The eagerness with which the Adani board announced an indefinite deferral of the Carmichael mine project today speaks for itself. As has long been conjectured by everyone with an understanding of the hopeless economics of this project, Adani has been looking for an excuse to walk away and blame government obstruction. Not only do they get to defer writing off the billion or more they have already invested, but there is the prospect of extracting some kind of compensation. At worst, they have a story to tell the financial markets in India that’s a bit more appealing than “we bought a worthless asset at the top of the market”.
The Palaszczuk government’s mishandling of Adani’s bid for a royalties holiday gave the company the excuse it needed. Until now, the government had bent over backward to avoid appearing obstructive, while holding the line on putting in no financial support. If they had stuck to that when the holiday idea was floated, all would have been well. As it is, they are likely to bear the blame for Adani’s mistakes.
In the broader scheme of things, the outcome is, of course, a good one. There was always the remote chance that Adani might push ahead with the scheme, and now that appears to be dead. But the political cost to Queensland Labor will be huge.
John Quiggin 
It’s not that hard to outmanoeuvre a chair. Palaszcuk has a position fixed by the Murdochracy and her unwillingness to disquiet the elite of tgis country. You could walk around that much as a child pkaying musical chairs alone might do before sitting down and declaring him or herself the winner.
Palaszcuk et al may still do the royalities scheme as it involves no real money as the mine will not go ahead for the obvious economic reasons. Hence the gov will look good but with no real cost. Those against the mine have nowhere else to turn to vote anyhow.
News report.
Looked like one of those games of chicken where both knew it wasn’t going ahead but didn’t want to say so first, each was trying to get an economic boost by getting the other to chuck more good money after bad.
JQ: ” … but there is the prospect of extracting some kind of compensation.” Can’t the Queensland govt. countersue Adani for breach of promise, alienation of affections, champerty, mortmain, being foreign, or something? That way the lost mining jobs will be made up for by higher-value lawyering jobs on both sides for a decade.
Fascinating. I was wondering about Adani again after a particularly vicious Courier Mail Editorial and really felt the politics over some time has been Byzantine and wedge, as much to do with Murdoch and Turnbull as patsies like Palaszcuzk.
To tell the truth, I actually felt sympathy for the QLD government after the Courtier Mail editorial as the crowning glory to a long term and destructive disinformation/consent manufacture campaign aimed at discrediting a weak state government (as are all state governments) in the interests of the development at any every cost claque that now runs this country, with its shonky back room manipulations and deals.
Ahh.. whaddya know. Fran Barlow “gets” it too.
I must admit I find JQ’s contention that an alleged Labor carefulness as to indulging Adani in a ” royalties holiday” amounted to a “mishandling”.
How many more gifties do these people need for a project that appears to offer Australia so little in return?
The purported project benefits are illusory.
1. The tax depreciation on the mine and rail mean it will likely never pay company tax for decades (similar to gas projects)
2. The mine and rail will be partially automated meaning little regional employment in the operational phase and therefore little pay roll tax
3. The mine has admitted it will not be expanding the Abbot point coal terminal for the initial development and therefore limited employment within larger coastal cities
4. The argument that it is cleaner than Indonesian coal and is needed to bring millions out of poverty is nonsense given cleaner coal can be procured from the Bowen and Gunnedah basins within the existing infrastructure capacity.
5. The mine output will probably displace higher value coal through the terminal which will pay higher royalties
6. There is no mine gate price to calculate royalties so they are likely to periodically dump coal to establish a low mine gate price for royalty meaning it will pay little royalty on the transfer priced coal even without the holiday.
7. The use of public funds must be able to demonstrate alternate ‘likely demand’ from non-coal markets which is the primary basis for public funds in port channels (multi-user and long term growth with wider economic benefits). Not mine specific assets to underwrite sub-economic projects.
I think the Carmichael Mine has now joined the Bell Bay pulp mill in that mysterious limbo where dwell the shades of environmentally disastrous project proposals that have been denied a decent Christian burial by the governments that boosted them.
I still think that a leader and party that just stood up and told the truth about everything would be a such a breath of fresh the public would respond to it. No lies, no spin, just plain truth all the way. Perhaps deliver it in a folksy way. “Look everyone knows Adani are trying to get free money from the taxpayers of Queensland. That’s not happening on my watch. If the mine was truly commercially feasible they would build it. The banks would lend to them if the project was feasible. The fact that they can’t get the loans tells you what the banks think of the project… and perhaps it tells you what the banks think of Adani.”
