Adani has finally received environmental approval from the Queensland government for its proposed Carmichael mine in the Galilee Basin. At this point, in a standard news story about a multi-billion project, we’d be reading about the domestic and global banks that were competing to be the lead financiers for the project, and those who would have to content with the crumbs. Along with that, there would stories about the partners and subcontractors who would get the lucrative work of construction.
Instead, we have a long list of banks and other funding sources that have announced that they won’t finance the project, or have pulled out of announced and existing finance arrangements. The list includes the Commonwealth (formerly a big lender to Adani), NAB, the Queensland Treasury, the State Bank of India, and global banks including Standard Chartered (another former big lender), Citigroup, JP Morgan Chase, Goldman Sachs, Deutsche Bank, Royal Bank of Scotland, HSBC, Barclays, BNP Paribas, Credit Agrilcole and Societe Generale. The US and Korean Export-Import banks have been touted as possible sources, but appear to have backed away. Even the Abbott-Turnbull $5 billion slush fund for Northern Australian boondoggles, seen when it was announced as a rescuer for Adani, now appears unlikely. At the recent Northern Australia Investment Forum, the fund was the centre of attention, but Adani apparently didn’t get a mention, unless it was implicit in Frydenberg’s claim that the government wouldn’t be investing in “white elephants”.
The situation with suppliers is just as bad. Adani sacked the engineering team from Worsley Parsons and the construction group from Posco (also a supposed equity partner) last year. A $2 billion announcement of work for Downer EDI seems to have vanished into thin air. And at Abbot Point, Adani, as owner, is engaged in a nasty brawl with Glencore, the current operator.
In summary, we appear likely to find out what happens when a dog catches the car it has been chasing. Adani and its backers have been denouncing green tape and “lawfare” as the only obstacles to the bonanza they have on offer. Now, the legal and administrative obstacles are gone, so they have only to line up the money, rehire the contractors and announce the starting date. My guess is that this will never happen.
John Quiggin 
This article indicates Coal India has problems with overproduction and over-stockpiling due to sluggish demand for coal.
http://economictimes.indiatimes.com/industry/indl-goods/svs/metals-mining/coal-india-in-dilemma-over-production-pricing/articleshow/50795014.cms
“Coal India has reached a situation when production cannot be optimised due to inability to stock coal further which has already reached 40 mt due to sluggish demand. …
“”Dumping more coal to power plants is getting difficult as average stock to them has gone up to 25 days against 11 days last year. This is neither economical and increases risk of fire,” the official said.”
I assume Coal India is a different conglomerate from Adani but I guess the same general market forces must be acting on Adani. It’s hard to see the need for a new coal project.
We may take consolation in the mounting evidence of Adani’s woes, and find there some assurance that this project will never happen. Perhaps it is ironic that a project may become economically nonviable before it starts, rather than later in life, when the result would be that the mine closes and no remediation work or environmental repair is ever carried out, so the wounds remain open and bleeding for decades and longer. Meanwhile, Adani, without ever shipping a ton of coal, is quite capable of doing a lot of damage in Queensland. And having the fate of a project resolved in this way does not excuse the culpability of successive governments of all ilks and at all levels which have seen fit to bow down before these carpetbaggers. Nor does it explain how assessment agencies, whether responsible for financial due diligence or environmental protection, continue to make decisions of this type. Of course, any premier of Queensland lies in the centre of a big bed, with the mining industry on one side and the development industry on the other. And whichever way he or she rolls over, there’s a back waiting to be scratched. There is a less savoury way of stating the situation, too.
@Peter Chapman
“Perhaps it is ironic that a project may become economically nonviable before it starts,..”
No irony here. There are millions or billions or multiples of these projects which are financially nonviable. And this is how it should be. Otherwise, ‘project evaluation’ would be totally superfluous. And so would be the last socially useful aspect of relative prices.
As for JQ’s post – eventually ‘the market’ learns.
@Ernestine Gross
The phrase “the last socially useful aspect of relative prices” is intriguing to me for what it omits rather than what it says. I would always find of interest links to concepts behind statements like these. That is if easy-to-post links exist of course and it is not high level maths.
