Radio Brisvaani
Despite environmental approval for the project, its economic viability and long-term sustainability are some of the major concerns, writes Devashish Chkraborty
It is now official. The Carmichael Coal Mine project of India’s Adani Group has obtained the final environmental approval from the Queensland state government. The Labor Party’s dismal performance in the general elections seems to have been a major reason why the local government in Queensland felt it necessary to hasten the approval, which had before the elections appeared to be a hurdle difficult to overcome for the Adani Group. The Adani Group’s tenacity to pursue the battles has to be applauded, as the Group has had to face numerous legal challenges over a period of eight years since the project was first proposed.
What has been interesting to discern over the years is that this project has allowed for mainstreaming of climate change and environmental issues as both Australia’s domestic politics and its foreign policy initiatives. However, the environmental approval won by the Group should not be perceived as the end of all troubles for the Carmichael project, rather it is the beginning of what could be an arduous journey for the Group and its supporters and enthusiasts. There are several reasons to ponder over before the project gets a new lease of life.
Economic viability—- the first concern
Winning environmental approval is a significant step for the project, but it may not be enough to make it a reality just yet. The fact that Adani could not elicit positive responses from banks for securing loans to fund the project is going to hurt its plans to start production at the earliest. This is precisely why the scope of the mine project was scaled down significantly last November from the proposed development cost of $16.5 billion initially to $ 2 billion. Whether environmental concerns dissuaded the banks in Australia from granting loans for the project or some other more mundane calculations discouraged them is difficult to discern.
But the ground reality is, sans financial legs the project is already in troubled waters even before it has kick-started. In fact, the output of the mine has been scaled down from its initial target of 60 million tons of coal a year to 10 million tons, though Adani Australia’s chief executive maintains that they might still go for the initially-proposed target. Moreover, even as the Adani Group has found it an uphill task to finance the project in the absence of financiers, they are unlikely to find it easier to find insurers for the project for the same climate change and environmental concerns. And in the absence of insurers the project is not likely to see the light of day.
Market conditions may be challenging
The Adani Group had originally planned to build its own 388 km railway line from the Galilee Basin to its coal terminal at Abbot Point. However, with the scaling down of the project, Adani now plans to build 200km of railway track and connecting to Goonyella line owned by Aurizon, a railway freight company. While Aurizon has no choice but to sit across the negotiating table with the representatives of the Adani Group, it however will be in no haste to strike a deal with the Group. The environmental concerns raked up by the project and with several social groups standing against it, many companies are reluctant to cooperate with the Group and its proposed project.
Left-wing backlash still a threat
Left-wing environmentalists may mobilize their supporters yet again and pose a threat to the project. However, in the light of the fact that the Adani Group has addressed almost all the major concerns of environmentalists and the government related to wildlife conservation in the vicinity of the mine, ground water usage and pollution, and pollution due to burning of coal, it will be unfair to attack the project, which is likely to offer employment opportunities to a large section of mining communities living in Queensland.
Sustainability of the project — a real concern
With coal prices coming down drastically across the globe and countries, especially developed countries, looking for renewal sources of energy, coal production may not offer rewarding revenues to sustain production in future. The Adani Group has mostly argued that the coal produced in the project will be used in its coal-fired thermal power plants in India. This may be the case now, but experts feel that with India announcing that it may not need any new thermal power plant in the country after 2027, the Group’s coal production may not yield rich dividends in future. Moreover, the Indian government has enhanced its investment on renewal sources, which is likely to be a dampener for the Adani Group. Of course, it can look for alternative markets among the developing countries, which are still heavily dependent on fossil fuels for their sustenance.
In any case, analysts believe it may still take a year or two before the project starts coal production, after all other hurdles are removed. While employment opportunities look bright for the mining communities in Queensland, who are going to be the immediate beneficiaries if the project kick-starts, it may still take some time before it really happens. This period may just be enough for the adversaries of the project to regroup and start their protest yet again.
