Adani mirage fading

Adani Mining has just received the final approval from the Queensland government for the Carmichael mine in the Galilee Basin. According to this report from February, citing a “top Adani Group executive”, operations should start in August 2016, which would be a disaster for the global environment.

But wait! Now it seems yet more “secondary approvals” are needed (it appears this refers to a bond for cleaning up the mess afterwards), and “we hope that construction would start any time in 2017”.

There’s more interesting stuff in the report.

He said the price of coal was not the main issue in determining the viability of the project, but rather the cost at which the coal could be mined as the company already had a price agreement with the Indian government.Adani Mining CEO Jeyakumar Janakaraj claims there’s no need to worry about the price of the coal they produce “We are an integrated player. We have sold electricity in India on a long-term price.

‘‘It is not about the price point of coal, it is about the cost point, at what cost can we produce coal so that we will always be able to make a profit with the electricity price that we have already sold,”

The reference to the Indian government is pretty cheeky, given the government policy of eliminating coal imports over the next few years, which looks to be on track to succeed. (it’s currently a little behind its targets for increased production, but that’s because of weak demand).

More importantly, Janakaraj’s claim that “We are an integrated player” suggests he does not know much about his own business. Adani was an integrated enterprise when the project began. But the restructuring of the Adani Group in 2015 separated Adani Power (the electricity producer with a diversified portfolio of coal-fired power and renewables) from Adani Mining, which holds the stranded assets like Carmichael. This analysis from IEEFA spells it all out. Adani Power would be breaching its fiduciary obligations to shareholders if it paid an above market price for coal from Adani Mining.

I found a response from Adani, which illustrates one of my favorite points. When you have no answer to a damning report, say that it is “flawed“. That’s true of just about anything, and saves you the trouble of an actual response.

28 thoughts on “Adani mirage fading

  1. Paul Norton :
    Ivor @16, I think an ecologically sustainable economy, if achieved, will not be capitalist. .

    Yes, and the more people who come to this realisation, the better.

    So far – except the Yugoslav 1976 Associated Labour Act – no model exists of any practicable “ecological sustainable economy”. But you have to be acquainted with Karl Marx in the original to see this.

    In Australia, “ecological sustainable economy”, seems to be little more than a nice, poetic concept.

  2. I suspect the Qld government’s support for the project is precisely because they know it aint gonna happen. From their POV the politics would be much more difficult if the thing was financially viable.

    If that was the case if they blocked it on environmental grounds they’d lose votes as being “anti jobs” while if it went ahead they’d have much more problem dealing with the sane greenies (including those in their own cabinet) during construction and operation. The best possible outcome for them is to be able to say “well we tried but the price of coal is just too low – can’t be helped”.

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