@Ernestine Gross
My take would be;
“Eventually ‘the market’ learns, meanwhile the world burns.”
Not meant as a criticism of your point-making BTW but as a criticism of markets, at least under “really existing capitalism”.
They still have to get a mining lease so that’s still another hurdle. Also, no bank would look at them until they had a mining lease. A lot of those banks mentioned don’t even fund these projects and have never been asked to fund it
@Ikonoclast
Goyal is going to have to review his coal policy sharpish. Another straw in the wind is this decision by a smaller coal plant developer to switch a site planned for a new coal plant to solar. The big boys (Adani, Tata, Reliance) are sitting on tens of gigawatts of coal plant projects they have unaccountably not yet broken ground on. That’s domestic coal, historically much cheaper than imports.
With any luck, India and China can both improve their Paris Agreement NDCs before they sign it, at earliest on 22 April, at no policy cost. Certainly the gloomy emissions estimates that take INDCS as estimates of the likely path are no longer credible.
Great to have this explanation Professor. The Brisbane Times (Fairfax) is today reporting a Morgan (News) poll claiming that the LNP would win government in Qld were an election held today:
Many people on the Left just can’t understand how the Palaszczuk government could approve the Adani mine and even offer financial assistance for it. That confusion is furthered by GetUp screaming at its members to act now.
Not so many seemed to have realised that commercially the mine is dead.
Whoops. Sorry about that:
Great to have this explanation Professor. The Brisbane Times (Fairfax) is today reporting a Morgan (News) poll claiming that the LNP would win government in Qld were an election held today:
http://www.brisbanetimes.com.au/queensland/lnp-would-win-queensland-government-if-election-held-now-poll-20160203-gmkssg.html
Many people on the Left just can’t understand how the Palaszczuk government could approve the Adani mine and even offer financial assistance for it. That confusion is furthered by GetUp screaming at its members to act now.
Not so many seemed to have realised that commercially the mine is dead.
So, the MSM collectively has failed to investigate the thing. Surprise, surprise. Perish the thought that the Fearless and Without Favour people would stoop to suppression of scientific and economic fact..
In fact, does captured media and press report ANYTHING honestly any more?
@paul walter
“In fact, does captured media and press report ANYTHING honestly any more?”
I suppose the ‘captured media’ wouldn’t understand the question.
@Ernestine Gross
Once again you offer a soothing balm for the wounds to my sensibility. Thank you.
@paul walter
I think most of the media/press now publish what they’re resourced to publish, which is not much at all beyond regurgitations of a diminishing puddle of quality journalism and a growing ocean of sensationalism, covertly disguised paid content and opinionated rants. Alas, such is the reality of ever shrinking revenue from internet competition.
India’s Energy Minister, Piyush Goyal, recently tweeted that solar power is now cheaper than coal in India. People may be amused by this short piece on how RattanIndia Power Ltd., a developer of coal power plants, is using land that was set aside for a coal power station to build a solar farm instead:
http://cleantechnica.com/2016/02/02/india-coal-energy-developer-converts-one-site-solar-electricity/
They claim the entire 320 hectare site will be used for solar, which means the solar farm could have a capacity of 300 megawatts or more.
Rather than being exceptional, most large energy companies in India are now involved in renewable generation to some degree. While the current amount of new renewable capacity in India is still low, they are clearly positioning themselves for future development.
@Troy Prideaux
Thanks, Troy.
Am actually back here because I recall that Ernestine Gross is an economics expert.
What I wanted to mention was a report in today’s Guardian involving Robb signing the TCP.
The particular issue for me is that Robb was asked if a Productivity Commission analysis of cost benfit had been done or would it be done
: http://www.theguardian.com/australia-news/2016/feb/04/tpp-signing-andrew-robb-rejects-calls-for-cost-benefit-analysis-of-trade-deal.
Are they saying one hasn’t been done previously (like before the signing let alone negotiations)?
I know I am a moron, out of the loop, but can someone qualified assure me this is normal practice or just a formality, or is some thing else in play.
Please excuse my ignorance.
Oh- Oh. Looks like I am on mods, what crime did I commit this time?
@paul walter
WordPress is a fickle god, beyond the power of a mere blogger to control or predict.
