Double blow for Adani's Carmichael mine in AustraliaPublished by MAC on 2015-08-06
Source: Sydney Morning Herald, ABC News (2015-08-06)
Adani's Carmichael Mine approval has been ruled invalid by the Australian Federal Court.
At the same time the Commonwealth Bank's role as adviser to Australia's biggest coal project, Adani Mining's proposed Carmichael Mine in Queensland, has ended
This leaves Adani without an approval for the mine, no approval for dredging in Great Barrier Reef waters at Abbot Point, and retreating investors.
Although it is likely not the end of the project yet, it is difficult to see how the project can proceed in the face of concerted campaigning without a substantial change to their fortunes
Adani and Commonwealth Bank part ways, casting further doubt on Carmichael coal project
5 August 2015
The Commonwealth Bank's role as adviser to Australia's biggest coal project, Adani Mining's proposed Carmichael Mine in Queensland, has ended, dealing a heavy blow to its prospects and a significant victory for environmental groups.
It comes as environmentalists claimed a victory in their case against the project after the Federal Court overturned Adani's federal environmental approval. Environment Minister Greg Hunt was forced to concede defeat for not taking into account two threatened species – the yakka skink and ornamental snake – before he signed off on the project in 2014.
Fairfax Media has confirmed that Commonwealth Bank's mandate with the Indian conglomerate Adani had ended, a decision which now casts doubt on the likelihood that Adani will be able to raise the $16 billion required to build Carmichael and the attending infrastructure such as the rail line and the port facilities at Abbot Point on the Great Barrier Reef.
"As part of Adani's refocusing of the project on gaining the various outstanding approvals, the financial advisory mandate has ended," said a spokesperson for the bank.
The bank declined to elaborate on the circumstances of its withdrawal but sources said the environmental controversy surrounding Carmichael and the project's financial risk in the face of tumbling coal prices had been concerns.
An Adani spokesman said it was "inaccurate" to suggest CBA had walked away, insisting Adani had terminated the mandate.
It had done so "on the basis of its own concerns over ongoing delays to a now five-year long approvals process here in Australia", he said in a statement.
He added that Adani valued its partnership with CBA.
"In the event the Commonwealth approvals framework is not further undermined by activists seeking to exploit legal loopholes - thus enabling the project and the thousands of jobs and billions of dollars of investment it would bring to be delivered - Adani would happily work with the bank in future."
CBA announced it had tightened its environmental and social governance policies at its annual shareholder meeting last November.
The end of CBA's relationship with the Indian power company could make it more difficult for Adani to attract investment from other banks.
CBA is Australia's largest lender and a leading banker to resources projects around the country.
Many of the world's biggest coal project funders – Citigroup, Deutsche Bank, Morgan Stanley, RBS, Credit Agricole, BNP, Barclays, Goldman Sachs, JP Morgan and Societe Generale and HSBC – have already said they would not fund the development of a coal project whose export facilities were to be built near the Great Barrier Reef.
While the government and Adani are describing the court ruling as a "technicality", environment lawyers say it could expose both parties to a fresh wave of court action if the minister does not consider other new information that has come to light since he first approved the project.
The Mackay Conservation Group launched its legal challenge in January.
The group alleged Mr Hunt should be forced to consider the impact of greenhouse gas emissions from the burning of coal from the mine and Adani's poor environmental track record in India, and that he had failed to examine an assessment on vulnerable species.
Mr Hunt, Adani and the Mackay Conservation Group agreed the environmental approval should be set aside by the court because federal environment law required the impact on the species, in this case the skink and the snake, to be assessed.
Both the government and Adani are putting the setback down to a bureaucratic bungle, saying the assessment had been done but the Environment Department failed to include it in the documentation it gave Mr Hunt.
"It is regrettable that a technical legal error from the federal Environment Department has exposed the approval to an adverse decision," Adani's spokesman said.
But it creates a new hurdle for Adani, with environment groups now pressuring Mr Hunt to reject the mine altogether.
"A lot of new information has emerged since Greg Hunt made his approval and we call on him to now reject the mine," Mackay Conservation Group coordinator Ellen Roberts said.
That information includes statements to a separate Queensland Land Court case, which heard Adani had inflated the number of jobs its project would create and that its environmental assessment underestimated the damage it would cause to the habitat of another species – the southern black-throated finch.
The Mackay Conservation Group is also calling on the minister to consider the economic viability of the project, and its other claims regarding Adani's environmental history and the impact emissions from burning coal would have on the Great Barrier Reef.
"If the minister is going to reconsider this project, he ought to do so taking into account all of the relevant impacts associated with the mine or he may expose himself to further legal action," principal solicitor Sue Higginson from the Environmental Defenders Office of NSW said.
On Wednesday, the Queensland government continued to praise the project, despite growing scepticism in senior ranks that it will proceed.
"We are extremely disappointed that there has been this delay to Adani in the Galilee Basin," Mines Minister Anthony Lynham said.
