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MoneyAdani is a $2 billion long-shot bet on the future of coal

02:25  04 june  2019
02:25  04 june  2019 Source:   smh.com.au

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But it would represent a huge bet on the long -term future of coal -fired electricity, at very bad odds. Adani is preparing its Carmichael coal mine for development. Such an investment could only be profitable on the basis of a mine with a long life and substantial potential for future expansion.

But it would represent a huge bet on the long -term future of coal -fired electricity, at very bad odds. Adani is preparing its Carmichael coal mine for development. Such an investment could only be profitable on the basis of a mine with a long life and substantial potential for future expansion.

Adani is a $2 billion long-shot bet on the future of coal© Supplied Queensland's Co-ordinator-General and the Department of Environment and Science approved Adani's black-throated finch management plan.

By mid-June, if everything goes as expected, Adani Australia will receive the final environmental approvals for its proposed Carmichael coal mine and rail line development.

Newspaper reports based on briefings from Adani suggest that, once the approvals are in place, the company could begin digging “within days”.

On Friday the Queensland government approved Adani’s plan to protect a rare bird, apparently leaving it with just one regulatory hurdle: approval for its plan to manage groundwater.

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Coal royalties will not be increased in next Queensland budget The announcement comes days after Ms Trad said she would not speculate on a change to the rate of royalties before the June budget was handed down. "We want to set up a fund that will go to assist regional communities to deliver on infrastructure they have been crying out for for a while. To get this fund started the government will contribute $30 million," she said. Ms Trad said she hoped mining companies would chip in $70 million to bring the fund total up to $100 million, but stressed the contributions were “completely voluntary”.

The billion Adani Group — a sprawling conglomerate with interests in energy, agribusiness, real estate and defense, among other sectors — leveraged Yet before the election was called in April, the federal government sent a signal to those on the side of coal . It approved Adani ’s groundwater plan

The Carmichael coal mine is an approved thermal coal mine in the north of the Galilee Basin in Central Queensland, Australia. Mining is planned to be conducted by both open-cut and underground methods.

Its billboards in Brisbane read: “We can start tomorrow if we get the nod today”.

But several big obstacles remain. Even after governments are out of the way, it will have to deal with markets and companies that aren’t keen on the project.

First up, there’s the problem of access to Aurizon’s rail line. Adani originally planned to build its own 388-kilometre railway from the Galilee Basin to its coal terminal at Abbot Point.

However, in the scaled-down version of the project announced last year, Adani plans to build only 200 kilometres of track before connecting to the existing Goonyella line owned by the rail freight company Aurizon.

That requires an agreement of access pricing and conditions. Aurizon is legally obliged to negotiate with Adani, but has shown itself to be in no hurry to reach a deal.

Adani needs one more environmental approval after sign off on black throated finch plan

Adani needs one more environmental approval after sign off on black throated finch plan Adani is just one step away from starting construction on one of the country's largest coal mines, after the Queensland Government approved a crucial environmental plan to protect an endangered bird. 

So to the extent that coal from the mine contributes to global warming, it is a threat to the reef. Adani ’s reputation: A report by Environmental Justice Australia detailed a long list of allegations of environmental damage caused by Adani Enterprises and its subsidiaries around the world.

Adani is seeking A $ 2 billion (.5 billion) in financing by March 2018 for the A billion first stage of its proposed Carmichael coal mine in the state of Queensland, a project that has been shrunk from a A.5 billion plan to make it more viable. Adani declined to comment on its financing plans on

Then there’s insurance. Faced with rejection by every major bank in the world, Adani announced it would fund the project from its own resources. But now insurers, including nearly all the big European firms and Australia’s own QBE, are saying the same sort of thing as the financiers.

Without insurance the project can’t proceed, and the pool of potential insurers is shrinking all the time.

But the most fundamental problem may lie within the Adani group itself. The $2 billion required from the project will ultimately come, in large measure, from chairman Gautam Adani’s own pocket.

With an estimated wealth of $7 billion, he can certainly afford to pay if he chooses to. But it would represent a huge bet on the long-term future of coal-fired electricity, at very bad odds.

Adani is a $2 billion long-shot bet on the future of coal© Glenn Hunt Gautam Adani.

In my analysis of the original Carmichael mine proposal in 2017, I concluded that the profit from operating the coal mine would be around $15 per tonne.

'It's time to move on': Trad on Adani

'It's time to move on': Trad on Adani Queensland treasurer Jackie Trad has had the figures calculated on the jobs Adani's proposed mine would produce compared to those created by the government. There is way too much hype from all sides about Adani's proposed Carmichael coal mine, Queensland treasurer Jackie Trad says. It would create barely any jobs compared to those created by the Palaszczuk government, she said. The mine would make up about 0.005 per cent of the jobs produced or facilitated by the state government since it came into power in 2015, Ms Trad said on Thursday.

