After years of campaigning, it finally looks as if the Adani mine-rail-port proposal in the Galilee Basin has been defeated. A week after the Palaszczuk government was re-elected on a promise to veto funding from the Northern Australia Infrastructure Facility, the two biggest Chinese banks have announced that they will not be lending to the project either.
The election outcome is particularly striking. Premier Palaszczuk executed a rather inelegant backflip on this question after it became apparent that her weak pro-Adani position was politically untenable (I hope my column on the subject may have had some small influence there). My expectation (widely shared, I think) was that this would cost the government seats in Townsville and Rockhampton, where the local governments had committed millions of dollars to be nominated as FIFO hubs. In fact Labor held all these seats, with the possible exception of Townsville, still in doubt. Meanwhile, the LNP proposal for a coal-fired power station gained them nothing in North Queensland and cost votes in the South-East. With the election over, Adani’s political leverage in Queensland is now non-existent.
The Chinese banking decision also welcome. Although China is rapidly moving away from coal in its domestic economy, the Chinese export finance machine is still pushing coal projects around the world, as long as they use Chinese equipment and expertise. Perhaps this announcement is part of a broader change, or perhaps the Carmichael mine project is too much of a dog even for pro-coal lenders.
There’s still one cloud on the horizon (trying to work out a pun on Aurizon here, but failing). The former QR has a competing proposal before the NAIF, seeking funding for its own rail line connecting Abbot Point and the Galilee Basin. This is a revival of a project put forward in partnership with GVK Hancock, which owns three prospective mine sites: Alpha, Alpha West and Kevin’s Corner. Aurizon abandoned the project in 2016, but revived it to the point of a proposal to the NAIF.
The Aurizon proposal would involve the public lending money to an Australian company with substantial assets. On the other hand, the GVK coal mine project makes Adani’s Carmichael look like a great investment. GVK defaulted on half of the purchase price owed to Gina Rinehart’s Hancock Prospecting and remains massively in debt, with heavy accumulated losses and with the banks declaring the company’s debt as non-performing. The company’s namesake and founder GVK Reddy, has just resigned as Managing Director of the main company in the group, GVK Power and Infrastructure. Even with a bump in the price of coal, it seems impossible that this project can proceed any time soon.
The same is true, for similar reasons, of Clive Palmer’s Waratah Coal.
So, if Aurizon went ahead, it would depend on Adani somehow finding the money to start up the Carmichael mine, and the willingness to pay enough to make the rail line profitable. That seems highly unlikely, but with a project as potentially destructive as this, it’s important not to relax until it has been finally abandoned.