"Jobs are so important to the people of Queensland and Adani will bring jobs to a very needed area of Queensland, central Queensland and we look forward to those jobs being produced."
Fairfax Media revealed last week that Adani had begun sacking most of its staff at its Brisbane headquarters.
This followed the suspension of Adani's project manager Parsons Brinckerhoff, its construction partner and potential investor Posco, and four engineering firms.
While the project has been praised by both sides of politics – including Prime Minister Tony Abbott, who called it a poverty-busting "miracle" for India's poor – there have been growing calls for federal and state inquiries into decisions around the project given the growing body of information that has been exposed about Adani's environmental and corporate practices.
A Fairfax Media investigation in February raised questions about the ultimate ownership of Adani's assets in Australia, as well as the transparency of its corporate structure.
Confidential Queensland Treasury documents revealed in June that treasury officials had also expressed serious concerns to the Queensland government about Adani's transparency and ability to finance the project.
Approval of Adani's $16 billion Carmichael coal mine in Queensland's Galilee Basin ruled invalid by Federal Court
5 August 2015
The approval of Adani's Carmichael coal mine in central Queensland has been declared invalid by the Federal Court because of a bureaucratic bungle over two vulnerable species.
The $16 billion open cut and underground coal mine and 189-kilometre rail link was approved by the Federal Government in July 2014.
The approval was set aside by the court after it was found Federal Environment Minister Greg Hunt had not properly considered advice about the yakka skink and the ornamental snake.
The Mackay Conservation Group launched a challenge to the mine project earlier this year over the vulnerable species.
Today's court ruling has been consented to by Indian company Adani and the Federal Government.
Mr Hunt denied it was a major problem.
"What the department said is 'look, we have a sense that the court might find something new as a new standard and so it might be better to remake the decision'," he said.
In a statement, the Federal Department of the Environment said the ruling was taken at the request of "all of the parties to the court proceedings".
It said the entire approval process would not have to be reconsidered.
"This is a technical, administrative matter and to remove this doubt, the department has advised that the decision should be reconsidered," the statement said.
"Without pre-empting a final decision about the project, the department expects that it will take six to eight weeks to prepare its advice and the supporting documentation, and for the Minister to reconsider his final decision."
Environmental Defenders Office principal solicitor Sue Higginson, who represents the Mackay Conservation Group, said the coal mine, which would be the biggest in Australia, was now in a state of legal uncertainty.
She has written to Mr Hunt with further information to consider for the mine's application, namely "exaggerated" job figures included in Adani's environmental impact statement.
"What can happen from here is the Minister can re-make his decision, and of course in re-making that decision he can approve the mine again following the proper legal procedures, or he can refuse the mine; that is the legal power open to the Minister," Ms Higginson said.
"What our client says is that if the Minster wants to reconsider approving the mine there is a plethora of new evidence and information about that mine, so it will be no simple task to simply re-approve that mine."
Adani said it was committed to ensuring its mine, rail and port projects in Queensland are developed, and complied with environmental conditions.
"It should be noted the approval did include appropriate conditions to manage the species protection of the yakka skink and ornamental snake," it said.
"However, we have been advised that, because certain documents were not presented by the Department in finalising the approval, it created a technical legal vulnerability that is better to address now.
"Adani is confident the conditions imposed on the existing approval are robust and appropriate once the technicality is addressed."
Queensland Resources Council chief executive Michael Roche said "legal loopholes" had paved the way for anti-coal activists to delay billions of dollars in investment and thousands of jobs.
"It is preposterous that a technical administrative hitch could hold up billions of dollars in investment and thousands of desperately needed jobs," Mr Roche said.
Mr Roche said Mr Hunt should be able to quickly sort it out.
"The great irony of this is that minister has put conditions in his approval for the mine that cover the two species - a skink and a snake - but on some technical basis he can't demonstrate that all the right documents were in front of him at the time," he said.
State Mines Minister Anthony Lynham said he hoped the court's decision would not delay the project for too long.
"I'm extremely disappointed this has happened," he said.
"There's been a judicial review and I believe it's a technical error, but we're asking the Federal Government, we're asking the Federal Environment Minister to sort this out as quickly as possible."
However, Greens senator Larissa Waters said Adani should now walk away from Carmichael mine in the wake of the Federal Court decision.
"This is a chance now for Adani to walk away and if they do seek a fresh approval from the Minister, Minister Hunt needs to not only consider the conservation advices he forgot about the first time but he also needs to consider the fact that Adani corrected the record about the claims they made about jobs," she said.
Adani shown the door by traditional owners
Michael West, Business columnist
4 July 2015
The Wangan and Jagalingou people gathered two weeks ago at a convention centre in Carseldine north of Brisbane.
They were there to vote on a proposal to make sure those responsible for their native title claim were truly representative of the Wangan and Jagalingou people. These are the traditional owners of the land in the Galilee Basin, precisely where Indian company Adani aims to build Australia's biggest coal mine, the controversial $16 billion Carmichael project.
