warming the planet. They need to be held to account.”
Legally, where the stuff is burnt governments are held accountable. In the US where it has been tried, companies have escaped responsibility because the state, the gubblement is responsible for the policies that allow us to wreck the planet. This may change in the US now that the government has washed its hands of climate change policy.
If the law is to change, then attitudes need to change. The way the international law sits now it seems that nice people like Greg Combet, former environment minister while representing a coal mining electorate, could have it both ways and sleep well at nights. Ditto for premiers like Annastacia Palaszczuk.
Then there is politics, which operates within the realm of the possible. I think right now the only politician that we could expect to be elected on a ‘stop Adani’ ticket is Bill Shorten. Malcolm Turnbull could not while ever he has the strong fingers of his climate contrarian buddies around his you know whats.
Here’s my post of December 2013 Galilee Basin coal: a vision splendid or a kind of madness? and in June this year Adani – a mirage that will dissolve into mist?
Might have got that one wrong.
Here’s where the Galilee Basin is located in Queensland:
And this shows the mines in relation to some other towns:
It’s really in the middle of nowhere, and closer to Mackay as the crow flies rather than Townsville or Rockhampton, which is the best way of getting there.
Update: Map of proposed rail line:
The Australia Institute has done a comprehensive analysis of the impact of employment of the Adani mine and the implications in terms of marginal seats in the election. They based their analysis on the Wood Mackenzie report on the impact on other coal mining activities commissioned by the Port of Newcastle.
The main story is that their are only four electorates where the effect will be positive, all in Townsville. For one electorate the effect is uncertain, four have mixed effects and three negative.
There is a lot of detail in the report. here’s the story of the main cities.
Townsville has only 2500 workers supporting coal mining. There are five seats in town, including the northern tip of Burdekin. Four will gain, but I would think that in a city of around 180,000, the effect will be marginal.
Mackay has 14,400 workers in 1559 businesses. Mackay, a city of 85,000, will lose. Mackay is a safe Labor seat.
Rockhampton and Gladstone together, known as the Fitzroy Region, have 9,000 workers. Gladstone, a city of some 49,000, will lose. For Rockhampton the outlook is mixed, but for a city of some 80,000, it looks negligible at best.
Here is the outlook for fly-in fly-out centres:
Here is the map of the coal basins and state electorates: