Amid the coronavirus pandemic, the climate crisis rolls on, slowed a bit by the economic impact of travel restrictions. The campaign to stop carbon dioxide emissions, including those from the Adani Carmichael project, has to continue as well.
It’s now almost a year since Adani Mining gained the final environmental approvals for the construction of the Carmichael mine and rail project. At the time, the company promised to ramp up construction in a matter of weeks, with at least 1500 jobs in prospect during the construction phase. What has happened in the subsequent year. Three points stand out
First, the project is proceeding, but it can still be stopped. Work on the site continues and contracts said to total $1 billion have been announced. Nevertheless, the progress so far has been much less than might be expected if, as announced, the mine is to be exporting coal by next year.
Second, in global terms, the news for thermal coal has been remorselessly bad. Demand for coal-fired power has crashed in many countries, closures and cancellations have been announced regularly and major corporations and financial institutions have divested their assets
Finally, there is still no sign of the promised jobs bonanza.
What is happening on the site?
A number of recent announcements suggest substantial progress. The most notable are
* A $350 million contract with BMD for the construction of the rail line, including rail camps and other works, for a total of more than $1 billion in contracts.
* The completion of an airstrip permitting Fly In Fly Out (FIFO) operations
* Completion of the first of three camps for workers to construct the railway
However, throughout the long and troubled history of the project, Adani has made announcements of progress that turn out to be overstated. For example, the claim that more than $1 billion in contracts have been issued repeats an earlier claim. Many previously announced contracts with Downer EDI, Kepco and other large companies have come to nothing.
The airstrip (pictured here) was macadamized in March, and is nothing like the $35 million airport Adani initially proposed to build, to be financed by Townsville and Rockhampton city councils. It’s unclear whether it would be suitable for the large planes that would be needed for a FIFO operation with 1500 workers as claimed.
The contract for the construction of rail camps was announced in November 2019. The construction of one camp in the subsequent seven months is much less progress than might be expected for a rail line that is supposed to be operational next year. Satellite imagery suggests modest progress at best beyond this development, though even this is sufficient to cause substantial damage to the local environment.
Meanwhile the coronavirus is said to have cost Gautam Adani $1.5 billion of his $9.2 billion fortune, which raises the question of whether he can afford to sink $2 billion into a project that seems unlikely to generate any significant cash flow at current coal prices (see below)
Much of the loss has come from a decline in the share price of Adani Power, the presumed customer for Carmichael coal. The Adani group has proposed to delist the company, repurchasing all its shares, a transaction that has been highly controversial in India
Overall, it is clear that the project is moving forward slowly. But, it still appears possible that Adani can be stopped by a combination of the global decline in thermal coal and continued pressure on every aspect of the production chain, from insurance and finance, through the construction of the mine and rail line, the financing of the Abbot Point coal port and the cronyism surrounding Adani Power’s dealings in India and Bangladesh.
An important example emerged recently with the exposure of a number of insurance companies that have outstanding contracts with Adani, negotiated through broker Marsh (a disgusted Marsh employee leaked the info). Most of these contracts are nearly expired, and Adani will need either to renew them (some of the companies have said this won’t happen) or look elsewhere, such as to US company AIG, which still has no serious climate policy. You can take action here https://www.marketforces.org.au/liberty-mutual-hdi-talanx-and-aspen-revealed-as-adanis-insurers/ and here https://www.marketforces.org.au/adani-could-be-doing-an-insurance-deal-with-lloyds-canopius-and-axis-capital/
The global decline of thermal coal
In the year since Adani got its approval, the global outlook for thermal coal has worsened, steadily at first, and then rapidly in the wake of the coronavirus pandemic. In most of Europe and the Americas, coal-fired power is disappearing fast. Sweden and Austria closed their last coal-fired power plants earlier this year, and most EU countries have committed to a phase-out by 2030 (in many cases, by 2025). In the US, renewables now generate more electricity than thermal coal, which is likely to account for no more than 10 per cent of generation by 2030, while Canada has promised a complete phase-out.
Although China has continued to develop and finance coal projects, other Asian countries, most notably Korea, have gone the other way. In India, it is already clear that solar PV, even with firming is cheaper than new coal. Most Indian electricity generators, including Adani, are moving in this direction, even as Adani pushes ahead with projects that rely on political connections to secure an above-market prices.
The rise of renewable energy has been reflected in a sharp decline in the market price of thermal coal, which has fallen 40 per cent since the revised version of the Adani project was announced in November 2018
The central claim made in support of the Carmichael project is that it will generate large numbers of jobs. All sorts of numbers have been bandied about, but the current claim is that the construction phase of the project will generate 1500 direct jobs and many more indirect jobs. A year after the final approvals, and halfway to the announced date for shipping the first coal, there is no sign of these jobs.
Adani’s own jobs portal is currently advertising only a handful of jobs with the company. The “Carmichael jobs” website which includes ads from contractors such as Martinus rail, as well as Adani itself, has advertised less than 30 jobs in the last month. Adani is currently claiming that there are 500 workers on the project, a number that is almost certainly overstated.
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