In related news, AGL is quitting the coal seam gas business, to the relief of rural New South Wales.
Giles Parkinson has an item in Renew Economy that Adani are pulling back from any plans for capital expenditure in Galilee pending a recovery in the coal price.
http://reneweconomy.com.au/2016/adani-puts-galilee-coal-mine-on-hold-pending-recovery-in-coal-price-67892
The Carmichael coal is very low grade steaming coal, with an ash content according to the EIS of 25%.
No black coal with that low a grade is used within or exported from NSW. Hunter coal ‘standard’ steaming is 12% ash, and has a heating value of around 6000 kcal/kg nett as received (NAR) ie after evaporating water contained therein. The Carmichael coal is 5200 kcal/kg. It would sell for even less than 5200/6000 = 86% of the normal price, because of the extra freight cost of transporting twice the ash, and the cost in the power plant of removing and handling twice the ash.
http://www.indexmundi.com/commodities/?commodity=coal-australian This chart shows that the price of standard Hunter Valley steaming coal in Dec 2015 was about $US56 per tonne. Adani need $70 to break even. To match the Newcastle coal at $56 they would only be able to realise 86% of $56 at most, ie $48 per tonne. At that price they would lose well over $22 on every tonne, compared to readily obtainable alternative supplies, which are currently more than freely available..
No financier will go anywhere near such a disaster. Adani know that, and the Queensland government should also, of course, know that. The only worse coal sources being exploited in the world at present are brown coal deposits next door to power stations, like the Latrobe Valley mines (Hazlewood etc) which are massively polluting relics of a bygone age.
@John Quiggin
“Yea, verily it said unto me, thou art in moderation. Prostrate thyself before the Lord thy PC, for thou hast been found wanting and verily I say, issued there forth a great lamentation; a wailing and gnashing of teeth, even unto the lake of Galilee.”
It’s interesting that Whitehaven have returned a 1st half profit due to “record sales”.
@Troy Prideaux
Yep, one mine that doesn’t go ahead means nothing when existing mines, wells and their products are still pushing accumulated CO2 levels in the atmosphere and oceans ever higher.
As the internet clickbait industry would say:
“When CO2 reaches dangerous levels in the atmosphere and oceans, you won’t believe the one amazing thing capitalism does next.”
Answer (after 10 clicks on pointless photographs): “It keeps pumping out even more CO2 emissions!”
Gee, who’da thunk it?
It is interesting but not surprising that coal companies are able to make a profit at current coal prices as the marginal cost of ripping coal out of an existing mine, piling it on a train, and then dumping it in a ship is very low. It’s really a matter of whether or not they have invested too much in projects that require high coal prices to make a buck. And making a buck per tonne i all Whitehaven is doing at the moment. Whitehaven managed to make $1.07 profit per tonne of coal they sold. If prices were at their 2008 peak they would have made $124 a tonne profit, all else equal. Mind you, diesel was a bit more expensive then. As was the cost of capital.
I probably should have mentioned that the financial year before Whitehaven had a $78 million loss and $65.5 million in write downs. So it would only take ten years of $7.8 million profits to exceed that one year loss.
@Ikonoclast
I’m puzzled about your theory of change. The way I see it, first growth in emissions slows, then it stops (where we are now), then it turns down, then (after more of the same) it collapses. The collapse stage, as with the share prices of US coal companies, comes right at the end. How do you see it happening? Damascene boardroom conversions? The mob charging into the front gate of the Winter Palace and sweeping up the grand staircase, as in Eisenstein’s fictional October scene? The sudden introduction of a war economy. with General Motors switching its refrigerator factories to make machine guns instead? The last one really happened, so it’s not impossible like FTL drives, but vanishingly unlikely.
@James Wimberley
A fair question. Predictions are always risky of course. I think it will take what I call a “salutary disaster” to ensure we change course significantly. In other words, I believe human CO2 emissions will continue to grow, or at least not be ameliorated nearly fast enough, until some very large natural disaster occurs. This natural disaster will have to be unambiguously attributable to climate change. It will have to affect one or more rich and/or powerful nations and kill, injure or render homeless hundred of thousands if not millions of people. Once this salutary disaster occurs everybody, elite and ordinary persons alike, will become very, very frightened. Once they are suitably frightened by the demonstration effect(s) of nature’s vast power, they will actually do something serious about the problem.
