The chairman of Indian mining giant Adani has given final investment approval for its multi-billion dollar Carmichael mine in Australia.
The project has come under fire from a range of environmental groups, with its potential impact on the Great Barrier Reef a primary concern. The Carmichael coal mine is said to threaten the Great Barrier Reef because it requires an expansion of the coal port at Abbot Point, adjacent to the reef, as well as increased shipping in the Reef’s waters.
Adani has already invested $3.3 billion in the project, including buying the bulk coal handling port at Abbot Point. The terminal is on the edge of the reef, about 19 kilometers from the closest coral. The expansion work will require dredging 1.1 million cubic meters of seabed near the Great Barrier Reef Marine Park, which will then be disposed of on land to make way for what will become one of the world's biggest export terminals for coal.
Adani chairman, Gautam Adani, says decision marks the "official start" of the mine. "We have been challenged by activists in the courts, in inner-city streets and even outside banks that have not even been approached to finance the project," Adani said. "We are still facing activists. But we are committed to this project. We are committed to regional Queensland, and we are committed to addressing energy poverty in India."
Coal reserves are estimated at 11 billion tons, and Adani says pre-construction work will start in the third quarter of 2017. However, there is skepticism about the company's ability to finance the project. Environmental advisory company Market Forces has dismissed the announcement as a PR stunt.
“With a net debt estimated at $2.5 billion, Adani Enterprises has yet to raise a single cent of the $5 billion required to capitalize the project, relying on handouts and subsidies from the Commonwealth and Queensland Governments,” says Market Forces in a statement. “However, it has no option but to pursue the project because failure would mean a write-down equivalent to around half the value of the company.
“23 banks have so far either distanced themselves publicly from Galilee Basin coal export projects, or introduced policies that prohibit financing Adani’s mine. Only last month, Westpac was the latest institution to rule out funding the proposal. Commonwealth Bank is the only Australian bank which has not committed to steer clear.”
Market Forces Executive Director Julien Vincent says: “The investment decision we really need to worry about is that of the Northern Australia Infrastructure Facility, which may be about an announce a $900 million loan to Adani on behalf of the Australian public.
“Adani Enterprises is laden with debt, and India’s rapid move away from imported coal makes its project a dud prospect,” said Vincent. “As a consequence, private finance is giving it a wide berth, with the Australian taxpayer the main dupe left at the table.”