A secret royalty deal struck between the Queensland government and coal miner Adani Australia is set to deliver millions in concessions and what amount to cheap loans, despite the Palaszczuk government committing not to subsidise the massive Carmichael coal mine.
While both Adani and the Queensland government have acknowledged that the royalty deal has been struck and signed-off by Queensland treasurer Cameron Dick on Thursday night, virtually no deals of the royalty deal have been disclosed.
Reports suggest that the Palaszczuk government has agreed to set an annual cap of $5 million on royalties payable by Adani to the Queensland government for its first five years of operation, with remaining royalties deferred.
It is understood that the value of state government royalties expected to be generated during the first five years of the operation of Adani’s Carmichael coal mine is to be more than $300 million.
Adani will be required to pay the full value of the royalties due at the end of the five year period, but it is unclear what interest may be payable on the deferred royalties, which effectively amount a low or zero interest loan from the Queensland government.
“I can assure Queenslanders every dollar that is owed to Queensland taxpayers will be paid and it will be paid with interest,” Dick said on Thursday.
While Adani has promised to deliver “billions in mining taxes and royalties”, it won’t be until well after 2025 before they start flowing through into government coffers.
In a statement, a spokesperson for Adani Australia confirmed that the royalties deal had been struck and that the first coal was expected to be produced at the Carmichael mine sometime in 2021.
Based on leaked details of the royalties deal, The Australia Institute estimates that the deferred payment arrangement would add up to a $271 million loan from the Queensland government to Adani.
“Yet again we see Adani being given a free ride and a secret deal,” The Australia Institute research director Rod Campbell said.
“Queenslanders are essentially giving Adani a discounted loan of around $271 million based on leaked details of the initial deal.”
The timing of the royalty deal effectively nullifies what could have become a hot political issue, with the Queensland state election less than a month away.
Adani’s Carmichael coal mine has attracted immense opposition from environmental groups who fear that the project will become just one of many new coal mines being developed in Queensland’s Galilee basin, which undermining global efforts to prevent global warming.
The Australian Conservation Foundation slammed the royalties deal, saying that the people of Queensland had a right to know the details of what has been offered to the controversial mining company.
“The Queensland government’s deal with Adani is a disgrace. Why is the government handing out freebies to a billionaire coal baron?” Australian Conservation Foundation campaigner Christian Slattery said.
“Astonishingly, the public is still in the dark about the details of this deal, which has been stitched up behind closed doors.”
“The government should immediately disclose the terms of this deal. Queenslanders have a right to know how much revenue and risk has been sacrificed at the altar of Adani’s destructive coal mine,” Slattery added.
The Adani project also became an effective proxy issue at the 2019 federal election for wider commitment to the long term phase out of coal, with the Bill Shorten-led Labor party caught between progressive voters who wanted to see the project halted, while trying to win votes off the Morrison-led coalition which enthusiastically supported the Adani mine.
Following the re-election of the Morrison government, the outstanding approvals for the Carmichael mine were waived through by both the federal and Queensland state governments.
While the signing of the deal ensures it doesn’t become an electoral issue in the last month of Queensland election campaigning, the Australia Institute argued that providing the deferred royalty deal to Adani, effectively amounting to a subsidy for the massive coal mine project, would not necessarily attract the favour of voters.
“Subsidising new coal is the last thing Queensland should be doing as global coal demand declines in the wake of the pandemic and in response to climate action,” Campbell added.
“Subsidising Adani is not only bad policy, it is bad politics. Australia Institute polling has shown that 59% of Queenslanders oppose subsidies for Adani, while just 19% support.”