@Ikonoclast
Re comment to James, I believe you are correct and unfortunately by the time “everybody, elite and ordinary persons” act it will be too late to avoid major climate change and a disastrous impact upon all humanity. In times past it took just a couple of decades for Europe to be plunged into an ice age that lasted a thousand years when global warming led to polar ice melt and disrupted the Gulf Stream. Look up some of the work on the study of midges and their relationship to climate change.
The feed back loops involving the polar ice melt, release of methane from the permafrost, higher absorption of the sun’s energy as the polar ice retreats is truly scary. People who think technology will come to the rescue should think again, the technologies needed will in
themselves likely require significant energy input to realise and would stoke pollution.
It is optimistic to believe that given the present trajectory the world will keep global warming below 4 degrees let alone the 2 degrees that is the subject of much discussion
@John Turner
Look, I agree. I think the chances for abrupt climate change and other abrupt system changes in the biosphere are now considerable. I think it is quite possible that one or more such changes will happen in this century.
Human technology is puny compared to the forces of nature. Most people seem to have no proper appreciation of how puny our technology and its marshaled powers are compared to natural forces even on this planet. There is an enormous hubris today about human efforts and technology. I say this as a scientific humanist. This hubris is unfortunate because it leads to dangerous mistakes and oversights due to over-confidence.
I’ve argued a certain point on this blog before but I am not sure many got the point. Humanity is fully contained within and part of nature (physical and biological forces). There is no way for humanity to transcend these forces. I mean this in the sense that is no way we can ever be un-contained by nature. We can harness nature’s forces, to a quite modest degree actually, but we can never supersede, obviate or escape them.
Francis Bacon wrote in Aphorism IV (Novum Organum);
“Toward the effecting of works, all that man can do is to put together or put asunder natural
bodies. The rest is done by nature working within.”
Nature is a given. The religious believe it is Deity created (which in my book is an attempt at explaining away not at explaining). As a scientific humanist, I take nature as “brute fact”. It is inexplicable, undeniable and just “there”. All of “nature working within” is a vast set of processes independent of us in almost all ways even though we as a sub-system are wholly dependent on it. Our society-economy a tiny sub-system of a massive “all-existent”, a system of interconnected processes ie. the largest real system conventionally called The Universe.
Ikonoclast re
You could argue that, if science, technology and sheer human ingenuity got us into the pickle, then, all being equal, the very same aught to be able to get us out of the pickle. In the recent regime change at the CSIRO, the new boss requested for the main problem to be outsourced and, in a schizophrenic way, with “his first priority is to raise morale” essentially crippling basic climate research in our leading scientific organisation which has already lost a fifth of its workers. As a Nation we have already outsourced major aspects of our life to market forces, where as now we are handing over our intelligence on the most pressing risk to a venture capitalist. So I would argue that science, tech and innovation should get us out of the pickles (within probabiity), but question wether market forces are suitably intelligent and responsible to succeed in such a monumental task?
@Ootz
A fair question. Of course, some pickles are irreversible. Indeed “pickles” themselves are irreversible. You know the kid of sayings. You can’t unpickle a pickle. You can’t unscramble an egg. You can’t unbreak an egg. You can’t put toothpaste back in the tube… and so on.
“An irreversible process increases the entropy of the universe. However, because entropy is a state function, the change in entropy of the system is the same whether the process is reversible or irreversible. The second law of thermodynamics can be used to determine whether a process is reversible or not.” – Wikipedia.
“In the context of complex systems, events which lead to the end of certain self-organising processes, like death, extinction of a species or the collapse of a meteorological system, can be considered as irreversible…. Ecological principles, like those of sustainability and the precautionary principle can be defined with reference to the concept of reversibility.” – Wikipedia.
Given the mass extinction event currently underway due to human activity it is clear we can’t undo or reverse the actual damage we have done. On the other hand we could arrest the process of damage and/or diverge to a new, less damaging future than say one of human extinction, major climate change and “ocean death” for example. In time, with energy from the sun, life in the earth’s biosphere also could evolve new complexity.