JQ has shown heroic self-denial in not calling it a zombie mine.
The Adani mine was always doubtful and the Queensland Premier showed quite clearly she and her party should not be in power.
always doubtful to get rid of a government after only one term. Oppositions are rarely ready to govern and this is simply more evidence of this.
Having invoked the Ghost of Pulp Mills Past, I can’t forbear to add that the Palaszczuk government has reduced itself to the same abject position with respect to Adani and the non-mine as Robin Grey’s Tasmanian Liberal government did in 1989 with respect to Noranda and its non-pulp mill at Wesley Vale.
I was surprised at the apparent willingness of the Palaszczuk govt to lay down with this particular dog, perhaps the ALP need to be in a Green coalition to lift their game.
Is Adani just putting pressure on the royalty agreement? The demand for coal in India is still growing strongly – it still provides 40% of total world electricity. Still strong coal demands in many other Asian countries as well. Of course, the case for concessions by the Queensland Government of economic illiterates (& by pressures from Barnaby) is weak.
I met an Indian cabinet minister a year ago and he told me India was not in a position to worry about climate change.
https://www.bloomberg.com/news/articles/2016-12-12/global-coal-demand-to-stall-as-india-props-up-growth-iea-says
@hc
India is banning coal imports from 2020.
@billie
That’s the claim and will presumably impact on Adani. But the move is entirely mercantilist – they seek to rely on Indian sources of coal to “save money”. Meanwhile demand continues to grow strongly in Vietnam, Indonesia and many other Asian countries. And import demands from China remain massive.
@hc
Indonesia is a competing exporter. South Korea, the largest importer after China, India and Japan, is likely to reduce coal use following the recent election. Vietnam has given mixed signals, but will certainly not import as much as previously planned
http://reneweconomy.com.au/south-koreas-new-president-likely-curb-thermal-coal-imports-54886/
competition in gas is hotting up as well.
the US is set to export fracked coal seam gas.
can some one in terms simple enough for an idiot let me know
why the price of gas in OZ, seems to be both to low and too high at the same time?
there are manufacturers hit with price hikes they could never have anticipated and gas purveyors saying competition is driving prices too far down.
what gives?
@John Quiggin
The demand for coal will grow – yes, not very quickly – at least through to 2040. The big consumers – China and India.
https://www.eia.gov/outlooks/ieo/coal.cfm
Indonesia (and India)) as competitor(s).
But isn’t their coal of a lesser quality than ours and not suitable for the sort of work our coal is best at. In fact, alternative sources in Qld itself are far better for fulfilling the task Adani might would use coal for than Carmichael.
@hc
It’s always a mistake to treat projections as forecasts, especially “reference case” projections. But even making that allowance, the projections of the EIA and IEA have been consistently wrong, overestimating coal and underestimating renewables. Everyone who follows the debate knows this. I’m surprised you don’t.
@John Quiggin
I think they are widely-used as projections but I agree they have been widely criticised, particularly by those supporting renewables. And the IEA have recently cut their projections of Chinese coal usage. But they still see these cuts as being more than offset by increases in demand in countries like India and among the relatively poorer developing countries. Most development efforts around the world – perhaps outside sub-Saharan Africa – are working and much-increased coal (and other resource) demands will emerge as many of these countries move towards middle-income status.
In the past the IES significantly under-forecast coal demands by countries such as China so that I am not sure that it is reasonable to claim they consistently overestimate these demands.
http://www.theenergycollective.com/schalk-cloete/2172041/evaluating-fifteen-years-iea-energy-forecasts
I miss Will Boisvert, for long the lonely defender of nuclear power on this blog. He knew his stuff. HC is a poor substitute as a coal defender. The case boils down to an assertion that Modi and Goyal are idiots. Modi is ethically questionable and his party flirts with a nasty type of nationalism, but he’s a politician of outstanding skills. Think Lloyd George. Goyal is a capable technocrat. Their bold energy policy is working just fine.Australians may have forgotten what a competent government looks like.
Worth reading:
https://arstechnica.com/science/2017/04/whats-next-for-solar-energy/
@James Wimberley
“as a coal defender”. What nonsense – I am no such thing. But reasoning should be based on what you think will happen not what you would like to happen.
JQ, I’ll make a comment and ask for your opinion of it. The Carmichael mine is about to fall over, basically for the reasons that you have consistently outlined here, but the Australian political class doesn’t understand that this is the case, or why it is the case (the exceptions being the Greens and those ALP politicians who have recently positioned themselves to be prophets and advocates of the project’s doom).