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Government gives climate-wrecking Adani millions to 'attract investment'

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Queensland Premier Annastacia Palaszcuk and Gautam Adani in 2016 shaking hands (image via YouTube)

The Queensland Government's avowed support for Adani's Carmichael mine doesn't measure up, Steve Bishop reports.

THE QUEENSLAND GOVERNMENT'S sole reason for giving Adani its mega-million dollar tax holiday for its climate-wrecking Carmichael thermal coal mine is to encourage investment, according to Treasurer Cameron Dick.

Adani confirmed to IA it doesn’t need the deferment of royalties it negotiated recently with the Government in order to make the mine in the Galilee Basin viable.

Which invites the question: why would the government “loan” hundreds of millions of dollars to a project already underway which will add an estimated 26 million tonnes of CO2 each year to global warming at a time when climate scientists are urging an end to thermal coal mining?

The Intergovernmental Panel on Climate Change (IPCC) has warned:

'Phasing out coal from the electricity sector is the single most important step to get in line with [limiting global temperature rise to] 1.5°C.'

And the Climate Council has warned:

'The bottom line is simple, If we are to tackle climate change…New mines, such as those in the Galilee Basin, cannot be built.'

IA asked a spokeswoman for Adani whether it needed the recently-signed royalties agreement with the Queensland Government to make the Carmichael mine viable in the current economic situation

She said:

In direct response to your question,Carmichael project’s low cost profile, the quality of the resource and forecast demand from our target markets of India and South-East Asia mean that the project’s economics are strong and are projected to stay strong. 

 

We have already secured the market for the 10 million tonne per annum of coal produced at the Carmichael mine.

IA asked Treasurer Cameron Dick, Natural Resources and Mines Minister Anthony Lynham and Environment and Science Minister Leeanne Enoch why has the Government deferred royalties from the Carmichael mine when the company says such help is not needed to make the mine viable.

Ialso asked why the Government is giving financial help to a thermal coal mine when science is saying it is essential to phase out mines like this because of their contribution to global warming.

Mr Dick replied that the deferral was arranged under a scheme called the Resources Regional Development Framework (RRDF) which is:

'…designed to attract investment in designated undeveloped or under-developed resource regions across Queensland.'

He gave no other reason.

The RRDF could not have been used to attract the Adani investment because it was not created until May 2017, well after the original proposal in 2010 by Adani to open a mine, the Queensland Government’s approval for the project in 2014 and the Federal Government’s final approval for the mine in October 2015.

The environment, science and environment ministers chose not to tackle the question of why the Government is ignoring scientific advice to leave the coal in the ground and is endangering global attempts to avoid a climate crisis.

Mr Dick announced in the week before the caretaker period that payment of royalties from the mine would be deferred, despite issuing a long media release on 1 October about backing Queensland’s mining sector, the Government has failed to mention the agreement in a media release.

Neither the Government nor Adani will reveal details of the agreement.

But the Australia Institute has warned:

If the Queensland government settles on a royalty holiday for Adani's proposed coal mine, similar to that used earlier by the NSW government, the cost to Queenslanders will be almost $1.2 billion in lost revenue.

 

 

This policy would effectively give Adani free coal for five years and discounted coal for another four.

Other estimates have put the period of the tax holiday at up to 10 years before all of the back royalties begin to be paid.

Thermal coal is selling at about $75 a tonne on the international market at the moment. But two years ago, it was selling for more than $160 a tonne.

At a price of $100 a tonne and at the seven per cent royalty per tonne that would amount by 2030 to the Government having foregone AU$700 million that could have been spent on essential infrastructure such as schools.

While Queenslanders go without this income, Gautam Adani, the man behind the company, is a multi-billionaire who could have personally financed the mine. His wealth was put at $15.7 billion last year, according to the Forbes India Rich List 2019.

The estimate of an annual 26 million tonnes of CO2 being added to the atmosphere through the burning of Carmichael’s projected annual export of 10 million tonnes of coal comes from Climate Analytics and the National Greenhouse Gas inventory which estimate that 60 million tonnes of coal from the Carmichael mine would produce 156 million tonnes of CO2.

Scientists and environmentalists fear that Adani’s rail line linking ports to its mine will open the entire Galilee Basin to more massive mines with exports of coal that would produce 857 million tonnes of CO2 each year.

The Carmichael mine would not just be a tragic acceleration of climate change. It would also provide the infrastructure to encourage the opening of other coal mines in the Galilee Basin, says Emeritus Professor of Science, Technology and Society Ian Lowe.

But there are also fears that mines in the basin will become stranded assets because the world’s demand for thermal coal is expected to plummet as countries phase out coal-fired power stations. And prices have crashed in the last two years.

In May the Australian Financial Review reported:

'…more than 30% of Australian thermal coal is unprofitable at current prices, creating a horror backdrop for the long list of miners and ports seeking to refinance debt this winter.'

Prices have fallen further since then.

The huge China Stone project, immediately next to Carmichael, was put on hold in 2019.

And just last month UniSuper bailed out of the development of Glencore’s giant $1.5 billion Valeria mine because of its thermal coal content.

"Thermal coal is bound to be a stranded asset,” said UniSuper’s Chief Investment Officer John Pearce in making the announcement.

Taxpayers are entitled to know what would happen to foregone royalties, potentially hundreds of millions of dollars, should the company that owns Carmichael Mine, Adani Mining, become insolvent before the end of the agreement.

The LNP policy on coal mining and the dangers to climate change is even worse than Labor’s, with leader Deb Frecklington promising in June 2019 a 10-year freeze on all royalties from coal mining.

Far from freezing coal royalties, Queensland Greens say they favour increases in coal royalties from seven per cent to 35% per tonne, stopping Adani-type deals and ending all subsidies to the coal industry

They say:

'We need to phase out thermal coal by 2030 … begin the longer term transition to zero carbon production … Meanwhile the Greens believe there should be no new LNG or coal mines in Queensland.'

Steve Bishop is a journalist and author. You can read more from Steve at stevebishop.net

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