Adani’s silent partners

A month after Adani got the final approvals for its Carmichael mine, it’s still hard to work out what’s going on with Adani and the Galilee Basin in general. Adani has been making a fair bit of noise, but the project still seems to consist of tree clearing and road building.

To get past this stage, and without significant in-house experience of major projects, Adani needs partners: engineering design firms, construction contractors, and so on. And even if no external funding is needed, the project still needs insurance, which is getting harder to come by.

Adani claims it has insurance lined up, but declines to say which firm is providing it. Assuming the claim is true, the obvious explanation is that the insurer is worried about reputational damage from being associated with such a toxic project. Presumably, that concern will be reflected in higher premiums.

The same is true as regards engineering. It’s widely rumored that global firm Gutteridge, Haskins and Davey will get the job, but so far GHD has refused to comment. As well as reputational damage, GHD needs to consider the fact that Adani has burned a string of previous contractors. They are still fighting their last partner, AECOM over a payment of $12 million. AECOM must surely be regretting ever getting into bed with Adani, ending up losing their money as well as their reputation.

Any firm looking at this history, and tendering to Adani, would want a high price and money up front for its services, as well as trying to keep its involvement as quiet as possible. That in turn raises the question of how a project that was marginal to begin with can manage to pay over the odds for everything it needs. This at a time when a company like Whitehaven is relying for its continued profitability on the assumption that existing producers will leave the market.

On the jobs front, Adani has been advertising positions in its Townsville office (about 60, as of today). But that’s barely enough to replace the cuts made last year. There’s no sign of the promised thousands of jobs so far.

Adani again

In pointing out that Adani’s Carmichael mine wasn’t viable without government help, I focused on the possibility of a concessional loan from Australia’s Export Finance Insurance Corporation. As commenters have pointed out, Adani (a prominent crony of Indian PM Modi) looks like being able to charge above-market prices for electricity in India. I’m not clear whether this helps much to make the Carmichael project viable. Over the fold, an exchange I had with Charles Worringham.

In other news, it seems likely that Adani will move fairly slowly even after the environmental clearances come through. They’ve announced on their Facebook page that they are filling “more than 50” positions for pre-project work, and there are a dozen or so HQ jobs listed on their jobs portal. That’s a long way short of their announcements in January that they were ready to start digging the moment they got the go-ahead.

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Explaining Adani: why would a billionaire persist with a mine that will probably lose money?

That’s the title of my latest piece in The Conversation, republished on the ABC website. Possible answers

So what could be going on? Perhaps Gautam Adani is willing to lose a large share of his wealth simply to show he can’t be pushed around. Alternatively, as on numerous previous occasions, his promises of an imminent start to work may prove to be baseless.
The third, and most worrying, possibility is that the political pressure to deliver the promised Adani jobs will lead to a large infusion of public money, all of which will be lost.
The $900 million Adani sought from the Northern Australia Infrastructure Facility in 2017 would be enough to keep the project going for a couple of years, without the need for Mr Adani to risk his own money. It now appears that a similar sum might be sought from the Export Finance and Insurance Corporation.

Adani’s moment of truth

The political campaign against Adani’s Carmichael mine has failed. That’s a big shift from the last Queensland state election, where the state government gained support in the south-east and held on to it in North Queensland. Obviously, Bob Brown’s convoy was counter-productive, perhaps disastrously so, and this failure will undermine any future direct action campaign in the region.

Given the election outcome, the approvals made by the Federal government will stay in place, and the Queensland state government is under immense (I would judge irresistible) pressure to expedite the remaining processes.

But we have been here before. Most of the approvals[1] needed to begin work were completed in 2016, at a time when both the Queensland and Federal governments were highly supportive (Anna Palaszczuk cut the ribbon at the opening of Adani’s Townsville regional HQ in 2017). At the time, I wrote

In summary, we appear likely to find out what happens when a dog catches the car it has been chasing. Adani and its backers have been denouncing green tape and “lawfare” as the only obstacles to the bonanza they have on offer. Now, the legal and administrative obstacles are gone, so they have only to line up the money, rehire the contractors and announce the starting date. My guess is that this will never happen.

