Adani hits panic button over Carmichael coal mine

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Just as Adani’s demand of Turnbull is ham-fisted, his sense of timing is symptomatic of why the project is in deep, deep trouble.

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In a seemingly desperate move the billionaire chairman of Adani has announced that early in November he met the new Australian Prime Minister, Malcolm Turnbull, and demanded legislation be passed to extinguish legal actions challenging the proposed Carmichael coal mine.

On Saturday, a little over a month after his meeting with Turnbull, Gautam Adani complained to journalists that legal challenges against the $15 billion mine, railway and port project had caused banks to refuse to finance the project.

“Ultimately, a decision lies with the politicians. They have to go to Parliament for enacting a special law which says that once government gives approval, no one can challenge it. That is what our request is to the Australian government. You come up with a special legislation which they have done in the past also,” Adani complained.

“Even though there is no stay, because of the judicial review, no lender will finance the project. They do not know what will be the outcome,” Adani told journalists, including the Indian business news website LiveMint.

Adani also bemoaned the dramatic slump in thermal coal process in the seaborne coal market. “In the meanwhile, coal prices have also slumped. We have to revive to the next cycle,” he said.

Adani’s loneliness on display

Adani’s comments, which reveal how isolated the company has become, are extraordinary for three reasons.

Firstly, the fact that Adani has chosen to go public just over a month after the November 4 meeting suggests that Turnbull didn’t immediately accede to Adani’s demand to extinguish the legal rights.

In other words, having failed with his behind-the-scenes lobbying, the company is now pinning its hopes on publicly pressing its case via comments to Indian journalists.

That Adani thinks his brazen demand is likely to play better when made public reveals just how out of touch the company is with the public mood.

Just as Adani’s demand of Turnbull is ham-fisted, his sense of timing is symptomatic of why the project is in deep, deep trouble. At a time of phenomenal smog problems in both New Delhi and Bejing – with coal burning being a significant contributing factor – Adani lets fly at Turnbull.

Nor does Adani seem to be aware that in the middle of the Paris climate talks, which have been buoyed by reports that greenhouse gas emissions might have declined this year and the phenomenal growth in renewables, it’s not a good time to be trying to hype one of the world’s largest proposed coal mines.

Adani‘s expectation of a favourable public reception to his public demand the Australian legal system be distorted to protect his proposed coal mine from legal scrutiny provides a telling insight into the company’s modus operandi.

In case his PR advisers haven’t spelt it out for him it, Adani’s deman was never going to play well: an Indian billionaire publicly dictating that he wants the Australian federal government to pass special legislation to extinguish the legal rights of Australian citizens so that his Indian-owned company can dig up the coal and export it to India in the hope that one day they can make a profit.

It’s not that the Australian Government is entirely unsympathetic, having already signalled that – at the behest of coal lobby groups – it wants to weaken the Environment Protection and Biodiversity Conservation Act. That move though seems destined to be rejected in the Senate.

As Jo Bragg from the Queensland Environmental Defenders Office wrote earlier this year the cases challenging Galilee Basin coal mines “have revealed flawed government assessments and independent evidence that the mining industry has used overestimated jobs figures in promoting its projects.”

That is what coal companies such as Adani fear. Coal company hype might work for state and federal governments but courts can be far more discerning.

Adani’s missive from his Indian headquarters also begs the question: if Adani wants Australian citizens stripped of legal rights today, what will he demand state and federal government’s do tomorrow?

Secondly, Adani’s comments confirm what analysts have been saying for ages: that the project is not financially viable.

While Adani acknowledges the “slump” in global coal prices, his suggestion that he wants the project approved so the company can “revive to the next cycle” implicitly confirms that it is not viable in the current “cycle.”

A recent report by the commodities analysts Platts noted that thermal coal from the Australian port of Newcastle – a benchmark price for the Pacific market – had slumped to US$50 per tonne, the lowest price in a decade. It also noted that the ‘forward price’ for thermal coal in 2021 is US$48 per tonne. Instead of complaining about environmental groups, Adani should be thankful they are saving him from losing a lot of shareholders money.

Adani’s comments also reveal he has yet to even acknowledge the possibility that thermal coal is in structural decline and that it is increasingly likely there will be no “next cycle.”


Finally, Adani’s comment that “no lender will finance the project” – which he attributes solely to the legal action – again confirms that the project is currently unbankable.

As the coal price keeps on falling, the chances of it ever being bankable – even without legal challenges – diminish by the day.

Adani’s public comments reek of a ‘last roll of the dice’ lobbying strategy which to most seasoned observers simply confirms the project is doomed.

Bob Burton is the Hobart-based Editor of CoalWire, a weekly bulletin on global coal industry developments. (You can sign up for it here.) Bob Burton’s Twitter feed is here.

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24 Comments
  1. Tim Buckley 4 years ago

    The Minerals Council of Australia (formally known as the Australian Coal Association) is proud to represent Adani and the Galilee coal basin – a series of proposed low energy, high ash (LEHA) coal mines. Just what Julie Bishop was thinking of when she said Australian coal exports will help alleviate world hunger! Funny Indian Energy Minister Piyush Goyal doesn’t share Bishop’s enthusiasm for LEHA Galilee coal!
    More greenfield coal mines will help flood the market and push Australia’s coal export price down even further. I’m sure Glencore, Whitehaven, New Hope, BHP and RIO will be happy to see that!

