Construction of Carmichael coal mine approved

April 4, 2016

The Queensland government has approved the construction of Adani Group's Carmichael coal mine, the largest thermal coal mine in the world.

The Financial Times reported that leases for the mine, rail and port projects were granted for the project that could cost as much as A$21.7 billion and create thousands of jobs.

The approval is a significant step forward for the project, but there is still a ways to go. Dredging of a nearby port cannot begin until Adani demonstrates that it has raised enough money to complete the project.

“This is a major step forward,” said Annastacia Palaszczuk, Queensland’s premier. “Some approvals are still required before construction can start, and ultimately committing to the project will be a decision for Adani,” she added.

As with any coal project, this one has its detractors.

The mine in Queensland’s Galilee Basin has become the focus of a global campaign by environmentalists who say digging new mines and burning coal will cause irreversible climate change. They say that burning Galilee’s coal reserves would pump 700 million tonnes of CO2 into the atmosphere every year for over half a century.

Greenpeace described the government’s decision to approve the mine as “appalling”, particularly as the nearby Great Barrier Reef is already experiencing severe coral bleaching due to climate change.

But it also suggested the mining project would never proceed as it “remains in financial disarray and faces legal challenges as well as a coal market in structural decline."

Thermal coal prices have more than halved since 2011 due to a supply glut and waning demand in China, the world’s biggest coal market.
Adani is fighting legal battles against two campaign groups opposed to the mine project. It also faces the challenge of raising billions of dollars in finance even as several large lenders including Deutsche Bank and HSBC have refused to back the project.

Environmentalists wage a high-profile campaign against Australia’s mighty coal industry

Last year Adani suspended preparatory engineering work on the Carmichael mine, blaming legal challenges.

Adani has secured all required primary approvals from state and federal governments required to proceed. It still must get secondary approvals for rail, port, power and other construction, but supporters do not expect this to hold up the project.

The three mining leases approved are estimated to cover an area containing 11 billion tonnes of coal.

Other companies plan to develop mines in the same basin, including GVK Hancock, a joint venture between India’s GVK and Hancock Prospecting, which is controlled by Gina Rinehart, Australia’s richest person.

Analysts say those planned mines will probably depend on Adani’s project going ahead, as it will provide the requisite rail and port infrastructure.

This has made Adani’s project a potent symbol for global environmental campaigners, who want to keep the coal in the ground.

Related article search: