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.