Science, technology and sheer human ingenuity could help us back out of this particular pickle. But they would have to be wielded in a new and very humble spirit before the power of nature. I say this not in any pantheistic or nature-worship manner but simply in a precautionary sense of paying a lot more attention to the possibilities of unforeseen consequences and working more subtly along with nature rather than trying to dominate it or sweep it aside, the latter two being impossible of course.
Obviously you are not aware of the Shakespearean use of “in a pickle” as being in a fix or major trouble. In reality we don’t know very well how our massive CO2 emissions are going to unfold considering the error margins of all the predictions. Indeed this very fact makes the outsourcing of Climate change modelling even more critical.
Further, major steps in human evolution have always brought changes in the environment, granted not on the scale as is happening now. Indeed the climate and environment have always changed too naturally. Our species comes from a mob of only about 1500 who somehow made it through the last interglacial and survived the vagaries of the last ice age. The nature of life has for millennia found ingenious ways to suspend your 2nd law of thermodynamics and in fact responds to serious setbacks with increased diversity and more complexity, see previous cataclysmic events in earths history. And of course tomorrow will be different to today, but will it be the kind of doom you are dwelling on, who knows? Similar, your estimation of human capacity to develop a way of dealing and adapting with the unfolding changes, are at best just assumptions.
In fact your attitude could be best described as a denier, a denier of the possibility for humanity to deal appropriately with the looming changes and associated risks, with innovation, science and technology. As I mentioned above, it would appear that the critical factor is not science and technology, rather than intelligent and responsible governance.
@Ootz
I know what the idiom of being “in a pickle” means. That was clear from my response as I joked around a bit. 🙂
But I am not being critical of you. As I recall, you are bilingual at least and you clearly know English very well even if it is your second language. You are well ahead of a monolingual English speaker like me when it comes to language knowledge.
1. I agree, there are error margins in Climate modeling predictions.
2. I agree, “major steps in human evolution have always brought changes in the environment”. I also agree “climate and environment have always changed too naturally”. Life on earth has “suspended” the 2nd law of thermodynamics as you say but only in the sense that it has used solar energy (energy from outside the earth system or biosphere) to increase complexity in the biosphere. This sense is important and indeed crucial as you indicate. So again we are in agreement.
You also said, the biosphere “in fact responds to serious setbacks with increased diversity and more complexity, see previous cataclysmic events in earths history”. I would quibble only with the “increased diversity” part only if it was being implied that the biosphere would always respond with increased diversity (though there are ways I can see where that would mostly happen). And things can go on like this until the sun “burns out” in about 5 billion years time.
I think we would both agree that the earth’s biosphere could eventually recover from a serious contemporary setback be it plus 6 degrees C of global warming from human generated CO2 emissions or a super-volcano eruption from the Yellowstone caldera, USA, or the Lake Taupo super-volcano caldera N.Z., for examples. However, the key point here is the time-span for a recovery, especially of the “new total evolved complexity of life” if I can call it that. The time-span of recovery is going to be enormous compared to human civilisational time spans and even enormous compared to the likely species lifespan of homo sapiens before its extinction.
As they might have said on Star Trek. “Life will recover Jim but not in the time span of our civilization.”
3. We even agree that “the critical factor is not science and technology, rather than intelligent and responsible governance”. Probably what we disagree on is the likelihood of that intelligent and responsible governance coming out of our current system. I pretty much see our current system as corporate capitalism and I see representative democracy within it as being critically weakened. I can’t see us saving ourselves without changing to a system of eco-socialism. That’s not to say it would be certain even then but I think our chances would be considerably improved.
@Ootz
Those forward error margins used by modellers have since been validated by observation eg http://onlinelibrary.wiley.com/doi/10.1002/grl.50541/full
Thanks for that rog, in a way it is a good illustration for my argument to avoid blanket claims like “Human technology is puny compared to the forces of nature.” Also, it reinforces the absolute irresponsibility to reduce the scientific endeavour to model and forecast with better resolution of what is in stall for us climate wise.
