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The Decision to Re-approve Australia's Biggest Coal Mine Just Gets Dumber

After being re-approved last week, Queensland's Carmichael Mine looks as environmentally fraught as before.
October 22, 2015, 12:23am

Open cut coal mine, Hunter Valley, Australia. Image via

The Carmichael Coal Mine is a project slated to unearth an annual 60 million tones of black coal from the Galilee Basin in Queensland's inner north, making it the largest coal mine in the country. At this size the project is expected to produce 130 million tonnes of carbon dioxide every year, almost entirely eclipsing any savings made by the government's Direct Action climate plan.

Suffice to say the mine is controversial, and especially as its outgoing coal will be exported through the Great Barrier Reef, via a dredged port at Abbot Point. This means the existing coal port will be expanded into the world's largest, while shipping traffic will dramatically increase throughout the World Heritage Area.

The Carmichael Mine has long been a passion project of Gautam Adani; the billionaire owner of the Indian-based conglomerate, Adani Group. Adani received approved for the mine in July last year, only for it to be put on ice by the Federal Court in August. An environmental group successfully argued the proposed site was home to two species of endangered wildlife, the yakka skink and ornamental snake, which provided a technical basis for the project's adjournment.

But last Wednesday Environment Minister Greg Hunt re-approved the mine with "36 of the strictest conditions in Australian history." However these strict conditions are now coming under attack as environmental groups highlight their shortcomings.

As the Australian Conservation Foundation chief executive, Kelly O'Shanassy told the ABC, "in the previous approval, if Adani wanted to make any changes to the plans to protect the environment, they needed to seek the minister's approval to do so. Under this second approval process from Greg Hunt, Adani has the power to create changes in their plans without seeking any approval from the minister."

Mr Hunt has explained that this is simply to remove red tape but Kelly, along with others, has pointed to the company's environmental legacy as proof of the plan's idiocy.

Adani began life in a swampy bay in northwest India called Mundra. Starting in the mid 90s the fledgling company built a jetty, followed by a series of wharves at the cost of around 75 hectares of mangrove swamp. This was followed by a coal-fired power station they're now hoping to fuel with Australian coal. All this expansion appeared without the scrutiny requisite to Australian developments, but it wasn't until 2011 that the High Court in Gujarat found Adani guilty of building an airport and a water intake channel without environmental approval. On top of this the company was found to have dumped coal ash into the surrounding bay and filled in a creek.

As Kelly O'Shanassy pointed out, these aren't the moves of a company concerned with environmental conservation. Yet perhaps these clouds over Adani could be at least counterbalanced if the Carmichael Mine guaranteed jobs, which it does, but only sort of.

When the project was first floated, Adani promised it would create around 10,000 jobs annually. In a separate court case in August this was then downgraded to 1,464, assuming the company turns a profit.

Yet profit also seems allusive. So far 11 international banks have refused to finance the mine, including the Commonwealth Bank and Standard Chartered. Environmental concerns aside this is basically due to the current price of thermal coal. For Adani to turn a profit the price of coal needs to be around US$110 a ton. But as of September it was at US$58.03—the lowest price since 2007.

So why is Adani pushing ahead? As Business Today reported earlier this year, it comes down to a fairly brave gamble. If coal prices improve, the Carmichael Mine will be profitable, and especially if Adani installs the necessary infrastructure while the demand for coal equipment is so low. As the Adani Australia's CEO, Jeyakumar Janakraj, explained "A lot of talk has happened about Galilee Basin. We do not want to talk. We want to make progress, slow and steady, and de-risk the overall business model."

So while Adani pushes ahead, environmentalists do what they can. This means finding another endangered animal in the area, which right now is the Black Throated Finch. The case to preserve the bird's habitat is currently with the Queensland Law Court with a decision expected late 2015 or early 2016.