    • david_fta 4 years ago

      Anglo-American’s got several operating coal projects up for sale now – if Adani really wants to get into coal, why doesn’t he just buy them?

      • Lock Barker 4 years ago

        Yes I have been wondering that for a while David, it’s a worthy point.
        But then I have been wrong footed by this Adani thing from the start.
        I couldn’t believe the federal government approved it.
        Then I couldn’t believe Adani kept pushing it while the coal price went through the cellar floor.
        Now they say they want to dig up the coal and sell it to themselves and they’ve got an 11 figure of debt to their name.
        So shipping coal from an Australian mine to their power stations in India will cost, not make, money, so the debt will increase.
        Yes, why not buy one or more mines currently available for sale?

        • david_fta 4 years ago

          I fear, Mr Barker, our Federal government’s agenda includes keeping this coal thing going for as long as they think they can.

          • Lock Barker 4 years ago

            Dead right David.
            They win financially, not matter if Adani goes broke.

      • Reality Bites 4 years ago

        Because most of the Anglo mines are metallurgical coal, but then most of the posters in here don’t know the difference or don’t care.

        • david_fta 4 years ago

          Callide – thermal (may not be for sale?)
          Dawson – coking and thermal
          Foxleigh – PCI and thermal
          German Creek – coking
          Moranbah North – coking

          okay thanks for pointing that out, I hadn’t realised.

          Still, at least New Hope can buy some of these mines for its coking coal contracts instead of opening a mine beside the (World Heritage) Great Sandy Straits wetlands.

          • Reality Bites 4 years ago

            So if New Hope have customers who want thermal coal, why would they buy mines with coking coal. The coals are not interchangeable and coal fired power stations have specific requirements. Coal is not just coal.

          • david_fta 4 years ago

            The mine that New Hope has applied to open beside the (World Heritage) Great Sandy Straits wetlands is coking coal.

          • david_fta 4 years ago

            Oh, and if Anglo’s Qld assets are all coking coal and hence of little interest to Adani, they’d be a better match for Shenhua’s requirements, meaning they have less reason to proceed with the Watermark project on the Liverpool Plains – unless the actual purpose of Watermark is to further degrade Australia’s best agricultural province.

    • Jacob 4 years ago

      Glencore said to Aussie media recently that they hate the proposed Adani mine because it would mean the Glencore mines will have to shut.

    • ID635 2 years ago

      Flood the market? Thanks for looking out for bhp and Rios profit margin. Such a noble bloke.

      • Tim Buckley 2 years ago

        Troll? Are you deliberately, cowardly hiding behind a fake name? Or does it come naturally?

        • ID635 2 years ago

          Stating facts.

  2. D. John Hunwick 4 years ago

    The Australian Liberals and coal energy companies cannot see anything other than money coming from investments already made in coal. They refuse to cut their losses – and it is the people who will have to pay the price unless they are soundly thrashed at the next federal election

    • Jason Van Der Velden 4 years ago

      You are aware the labor party are equally enthralled by coal?

  3. david_fta 4 years ago

    If Adani is so keen on getting into Australian coal, he can buy some operating projects off Anglo-American. That way, he won’t even need to twist anyone’s arm to get railways or ports built, and he’ll already have a competent workforce.

  4. Ken Dyer 4 years ago

    Meanwhile, whilst Adani are attempting to pervert due process, the pile of unwanted coal is growing.
    http://www.bloomberg.com/news/articles/2015-12-03/the-world-has-118-million-metric-tons-of-coal-it-doesn-t-need

  5. Jacob 4 years ago

    Mr Adani is a nutter. I thought he is building a huge silicon wafer factory in India.

    That would make much more sense, and employ more people, than sooty coal.

  6. Geoff 4 years ago

    “Even though there is no stay, because of the judicial review, no lender will finance the project”. I think this adani idiot is forgetting something, and that is banks were not financing the project even before the court actions were in place. it’s a white elephant. if he was smart, he would cut he’s losses and run, but this just goes to show how much of an idiot he is…

  7. Rob 4 years ago

    If the Adani mine goes ahead and then goes bankrupt due to falling demand for coal, who pays for the remediation of the mine site? The Australian taxpayer? I would like Mr Turnbull to answer this question and give his assurances that this mine will not cost the taxpayer one cent.

  8. greenmail 4 years ago

    The business case never stacked up as adani must expand the port, construct a rail line, build a power station and then supply water to both the power station and the thirsty mine operations. Adani makes his pile by keeping this scam limping along thereby generating consultancy fees and perks while the shareholders lose their shirts. He simply just has to keep the scam in the air for as long as the gravy train lasts.

    He cant lose. But he wont be mining any coal in the Galilee.

  9. Nick Thiwerspoon 4 years ago

    The thermal coal price is still declining. It is now below the levels reached during the GFC. In real terms, i.e., deflated by the US CPI, it is at 10 year lows.

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