Claims there is no market for Galilee Basin coal slammed by mining industry

The Minerals Council of Australia said a report warning against developing the coal-rich Galilee Basin is “activist-linked academics to try and undermine Australia’s $60 billion coal industry”.

The report, written by Tim Buckley, director of ­energy finance studies, Australasia, at the Institute for Energy Economics and Financial Analysis, said planned mines in the Galilee Basin are commercially unviable.

Buckley said proposed mines in the area including Adani Group’s Carmichael mine, Clive Palmer’s China first mine, and GVK Hancock’s Alpha mine would struggle to remain profitable as Australia’s coal industry enters a ‘structural’ down turn.

"The financial justification for Galilee Basin Coal is based on flawed economic assumptions, including a reliance on the increasingly uncertain prospect of India being able to continue to finance and economically justify building imported coal-fired power stations," Buckley said.

“Australia risks funding major new thermal coal projects on what I consider is a flawed assumption on ever increasing Indian import coal demand.”

Buckley argues India’s economic and financial situation is ‘perilous’ and said this, coupled with financial issues at the country’s coal-fired power station would cause “uncertainty for companies relying on its ability and willingness to import coal, with its associated implications for inflation, current account deficits, economic instability and energy security.”

“The report found that imported coal would need to be priced at double the wholesale price of India’s electricity, which categorically discredits the nonsense arguments that it might alleviate India’s energy poverty,” he said.

However the minerals council has rubbished the report.

“The activist movement has turned the creation of spurious, pseudo-intellectual reports on the coal industry into high art,” MCA chief executive Brendan Pearson said.

Pearson said the report flies in the face of official forecasts for coal demand in India that show that India – the world's third-largest coal consumer in 2010 – will surpass the United States as the second-largest coal consumer over the next two decades.

From 2010 to 2040, India's net coal-fired electricity generation is expected to grow by a total of 910 terawatthours, more than doubling from the 2010 total, Pearson said.

While the country’s coal consumption for electricity generation nearly doubles from 8.2 quadrillion Btu (British thermal units) in 2010 to 15.6 quadrillion Btu in 2040.

“This is will lift millions of Indians out of  poverty – a fact that should be celebrated by the activist movement,” Pearson said.

Meanwhile, GVK Hancock has also questioned the substance of the report.

“Given the claim revolves around India’s future energy demands and we are marketing our coal into south east Asia, not India, it makes you wonder just how much rigour went into the report if it can’t even get the basics right," a spokesman told Australian Mining.

In November last year, Buckley wrote a similar report that threw doubt over Adani’s plans to build the Carmichael mine.

He said low coal prices and a huge debt level carried by the company would hamstring the project.

The claims were rubbished by both Adani and the wider mining industry who say the Greenpeace funded investigation was loaded with ideological minefields.

Premier Campbell Newman has previously said opening up the Galilee Basin to mining would be worth $60 billion and create 15,000 jobs.

Newman said Indian companies saw the area as a strategic “long-term play”.

"They want coal to come for their thermal power stations day in, day out, week in, week out, month after month, for not 10 years or 20 years or 50 years; they want it to come for 70 to 100 years," Newman said.

Palmer’s China First mine and both GVK’s Kevin’s Corner and Alpha projects have received the green light from the federal government.

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