Soaring coal prices fire up Adani mine railway plan
Summary: India’s Adani has rejuvenated the controversial Carmichael mine in Queensland as thermal coal prices soar, shaving about $1 billion from the cost of a planned railway to help seal a finance deal and accelerate construction.....
(Pictured: Adani Mining chief Lucas Dow.)
Adani’s new local chief, former BHP coal boss Lucas Dow, said the planned mine would now export through a 200km-long narrow-gauge rail line that would connect to the existing Aurizon Queensland coal network.
The new plan brings the project back into the frame after opposition from green groups spread into last year’s Queensland election and led Premier Annastacia Palaszczuk to knock it back for Northern Australia Infrastructure Facility funding to build a 388km stand-alone railway to the Abbot Point coal terminal.
The $16bn project in the frontier Galilee Basin had since been written off as uneconomic by many, including Opposition Leader Bill Shorten.
But the April appointment of Mr Dow, a former asset manager of the BHP Mitsubishi Alliance that runs most of BHP’s Queensland coking coal mines, and a new rail plan that could halve the previous $2.2bn rail development cost, has breathed new life into the idea.
“By connecting to the existing network we can fast-track project delivery, reduce capital expenditure and deliver coal more quickly to countries in Asia with growing energy demand,” Mr Dow said yesterday in Rockhampton.
The new rail plan will connect with Aurizon’s existing network and is essentially similar to one previously proposed by Aurizon that Adani had opposed.
Mr Dow said the link would help Adani secure a finance deal.
“As soon as we have that finance sorted, we’ll be ripping into construction,” he told The Australian. He would not give a timeline for construction or production. The most recent timeline given by Adani was in its local accounts, which were filed with the corporate regulator in June.
They show the company is targeting first production in 2020-21 from a first stage that would export 27 million tonnes of coal a year. Further stages are designed to bring it to 60 million tonnes.
The accounts also show an $18 million impairment because of delays to the project in the wake of the NAIF funding refusal. The first stage, with the rail savings, is now expected to cost about $3.5bn.
Mr Dow, who became Adani Mining chief in April, was BMA asset president from 2013 to 2015 and brings a new level of credibility to Adani’s local outfit.
He said Carmichael stood up economically and environmentally and that the recent strength in the thermal coal price helped the project.
The Australian reported this week that thermal coal export values hit a record in July, on prices that reached a 10-year high in Australian dollar terms.
“Any time we’ve got buoyant prices and a weaker Aussie dollar, as an exporter, they’re good times to be in the market,” Mr Dow said. “But this is a robust project that will stand the test of time throughout the cycle.”
He said the mine would be among the lowest-cost 25 per cent of global mines that could export coal to India, South East Asia and China (excluding capital costs).
“It stacks up economically and environmentally and we just want to get our ducks in a row and get on with it,” Mr Dow said.
Huge opposition to the coal mine from green groups has spilt into the broader community, particularly outside the region.
The pressure led Ms Palaszczuk to knock back NAIF funding during last year’s state election and has raised questions about Mr Shorten’s attitude to the project after he said this year it did not stack up economically.
The new announcement sparked immediate concerns from those opposing the mine.
“Signing a deal with arch-nemesis Aurizon shows this company is not f...ing around,” GetUp campaign director Sam Regester said on Twitter. “They will dig this mine unless we stop them.”
Australian Conservation Foundation Stop Adani campaigner Christian Slattery said: “Adani’s announcement is another clear indication that the company is more serious than ever about building its climate-damaging coal mine.”
Mr Dow said there was a lot of support for the project in regional centres in Queensland.
“All I would ever ask is opinions are based on facts,” he said of opposition to the project.
The project has achieved primary environmental approval and is working through environmental management plans for some species.