A controversial coal mine project in Central Queensland in Australia’s north has forced an early local election and threatens to put bilateral relations with India in a new bind.
Adani Enterprises, an Indian multinational conglomerate founded by billionaire Gautam Adani, has said it plans to invest A$16.5 billion (US$13 billion) to develop the Carmichael mine site situated in the state’s Galilee Basin.
If developed as proposed – a big if with rising environmental protests and political headwinds – it would be the largest coal mine in Australia and one of the biggest in the world.
The Queensland government was quick to approve the now stalled plan, citing huge royalties and a boost to employment, which Adani has said could amount to 10,000 direct and indirect jobs. But protestors alarmed by the mine’s potential environmental impacts and contribution to global warming have stirred a potent maelstrom.
“The Paris Agreement [on climate change] really said until we stop digging up coal and burning it at this rate there’s not much else we can do,” said ‘Stop Adani’ campaigner Geoffrey Cousins. “The mine clearly goes against all that thinking and against Australia as a signatory.”
The project’s supporters argue that the coal, which Adani says it plans to export to India, would not be burned in Australia. But Cousins and other activist groups say that argument is “nonsense” because it doesn’t matter where the fuel is burned to contribute to global warming.
The Queensland government has long touted the importance of the mine as a job creator. But that, too, is questionable, Cousins says. The jobs it would create, he says, will be offset by losses in tourism, which net-net would face ruin along the famed Great Barrier Reef.
“A third of the reef is already dead from rising temperatures and there are large parts that are at great risk. For us to be contributing to something that might significantly damage it further is just madness,” Cousins says. He says Adani’s export shipping route is mapped to pass through the sensitive marine area and would require massive seafloor dredging.
Cousins is firmly at the heart of the debate. He met earlier this year with India’s ex-environment minister Jairam Ramesh, who he says spoke at length about the alleged environmental degradation Adani has already caused in India.
In comments made to Cousins repeated to Australian news program ‘Four Corners’, Ramesh said he was perplexed the Australian government would grant approval to Adani for the mine’s development.
He said similar projects never reached environmental standards in India and would be less likely to do so under Australia’s more stringent regulations. Adani could not be reached for comment on the allegations.
India, which has a stated policy to reach self-sufficiency in coal in coming years, is unlikely to generate sufficient demand for the 2.3 billion tons of coal Adani says will be produced from the mine over the next six decades.
Ramesh told Cousins he believes Adani plans to import Australian coal into India where it would be repackaged and shipped onwards, likely to other countries in the subcontinent, as ‘Indian coal.’
The mine’s funding has proved as controversial as the potential environmental costs. Queensland premier Annastacia Palaszczuk abandoned an earlier plan to support a federal government loan of nearly AUD$1 billion due to the potential electoral costs to her party.
The loan would be used in part to build a railway to ship the coal 400 kilometers from Queensland to a Pacific Ocean port. The Northern Australia Infrastructure Facility, a special agency tasked with economic development of the country’s northern regions, has the final say in issuing the loan.
But Palaszczuk’s Labor Party-led local government will no longer assist Adani, she said, splitting from the previous bipartisan support it had provided Prime Minister Malcolm Turnbull’s Liberal Party-led federal government for the big ticket project.
Adani has been rebuffed by certain major global banks, including its own Bank of India, in trying to raise funding for the coal mine. The company has said it wants to tie up financing by March 2018 and would then look to sell a minority stake in the project to raise funds.
Reuters reported this month Adani is in talks with Chinese state-owned engineering enterprise China National Machinery Industry Corp Ltd, or Sinomach, to provide as much as US$1.54 billion.
The project’s finance galvanized new controversy in late October when a panel of Australian senators was told Turnbull’s deputies had sent a letter to China’s National Development and Reform Commission about the project.
The government said the letter merely acknowledged that government approvals and support had been given for the mine, and that the missive was not a bid to lobby for Chinese funds.
Attorney-General George Brandis told the senate panel the letter was sent to “dispel the misinformation campaign of those from the radical left.” (China’s US$12 billion Sino iron ore mine in Western Australia is its single largest overseas resource investment worldwide.)
As the anti-mine campaign heats up ahead of Queensland’s state polls on November 25, a vote that will likely boil down to pro- and anti-mine support, the kerfuffle also threatens to impact on wider Australia-India relations – significantly at a time the two sides contemplate a strategic gambit with the US and Japan to counterbalance China.
The Indian government is not directly involved in the project’s negotiations but its ministers have been targeted by protestors in the past. Dhruva Jaishankar, a foreign policy fellow at Brookings Institute who has covered Australia and India relations, says the anti-Adani campaign has not made many waves in India, yet.
“It’s rather striking how little it appears in the Indian press,” said Jaishankar. “Adani is perceived to be politically well connected, but because it is not in India and has no implications for Indian jobs or the Indian environment – and because the Indian government is not directly involved – it really has not been an issue in the press and in the public consciousness.”
That’s a bilateral blessing after a decade period of rocky relations, marred by racist attacks on Indian students and other Indian nationals in Australia, that have only recently normalized.
Jaishankar says the number of Indian students in Australia has recently boomed and business opportunities, including in the service sector, have grown apace for Indian companies. It’s not clear, however, that will include Adani digging and exporting coal from the hotly contested Carmichael mine.