That’s still my guess, three years later. The economics of the scaled down project still don’t stack up, and the problems with finance and contractors are even greater now than in 2016. However, there’s nothing more I can do to influence the outcome, so we will just have to wait and see.

Update: I meant to add that, if the project does go ahead, it will almost certainly involve a substantial injection of public money, which will not be recovered. Adani has plenty of form in this respect.

fn1. Obviously, not all of them. But if Adani had wanted to start work in 2016, they could have done so, and, given bipartisan political support, would certainly have found a way to deal with any remaining clearances. In fact, they announced they would be starting work then, and reannounced it in 2017.

Return of Adani’s big yellow grader

Adani’s chief executive Lucas Dow is yet again claiming that the company is “ready to go” with the Carmichael mine, as soon as the government approves it. As usual, we get a picture of Adani’s fleet of heavy earthmoving equipment, consisting of one big yellow grader.

Adani’s $2 billion at work

At least the journalist visiting the site shows a bit of scepticism this time, noting that Dow’s claims that he could start today, made while standing next to a 5-metre wide strip of cleared scrub, require a bit of imagination.

Just for fun, I thought I’d work out how much of Adani’s supposed $2 billion budget is being spent on this piece of theatre. From what I can see, graders like the one in the picture can be hired for $1-2000 a day, which would give a total of at most $250 000 since the latest go-ahead was announced late last year. I imagine Lucas Dow could just about finance that out of his pocket, without needing to call on Mr Adani’s much greater resources.

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Adani: always read the fine print

Keeping up its flow of announcements, Adani just claimed that it had received 15 000 expressions of interest in jobs at its Carmichael mine, 1500 of them from Townsville alone, “since Adani called for expressions of interest in December.” (Townsville Bulletin, paywalled)

That seemed impressive, and I wondered if all those applications had actually been received since December, as claimed in the Bulletin report. After all, Adani’s “jobs portal” was set up in 2017, and has been accepting registrations ever since.

Given that Adani has announced the imminent start of work on the project several times, it seems likely at least some of those who expressed interest in the past have found better opportunities and moved on. So, are the 15000 expressions of interest all current?

I looked through quite a few links, f which seemed to endorse Adani’s claim of a jobs rush, but finally found one with precise numbers, at the website of Bundaberg radio station 4BU, which led me to check the Adani website, where I found the press release on which the stories were based. At the bottom of its press release, Adani says (emphasis added)

In December Adani advertised for expressions of interest for people wanting to work at the project. When the December numbers were added to previous registrations, the total was 14,498.

Here’s a report from February 2018, where Adani stated that it had already received 11500 applications of which 18 per cent (about 2000) came from Townsville. The Townsville number is higher than the one they are currently claiming, suggesting that some applications must have lapsed or been withdrawn.

Given these figures, it’s impossible to tell how many applications Adani has received in the two months since it reannounced that it would be taking expressions of interest. Almost certainly, it’s a lot less than the headline figures announced in their release.

That’s not to say that there aren’t still plenty of people attracted by Adani’s promise of thousands of jobs. But it does confirm that, when reporting on Adani, it always pays to check the fine print.


Adani starting work?

A few weeks ago, I commented sceptically on Adani’s announcement that it had moved heavy earthmoving equipment to its Carmichael site. At the same time, Adani flew a banner over its Brisbane office, claiming it was ready to start the mining project the moment it got the green light. As I observed at the time, the “heavy earthmoving equipment” appeared to consist of one large grader and a few smaller vehicles.

The latest news is that Adani is “moving ahead with access work” namely, building by-passes around cattle grids, which “which will allow larger machinery and equipment to be transported to site. ” It sounds as if the start of real work is a long way off.

And here’s our big yellow grader at work.


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