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Doubts Adani can develop Galilee Basin coal mine slammed by industry

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Doubts Adani can develop Galilee Basin coal mine slammed by industry

A report commissioned by Greenpeace into the viability of Adani’s position to develop the Galilee Basin coal fields has been slammed by the mining industry.

Indian conglomerate the Adani Group announced plans last year to build the $10 billion Carmichael Coal mine, rail and port project in the area.

At 10 billion tonnes, Carmichael is considered the largest single coal tenement in the world, and would move to open up the vast coal-rich region to mining for the first time.

However, resource analyst Tim Buckley said the company was carrying too much debt, throwing doubts the project would go ahead.

In a financial investigation commissioned by Greenpeace, Buckley said Adani was taking a gamble in its hope to mine Carmichael.

“They are betting the entire company on their Australian foray into opening up the Galilee,” Buckley told the ABC’s Lateline program.

He claims that low coal prices and a huge debt level would hamstring the project.

“We estimate the external debt of the Adani Group at US$12 billion. So it is a very financially leveraged group of companies. And that's before funding the majority of the $10 billion to be invested in Australia,” Buckley explained.

“Their core business isn't making money, and therefore, they're not actually able to cover the interest costs, so debt, when you can't cover the interest, is a problem.”

The claims have been rubbished by both Adani and the wider coal industry who say a Greenpeace funded investigation is loaded with idealoogical minefields.

Speaking at the recent Galilee Basin Coal and Energy Conference, Queensland Resources Council CEO Michael Roche said the economics of the three projects planned for the basin were sound.

“It's very nice for Greenpeace to be concerned about the coal businesses, the economics of the coal market, but I'd never rely on Greenpeace to make a call on whether it's a good time or not a good time to be investing in a new coal mine,” Roche said.

Adani also criticised the findings, calling it short-sighted and claiming in ignores long-term fundamentals.

Chairman Gautam Adani announced his company planned to export its first coal to India in 2016.

Queensland Premier Campbell Newman has previously said the downturn in the coal sector can be used as an advantage as resources and manpower have been freed up in order to fast track construction.

Meanwhile, GVK-Hancock, a joint venture between Gina Rinehart's Hancock Coal and Indian conglomerate GVK and Clive Palmer’s Waratah Coal are also vying to build coal mines in the region, considered by many as the new frontier in Queensland mining.

This is not the first time Greenpease and the QRC have bumped heads.

Last year a report by the environmental group drew the ire of the industry-body after it claimed “"if the Galilee Basin were a country, the carbon dioxide produced from using this coal would make it the seventh dirtiest fossil fuel burner on the planet", after China, the U.S., India, Russia, Japan, and Germany.

At the end of its report Greenpeace called on the Australia Government to halt all proposals to expand coal mining and exports, starting with the Galilee Basin.

The QRC described the report as a 'scary monsters' comic book.


 

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