Why Gautam Adani is making a bet on Australian coal and how the odds are stacked. Counting on coal : Gautam Adani , Chairman and Founder of the Adani Group (Photo: Umesh Goswami). As you enter the 25th floor of the imposing 10 Eagle Street building on Brisbane’s Golden Triangle business

Why Gautam Adani is making a bet on Australian coal and how the odds are stacked. The Abbott Point port: Adani needs to invest about USD 3.5 billion to build a railway line to Abbot Point and The Australian Broadcasting Corporation even did a long documentary on how the decision process within

A recent analysis of the revised project by David Fickling for Bloomberg yielded a marginally more favourable estimate of $US16 per tonne ($23 per tonne), or $US160 million a year for the initial output of 10 million tonnes a year.

That’s a small return on $2 billion, before considering overheads and depreciation.

Such an investment could only be profitable on the basis of a mine with a long life and substantial potential for future expansion. How likely is that? When the start of construction was re-announced last November, it was suggested the coal might be shipped by 2021. With six months’ delay, and the insurance problem noted already, 2022 seems like the earliest possible date.

But by that time, the current construction pipeline for coal-fired plants in India will have been worked through, and very few new ones will be being commissioned. A mere 8 gigawatts of new coal-fired power was commissioned in 2017-18, partly offset by 3.6GW of coal-fired power stations that closed down.

The Indian government has stated that no new coal plants will be needed after 2022, or 2027 at the latest.

Final Adani decision to be revealed

Final Adani decision to be revealed Adani will learn today if it has the final state approval it needs to get on with building its Queensland coal mine amid fears for a million-year-old ecosystem. Queensland's environment department is poised to reveal if it's happy with Adani's groundwater management plan, including a strategy to protect sacred wetlands some experts believe could permanently dry up if the mine proceeds. Hydrologists say Adani has grossly underestimated the mine's groundwater impacts, and warn the mine could drain the underground water source that feeds the Doongmabulla Springs Complex, 8km from the edge of Adani's mining lease.

Adani Enterprises Ltd. will build Australia’s largest coal mine by itself after canceling a planned A $ 2 billion (.5 billion) deal with Adani and Downer mutually agreed to cancel all letters of award for work on the mine first made three years ago, Adani ’s Australian unit said in a statement Monday.

From here Adani would ship the coal to India to fuel its network of electricity power plants. Adani ’s board gave final approval for the mine in June. The project has become a litmus test on the future of coal , amid growing investor fears about whether increasingly onerous regulations on the emissions

In these circumstances, newly opened coal mines will be able to sell coal only if they can displace existing suppliers. This suggests prices will have to fall to a level sufficient to ensure further closures of existing mines. Such a fall would erode or eliminate Adani’s already thin margins.

By 2030, with the project still in its relatively early stages, most developed countries will have stopped using coal-fired power. The others will be moving fast in that direction. So far under President Donald Trump, the United States has closed 50 coal-fired power stations, and will almost certainly never build another.

The only glimmer of hope for coal has been in less developed countries in Asia. But over the course of this year, even these hopes have dimmed. Major banks in Japan and Singapore have withdrawn from funding new coal projects, following the lead of the global banks based in Europe and the US.

That leaves South Korea and China as potential sources of funding. Korea is already phasing out coal-fired power domestically and its banks are being pressured to divest globally. The option of relying solely on China is problematic to say the least.

To sum up, unless current trends change dramatically, the economic life of the Carmichael mine is unlikely to be more than a decade – nowhere near enough to recover a $2 billion investment.

Adani clears last major hurdle for controversial mine

Adani clears last major hurdle for controversial mine Adani Mining has had its groundwater plan approved by the Queensland government.

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A $ 2 . 2 b rail link to the huge Carmichael project has gained conditional approval for commonwealth funding.

So what could be going on? Perhaps Gautam Adani is willing to lose a large share of his wealth simply to show he can’t be pushed around. Alternatively, as on numerous previous occasions, his promises of an imminent start to work may prove to be baseless.

The third and most worrying possibility is that the political pressure to deliver the promised Adani jobs will lead to a large infusion of public money, all of which will be lost.

The $900 million Adani sought from the Northern Australia Infrastructure Facility in 2017 would be enough to keep the project going for a couple of years, without the need for Mr Adani to risk his own money. It now appears that a similar sum might be sought from the Export Finance and Insurance Corporation.

All this is speculation. Assuming the approvals come through by the Queensland Premier’s self-imposed deadline of June 13, we will find out soon enough whether something happens, or whether something else will stay in the way.

John Quiggin is professor at the school of economics, University of Queensland. This article is republished from The Conversation under a Creative Commons license.

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