Twice in three years, the Wangan and Jagalingou (W&J) had rejected Adani's advances to sign a land deal for the mine, and twice Adani had dragged them off to the Native Title Tribunal and sought approval for the state to override their opposition to the mine.
It was just after 9am on Saturday, June 20, when two charter buses turned up at the Tavernetta Function Centre in Carseldine. Adani had bussed in 150 people in a sly bid to force consideration of a new memorandum of understanding they claimed to have with W&J, despite the previous 'no vote' from W&J. It was an Adani ambush, and it must have cost a fortune: three days of food, accommodation and transport for 150 people.
"We saw the buses turn up and we were wondering what was going on," says traditional owner and W&J lead spokesman Adrian Burragubba.
"They tried to organise their own meeting after ours in order to get the people to agree to their MoU - a kind of tricked ILUA [Indigenous Land Use Agreement] when they knew they didn't have one. Right now we're in the Federal Court precisely because we refused an ILUA and they have tried to override us."
But Adani's cunning stunt backfired. They hadn't counted on their 150 voters changing their minds after impassioned speeches from the likes of Burragubba. W&J tribal elders are deeply concerned about the effect of the mine on their cultural heritage and the risks it poses to water and wildlife.
By the end of the day, Adani's reps had been asked to leave the meeting. Of the W&J's 12 "new applicants", or claim representatives, at least seven were against Adani, despite all the money flying about to skew the vote, and three were in favour. The views of the other two appear in the balance.
Burragubba says Adani has been engaging in tactical skulduggery for years, excluding him from meetings as he represented families which were not in favour of Carmichael.
"They claimed I was disruptive," he told Fairfax Media.
"But they need all applicants in a meeting to do a deal. So there cannot possibly be a legally binding agreement.
"Adani has been conniving with these other two people [other Indigenous applicants] to try to get an agreement and undermine the Native Title process and our right to free prior informed consent."
Before the showdown at the Carseldine convention centre, Adani had co-opted two of the W&J applicants, also directors of the trustee for the W&J's Cato Galilee Trust.
Adani failed to respond to questions on Friday as to its arrangements with Cato Galilee and with the W&J applicants.
Its latest public missive on the subject came three days before the W&J meeting: "Adani deepens partnership with Traditional Owners."
As far as W&J are concerned nothing could be further from the mark. While Adani has signed up ILUAs with other Indigenous groups – the Juru, Birriah and Jangga Aboriginal people – whose land lies either on the rail corridors from the Galilee or on the coast at Abbot Point where the coal is to be shipped to India, there is only a draft memorandum of understanding intended for the W&J, and one which is not representative of the majority of families at that.
It is getting messy. W&J now has a claim before the Federal Court alleging Adani misled the W&J people. The Native Title Tribunal and the state of Queensland are also listed as defendants for failing to properly follow process.
So here we have a deal which is no only an utter white elephant on a financial basis but which does not have consent from the traditional landowners in the Galilee Basin. They say the mine will destroy their land, yet the Labor government of Queensland came out this week in ardent support of it.
We welcome the "sustainable development of the Galilee Basin", was the line from Treasurer Curtis Pitt on Wednesday, notwithstanding revelations in Fairfax Media the day before that Queensland Treasury thought the project unbankable.
There is zero chance of "sustainable development". Adani's own financial modelling assumes coal prices have to double for the project to make money.
As one incredulous hedge fund source pondered this week: "Peabody does 36 million tonnes per annum and they'd take $2 billion any day of the week ... what am I missing here? Money laundering?"
By week's end the Peabody reference was even more poignant. Here was the US coal giant, with huge mining operations in Australia, desperately fending off its creditors.
Its share price sank another 20 per cent this week, hitting a record low and a market cap of $US520 million ($680 million). It is down 40 per cent for the month, is carrying $US5.5 billion in debt and is on the hook for nearly $1 billion in mining rehabilitation costs in Australia alone.
If Adani had the remotest interest in sane investment and value creation for its shareholders, why would it not just bid for Peabody's mines?: buy immediate cash flow, eliminate project risk, and get higher quality coal at a fraction of the price.
In fact, the value equation is 10 per cent less tonnage for four times the price. Adani's plan is to build a 32 million tonne per annum mine, stage one (versus Peabody's production of 36 million tpa).
They still need to spend $3.5 billion to build the mine, then another $3.5 billion to build the rail line and then $3 billion for the port expansion.
This is far too sensible for Adani and the government of Queensland, who prefer to pursue a project with no prospect of success, unless the coal price miraculously doubles, and with enormous environmental risk in the face of trenchant community opposition.
Even if it did succeed, against all logic, the job creation would be less than one-fifth what Adani claims; that is, 1400 versus Adani's ambit claim of 10,000. And if it did ever make money, thanks to the structure of Adani Mining any profits would wend their way via Singapore to Mauritius.
Queensland, the Peabody share price is telling you something, you are riding a white elephant with wings way above a magical landscape of dreams.