Australia clears Adani to mine one of the world’s largest coal reserves

Adani Australia operates a renewable energy business, a port near Bowen and will now develop the Carmichael coal mine and rail projects in Queensland. (Image courtesy of Adani Australia.)

The most divisive mining project in recent Australian history can finally break ground after the state of Queensland cleared the final regulatory hurdle on Thursday for Adani Group’s Carmichael coal mine.

The approval of the project’s groundwater management marks the end of an almost 10-year wait, during which the proposed mine faced steady resistance by environmental groups. Local and international detractors, including the scientific, educational and cultural arm of the United Nations, (UNESCO), worried about the impact on marine ecosystems, particularly by the Great Barrier Reef.

It also potentially paves the way for half a dozen new thermal coal mines to come online in Australia, by opening up Queensland’s remote Galilee basin with rail infrastructure to the coast 320km away at Abbot Point.

Other coal projects in the area include some of Australia’s wealthiest mining billionaires such as Gina Rinehart, who has a joint venture with India’s GVK Group, and controversial politician Clive Palmer.

The go-ahead to the Carmichael mine potentially opens the door for several other coal projects in the Galilee Basin, with a planned 189km rail link to the nearest port at Abbot Point set to make extraction feasible

The Carmichael project, acquired by the Indian conglomerate in 2010, is expected to produce 8-10 million tonnes of thermal coal a year and cost A$2 billion ($1.4 billion) during its initial phase.

“We’re ready to start work on the Carmichael Project and deliver the jobs these regions so badly need,” chief executive Lucas Dow said in a statement.

“[The authorization] confirms the mine’s plan complies with all regulatory conditions set by the Australian and State Governments, bringing to a close a two-year process of rigorous scientific inquiry, review and approvals,” Dow added.

According to official estimations, Carmichael will contribute $2.97 billion each year to Queensland’s economy and will create 1,500 direct and 6,750 indirect jobs during ramp up and construction.

Australia clears Adani to mine one of the world’s largest coal reserves
Mine and coal port locations.

Analysts at WoodMac expressed their doubts about the timeline announced by Adani — about two years until beginning production.

“We remain cautious on the timeframe for delivery of first coal onto a vessel given the sizeable task of building out both a new large-scale mine and greenfield rail connection,” they said in a note to investors.

“We anticipate at least a 12-month delay to Adani’s target of first coal exports, approximately two years from the commencement of construction, predominantly associated with delays in the construction of rail.”

The news come as other developed nations step up strategies to meet Paris Agreement emissions targets, and as several banks and insurers scale back exposure to the fossil fuel and to new thermal coal mines in particular.

Just this week, Norway’s $1 trillion sovereign wealth fund revealed it would dump billions in coal investments

Australia, in turn, has pledged to cut emissions by 26% on 2005 levels by 2030.

Thermal coal is one of the largest sources of greenhouse gas emissions. If burnt, output from Carmichael would release 700m tonnes of carbon dioxide into the atmosphere every year for more than 50 years.

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