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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What do we do with a problem like #Adani

Inside Story has run an updated and expanded version of my last post on Adani’s pretense that it is ready to start its mining project at a moment’s notice. The main new point is a suggestion for how a federal Labor government could close off the Galilee Basin without a general moratorium on new coal mines.

If federal Labor wins government in May (as seems highly likely), it will need to face up to the issue later this year. First of all, it will need to develop a coherent policy on phasing out coal exports — ideally involving a ban on new coalmines, though this is almost certainly too much for Labor to contemplate. That proposal also faces the counterargument, put forward by both mining companies and unions, that reduced Australian exports would be replaced by lower-quality coal from other countries.


The argument has some force, but there’s a way of taking it into account. Australia’s benchmark export is Newcastle coal, with an energy content of 6000 kilocalories per kilogram and a correspondingly low ash content. The premium for this higher-quality coal has risen greatly, though it has declined somewhat in recent years. Galilee Basin coal’s heat content, by contrast, is estimated at less than 5000 kcal/kg, and its ash content is 26 per cent, worse than coal from many competing countries. A policy that stops short of a blanket ban but requires new mines to supply coal of, say, 5500 kcal/kg or more would put an end to any idea of developing Galilee, while allowing for some smaller, higher-quality projects to proceed.

Further suggestions would be appreciated.

Adani’s Potemkin village

Throughout the long struggle over Adani’s Carmichael mine, I’ve argued that the project, as well as being environmentally disastrous, is not financially viable. Adani’s objective has been to keep the project alive, both to avoid bringing the loss of money already spent on the project and to maximize the chance that an Australian government will either pay them to go away or stop the project in a way that leaves open the possibility of a claim under the insidious system of Investor State Dispute Settlement, which still applies between Australia and India, even though our trade agreement has lapsed.

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Adani update

A week ago, I was speaking at a Royal Society of NSW Forum on the topic “Getting climate policy back on track” when the news came through that Adani had announced a start to the Carmichael mine “before Christmas”, funded from the company’s own reserves.  With Christmas now less than three weeks away, where do things stand?

It’s evident that, as with previous construction starts, this one won’t be on a large scale. Adani has just posted its first job opening for a year, on the portal it set up with great fanfare in mid-2017. It’s for a Senior Mine Planning Engineer a “newly changed and developed role reporting to the Head Mine Operations”.  Given that Adani has announced a proposal that’s radically different from the one they were running last year, you might have expected that a Senior Mine Planning Engineer would have been on the job for some time, heading a substantial team. Still, it’s likely that some kind of activity will take place, even if it’s only symbolic.

The big question is how Labor will respond, since it’s highly likely to be in office by the time any serious mining activity starts. So far the signs have been mixed. Queensland Premier Palaszczuk has said, correctly, that this is effectively a new proposal, and will need new approvals. On the other hand, Penny Wong has suggested that, once contracts are signed, the dreaded spectre of “sovereign risk” will mean that the government cannot intervene.  This is a bogus argument in the specific case of Adani, but the whole idea needs to be challenged. Governments routinely break their promises to voters, and corporations regularly renege on their commitments to governments, but, in the era of neoliberalism, promises made by governments to corporation have come to be held sacred.

Adani

Adani Mining announced today that its scaled-down Carmichael mine project would proceed without any external funding. Before considering reactions, it’s important to recall causes for scepticism.

First, Adani has repeatedly announced the imminent start of the project, while doing little or nothing. It is possible that this announcement will be followed by months, or even years, of “pre-construction activity” during which the project is kept alive with minimal expenditure from Adani.

Second, the economics of the project are as bad as they have ever been. Thermal coal prices have declined in recent months, especially following China’s decision to freeze imports. If China gets through the winter without significant problems, it is likely that the decline will be permanent. Even if it isn’t, the discount on low-quality coal =of the kind found in the Galilee Basin is rising all the time.

Third, the failure to secure any external finance for the project is significant. Most of the big lenders have now sworn off thermal coal altogether, but if there were real money to be made here, some second-tier institution would probably have gone for it.

So, it would make sense to wait for a while to see what develops. Still, we need to be prepared for a decision on whether Australia is going to back a future for coal, and destruction for the global environment or a moratorium on new mines. Labor under Bill Shorten has been surprisingly brave on issues like tax, and our Trumpist government is in a complete mess. A strong stand would be a huge step towards a better future.

Incredible shrinking #Adani still a threat

Adani has just announced another scaled down version of its proposed Carmichael mine, bringing the initial capital cost down to $2 billion, and the estimated  initial output to 10-15 million tonnes a year. As usual, the claim is that financing will close in the near future.

Unfortunately, it is possible that this time the project will go ahead. The Indian Supreme Court has reopened the possibility that Adani may be able to pass on to customers the costs of imported coal for its Mundra power station.

That doesn’t change the fact that the project is economically unsustainable in the long run, as well as being an environmental disaster (though not as big a disaster as in its original version).  But the cost is now low enough that, if Gautam Adani is willing to put in enough of his money, he may find lenders willing to finance the rest.

At this point, it looks as if Labor will have to get off the fence, on which has perched for so long. The world needs to stop opening new coal mines, and Carmichael is a good place to start.

 

The Coal Cartel ? Why Adani’s prospects haven’t improved

In my recent piece in The Guardian, mostly about Adani, I observed

The paradoxes of Adani are mirrored in the global coal market. Despite a small increase in 2017, global coal production is below its 2013 peak. Yet prices have recovered strongly, yielding big profits to existing miners and offering a seemingly tempting prospect for new mines.

It turns out that this isn’t quite right. The benchmark Newcastle price, for low-ash coal with a heat content of 6000kcal/kg has risen strongly, to the great benefit of companies like Yancoal, Glencore and Whitehaven. It turns out, however, that this increase isn’t representative of the broader market. Prices for lower quality coal with lower heat content and higher ash content haven’t moved at all, with the result that the premium between higher and lower grades has grown dramatically.

What’s going on here? One possible explanation is that Yancoal and Glencore, who produce the majority of Australia’s high-grade coal, have engaged in successful cartel behavior. Another is that the premium reflects shifts in demand (with China and India increasingly rejecting high ash coal, while Japan continues to demand high grade coal) and supply (few new mines are opening, and this has a bigger effect on the smaller market for high grade coal).

Whatever the explanation, most analysts agree that it is more likely to be resolved by a decline in the price of high-grade coal rather than an increase in the price of low-grade coal.

Where does Adani fit into all this. Most of the discussion I’ve found focuses on the premium between 6000kcal/kg and 5500 kcal/kg. Coal extracted from the Carmichael mine would be much lower quality, below 5000 kcal/kg.