Tag: Coal project

Adani’s Carmichael Coal project a house of cards: Report

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Map:IEEFA

By SAT News Desk

Melbourne, April 24: The proposed Carmichael Coal project in Queensland by India’s Adani group has once again come under the cloud with a new report by the Institute for Energy Economics and Financial Analysis (IEEFA) saying “Mounting debt across the Adani Group suggests that the Indian conglomerate’s Carmichael mine proposal for northeast Australia has become an increasingly precarious house of cards.”

The report— “Adani: Remote Prospect: Carmichael Status Update 2017”—notes that Adani Enterprise Ltd.’s equity market capitalization has declined from over US$10 billion in 2015 to $1.9 billion today. Relative to net debt estimated at $2.5 billion, this capitalization is wholly insufficient to underwrite even the reduced $5 billion total project cost for Carmichael.

“Adani’s proposal has all the fundamentals of a feckless entrepreneurial scheme reminiscent of those last seen in Australia in the 1980s,” said Tim Buckley, Director of Energy Research at IEEFA and lead author of the report. “Absent massive taxpayer subsidies, no independent investor would give the proposal a second glace given its strategic and financial predicament, particularly set against a rapidly declining market for seaborne thermal coal.”

“The leveraged nature of Adani Enterprises, which controls the Carmichael project, is mirrored across the whole Adani Group,” a IEEFA media release says.

The media release says, “Since early 2015, the Adani group has seen estimated net indebtedness rise by US$3 billion to $15.9 billion. Adani Power alone, mooted as the key off-taker for the Carmichael coal, has net debt of US$7.6bn, and its auditors qualified their most recent review of the company with notes on a material weakness in financial controls. Adani Power, then, is an unbankable off-taker.”

The report describes how the Adani Group currently has a pipeline of US$30 billion of mostly greenfield projects in India in addition to Carmichael, including $10 billion or more in renewable energy proposals plus proposed diversifications into new business areas as various as defense systems and copper smelting.

“Gautam Adani is an ambitious businessman with a broad range of proposals on the table at any one time. Since the purchase of Carmichael in 2010, the forward market value of its coal has declined 50% and thermal coal imports in India are down double digits in line with the government’s stated policy to nearly cease imports entirely by the end of this decade,” Buckley said. “Adani took a calculated business risk on this speculative project in 2010 but the world has changed since then. No longer strategically aligned nor financially robust, today it is less a gamble, more a shot in the dark.”

India’s energy transformation is one of the main drivers of the structural decline of the seaborne the thermal coal that has emerged since 2014.

“India’s government commitment to ending thermal coal imports and its ambitious target of 275GW of renewable energy installations by 2027 is among the forces eating away at the rationale of the Carmichael project.

Record-breaking auctions in India for both solar and wind energy have driven down renewables costs to new lows. Both are now cheaper than new coal in India.”

As a result, coal imports have dropped 22-25 percent year on year over the past two months. Meanwhile, Adani’s Indian renewables and transmission businesses are well aligned with government plans for rapid cost-competitive renewable energy expansion and the provision of electricity to its population.

“Private capital has already vacated the playing field,” Buckley said. “Australian and Indian taxpayers have become the only potential sources of funding, but it should be clear that Carmichael has never looked like more of a stranded asset than it does today.”

No dredge-dump Reef advice ignored: FOI documents

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NEWSFLASH: A man is strongly advised by his doctor to give up smoking, or cause irreversible damage to his health. After hearing the news, he meanders down to his corner shop and buys a pack of 25s.

This sad little story echoes what the Federal government did last December when giving the go-ahead to dredging and dumping in the Great Barrier Reef. It did so despite strong, expert advice from the independent Authority charged with protecting the Reef that it was dangerous to the Reef’s health. Dredging and dumping in the Reef is part of the coal project in which Indian companies Adani and GVK are involved.

Newly released internal documents clearly show that the Great Barrier Reef Marine Park Authority repeatedly advised the Environment Department to reject the controversial dredging and dumping proposal, to allow expansion of the Abbot Point coal port, because of the current health of the Reef and damage it would cause.

Greenpeace’s Investigations Unit has closely scrutinized a stack of briefing notes, draft approval documents and records of meetings released under Freedom of Information laws.

What we found is that the Great Barrier Reef Marine Park Authority:

was preparing to refuse permits to dump in the Great Barrier Reef Marine Park because it considered the consequences of dredging were unknown and viable alternatives existed to dredging on the proposed scale
assessed the water quality offset plan put forward to the Environment Minister as ‘unrealistic’ and ‘unachievable’
considered dumping at sea would be inconsistent with Australia’s obligations under international treaties on the prevention of marine pollution.
One very significant document prepared by GBRMPA notes:

“The proposal to dredge and dispose of up to 1.6 million cubic metres of sediment per year … has the potential to cause long-term irreversible harm to areas of the Great Barrier Reef Marine Park … in particular seagrass meadows and nearby coral reefs…”

“The information… provided by the proponent does not adequately address the potential for further impacts to these recovering habitats. The dredge plume modelling provided by the proponent… has been found to be of limited value, deficient and unreliable.”

Since the news broke, the Minister for the Environment Mr Greg Hunt and the Great Barrier Reef Marine Park Authority have been desperately attempting to explain away why, at the end of the day, they gave the tick to this damaging development.

Both the Minister and the GBRMPA are clinging to the political life raft so often employed when projects are approved which risk harming the environment – a plea to not worry because ‘strict conditions’ will protect the Reef.

Minister Hunt, facing pressure from the community, looming court action and an economic environment in which companies like Lend Lease and BHP Bulletin are publicly withdrawing from risky coal projects, is keen on blaming past Labor governments.

GBRMPA is brushing off the significance of the FOI documents saying they were ‘preliminary working drafts’, a sidestep which is blatantly disingenuous.

How does this explain minutes of a meeting between the Environment Department and GBRMPA in June 2013 to discuss the dredging application which GBRMPA’s Chairman Dr Russell Reichelt attended?

The minutes show GBRMPA advised the Department of the Environment that it “did not consider it practical or feasible to develop offsets of the magnitude required” to produce a net environmental benefit from the project in its current form. Two ways forward were discussed: “[A]dopt a compromised option” (i.e. trestle extension with dredging of 500,000 m3 and land disposal)” or “[a]pprove the proposal with conditions which are effectively unachievable”.

The public deserves a clear explanation as to why the Minister and his department rejected GBRMPA expert advice.

What other interests was the Minister considering which got in the way of what should be his priority – the health of this World Heritage jewel?

The smoker who continues to smoke despite medical advice they should stop is a tragic figure, but ultimately they are responsible for their health.

The difference here is that the Great Barrier Reef is not itself able to reject or accept the rapid industrialisation that is making it sick.

This power rests with the Minister for the Environment as the Reef’s guardian.

Right now it appears Minister Hunt is willing to accept illness and death of the Reef as his charge’s unhappy future.

Source: GREENPEACE