Adani Group’s move to self-fund development of the Carmichael mine and rail project in Queensland is set to deliver on the company’s promise to create jobs and business opportunities in the state.
Politicians and industry groups have lauded the Indian company’s decision. Federal resources minister Matt Canavan even called the company a “little Aussie battler” for overcoming the controversy the proposed development has caused to make it this far.
Adani Mining chief executive officer Lucas Dow yesterday said the company was on track to start work on the project before Christmas.
He said Adani would initially develop a smaller open cut mine than originally planned and then later ramp up to a 27 million tonne a year operation.
The updated plan has, however, caused surprise to others, including IBISWorld senior industry analyst Jason Aravanis, who views the downsized development as a high-risk investment.
Aravanis believes that Adani has significantly reduced the scale of the project due to the challenges it has faced.
“After failing to secure finance from banks and private investors both within Australia and abroad, Adani has reluctantly accepted that its plan to develop Australia’s largest coal mine has not succeeded,” Aravanis said.
The updated plan involves an initial investment of $2 billion, with annual production of 10–15 million tonnes of thermal coal, according to IBISWorld.
Adani originally set out to spend $16.5 billion on the project in 2010 to export 60 million tonnes a year.
IBISWorld also questions the decision to go ahead with the smaller project because demand for thermal coal around the world is decreasing and India is transitioning towards renewable energy sources.
“The investment decision for the Carmichael project is surprising, given the gloomy outlook for global coal demand. Adani’s power stations in India alone generated losses in 2018 due to their reliance on expensive imported coal,” Aravanis said.
“These power stations, such as the Mundra power plant in Gujarat, are the primary export market for the Carmichael project. However, rising Indian coal supply is reducing the need for imports from Australia.”
Whatever Adani decided to do at Carmichael was bound to be polarising. Fortunately, the mining industry, particularly in Queensland, has been grateful of the latest direction Adani has taken.
Queensland Resources Council (QRC) chief executive Ian Macfarlane said Adani had made sensible revisions to the project to ensure it could get under way as soon as possible.
He noted that the revisions included scale-up capacity and a decision to use common narrow gauge infrastructure.
“Just like every other project, Adani has followed the rules and gone through a rigorous and exhaustive approvals process,” Macfarlane said.
“All resources projects comply with the highest environmental standards that allow mining to co-exist with other industries such as agriculture and tourism.”
Adani’s new plan may not be what the industry originally expected (or what certain areas of the pubic feared), but at least the development is finally on the verge of getting under way.