And again how irresponsible for the only national newspaper to yet again flog John Christy’s critique on climate models solely based on ground and atmospheric temp. So Ikonoclast, I suggest rather than railing against old religion you should focus on the new high priests in msm. And what about this dingbat venture capitalist CSIRO boss to say that row over climate science cuts ‘more like religion than science’. Not to mention the new Deputy Prime Minister of $100 lamb roast fame? Hence, I still argue for us not to fall into the trap of making wholesale statements and to mitigate or simply cope effectively with the actually eventuating changes in climate, we need intelligent and responsible governance.
I haven’t propitiated you by indicating lots of areas of sincere agreement.
“Human technology is puny compared to the forces of nature.” This is a blanket statement and for that my apologies. It needed a “relative” clause. “Human technology is puny compared to the larger natural forces of the earth, solar system and cosmos.” On the other hand, if technology is strong enough to disrupt the climate it might be strong enough to ameliorate that disruption. The “might” is necessary to stipulate because some processes are difficult to reverse and others impossible to reverse. This has to do with entropy of course. It could be summed up by saying it’s a lot easier to create a mess than to clean it up. It’s a lot easier to destroy than create.
And as we know, there are likely AGW problems already “baked into” the climate system. There is the possibility that we have passed a point where system progression to climate tipping points might already have been initiated. None of these statements should be taken as me saying we should do nothing.
I am not sure that I railed against “old religion”. I indicated its point of view and mine in a very limited way on one topic, that of first cause. I agreed we need “intelligent and responsible governance”. I do not think we will get it under this system which is hard-wired to expand production without taking negative externalities into account. The “new high priests in msm” are shills, pens for hire. They write what this system demands of them. To remove their lies and obfuscations from the discourse at this stage would require the removal of oligarchic capitalist power in the msm at least. This could all change. A salutary climate disaster (say a rapid collapse of ice shelves causing a sea level rise of 500 cm in a decade or the failure of an ocean conveyor current) could frighten even the oligarchs.
Correction above: In my example I meant 50 cm in a decade. That is feasible though hopefully not likely. A rise of 50 cm in a decade would do massive damage combined with storm effects including more powerful storms.
No worries Ikonoclast, there are many issues I agree with you too and I like your thinking aloud approach on this thread, in an attempt to make sense of the complexity of the problem.So, please understand that I am supportive of the gist of your narrative outlined above, I am just not ready yet to write the obituary to humanity yet. One should never give up hope and let us not forget that yesterday we got in touch with one of the universe most profound events still gravitating through space.
“To remove their lies and obfuscations from the discourse at this stage would require the removal of oligarchic capitalist power in the msm at least. This could all change. A salutary climate disaster”
I would have thought, the Arab Spring, Syria and the recent burning of the ancient World Heritage forests in Tasmania were “salutary”. However, with all the other major destabilising factors such as population growth, inequality and global economic roller coaster, it may not necessary be climate which will be forcing change. Global military forces call climate change a “threat multiplier” and most are taking it seriously except here!
Admiral Chris Barrie, the former chief of the Australian Defence Force
Given the treatment CSIRO just got, it will be interesting to see how much of Chris Barrie’s advice above has been taken aboard in the delayed new Defence White Paper due in April.
/Sorry, moderation issues again (2 links) so will split the offending comment
No worries Ikonoclast, there are many issues I agree with you too and I like your thinking aloud approach on this thread, in an attempt to make sense of the complexity of the problem.So, please understand that I am supportive of the gist of your narrative outlined above, I am just not ready yet to write the obituary to humanity yet. One should never give up hope and let us not forget that yesterday we got in touch with one of the universe most profound events still gravitating through space.
“To remove their lies and obfuscations from the discourse at this stage would require the removal of oligarchic capitalist power in the msm at least. This could all change. A salutary climate disaster”
I would have thought, the Arab Spring, Syria and the recent burning of the ancient World Heritage forests in Tasmania were “salutary”. However, with all the other major destabilising factors such as population growth, inequality and global economic roller coaster, it may not necessary be climate which will be forcing change. Global military forces call climate change a “threat multiplier” and most are taking it seriously except here!
Admiral Chris Barrie, the former chief of the Australian Defence Force
/continue from above
Given the treatment CSIRO just got, it will be interesting to see how much of Chris Barrie’s advice above has been taken aboard in the delayed new Defence White Paper due in April.