Pitt approves huge loan for Queensland coal project, after rejecting wind farm

Federal resources minister Keith Pitt has approved a $175 million government loan to a Queensland coal mine just months after using his ministerial veto to block a similar loan for a wind farm.

The loan will go to Pembroke Resources to fund construction works at the Olive Downs metallurgical coal project, to be provided by the Northern Australia Infrastructure Facility (NAIF).

The loan will fund early development works for the mine, including the construction of new rail, transmission lines, water pipelines, access roads, and a coal processing plant.

Coal from the mine is destined for export markets to be sent offshore for use in steel processing.

Pitt said in a statement on Thursday that the project is expected to have a total cost of around $900 million, would support around 700 jobs during its construction phase and 500 jobs once operational.

Pitt said that the mine, which will produce metallurgical coal, would deliver economic benefits for the Queensland economy.

“Pembroke Resources’ Olive Downs project will create jobs and opportunities for central Queensland and the nearby town of Moranbah, and will generate royalties and export income for Queensland and Australia for many years to come,” Pitt said.

“Metallurgical coal is crucial for steelmaking, and is an important commodity for Australia’s trading partners to help support their economic development.”

The mine is projected to produce around 15 million tonnes of coal annually (and around 41 million tonnes of carbon dioxide emissions when the coal is burnt), with an expected operational life of greater than 80 years.

News of the loan to the Queensland coal project comes just a few months after it was revealed that Pitt had personally intervened to block the NAIF from providing a similar loan to the 157MW Kaban wind farm.

Pitt opted to intervene after the NAIF had recommended that he approve a $280 million loan to the Kaban Energy Hub, developed by Neoen in Northern regional Queensland.

In deciding to block the loan to the wind farm, Pitt said that he did not believe the project was consistent with Morrison government energy policy and that Pitt was not convinced that it would lead to lower energy prices.

Pitt added that he blocked the loan because the wind farm would not be able to deliver dispatchable power – despite the Kaban wind farm proposal including plans for a 100MW big battery.

In a subsequent television interview, Pitt refused to say whether he considered battery storage to be a dispatchable source of energy, nor specify what level of battery storage would need to accompany a wind farm.

The Kaban project will attract a total investment of $380 million and will create around 250 jobs during its construction phase. The Kaban project will still proceed after Neoen secured finance from other sources, including the Queensland state government, which stepped in to support the project.

There have long been fears that the NAIF created by the Coalition government in 2016 would be used to channel public funds into fossil fuel projects.

But the contrasting experiences of the two recent projects – the wind farm denied finance and the coal project eagerly awarded funding – shows the clear priorities of the Morrison government.

It is another clear example of the antagonism that exists within the Morrison government towards clean energy, and the comparative favouritism shown to fossil fuel projects in defiance of growing international pressure to take stronger action on climate change.

Environmental group, the Australian Conservation Foundation, slammed the loan to the coal mine, saying that public funds should not be used to finance fossil fuel projects, particularly when investors are withdrawing from the fossil fuel industry due to climate change concerns.

“While investors around the world are getting out of fossil fuels, and Australia’s banks are becoming increasingly unwilling to finance coal projects due to their clear climate risks, the Morrison government is using public money to support coal,” Australian Conservation Foundation’s Suzanne Harter said.

“It seems investment in Olive Downs would not hold up for other investors, yet the Minister and the NAIF board have decided it is an acceptable use of public money.”

“Investing public money in coal defies Australia’s own economic regulators, which see climate change as one of the greatest threats to our economic system and have determined that climate risk is a material risk,” Harter added.

News of the loan to the coal mine follows Australia recently being ranked dead last for climate action – of all 193 members of the United Nations – in a major assessment of global sustainability efforts.