Adani Carmichael: The final hurdle

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 06 Jun 2017   Posted by admin

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DEVELOPMENT of Adani’s $16.5 billion Carmichael coal project is back on the table after the QLD Government made clear its position for the go ahead of the project. The Indian miner had dramatically suspended its final investment decision just days before its due date, blaming lack of clarity over royalty rates and the specifics of a $900 million Federal loan through the North Australian Infrastructure facility (NAIF).


Over the last two years, Adani’s proposed Carmichael coal project has tenaciously pushed through the approval processes for the gigantic mine and associated infrastructure which, if developed, had the potential to unlock widespread development in the Galilee Basin.

The proposed Carmichael coal, railway and port project includes building Australia’s largest thermal coal mine in the north Galilee Basin, about 160km northwest of Clermont in Central QLD.

Mine to port would be linked by a new 388km standard gauge rail line to a new terminal at Abbot Point Port near Bowen.

Once developed, Carmichael would be one of the biggest coal mines on the planet, producing between 25 million tonnes per annum (mtpa) and 60mtpa of high quality thermal coal.

Over its 60 year life the major infrastructure would not only support Adani’s operations, but the rail line and port facilities could facilitate development of other proposed mines in the Galilee Basin.

The combined mine, rail and port operations would provide more than 10,000 direct and indirect jobs and supply opportunities for the region, with operational hubs slated for Mackay, Townsville and Rockhampton.

The project benefits would be felt locally, regionally and across QLD, generating about $22 billion in mining taxes and royalties in the first half of the project life.

This could assist in providing public funding to help deliver schools, hospitals, roads and other services and stimulate activity throughout the economy.


Confusion & Clarification


On  22 May however, the Indian-based miner deferred its final investment decision on the Carmichael project – due to be made the following week – until it received clarity from the Queensland Government over lower or deferred royalties.

The news garnered a strong response from Federal Minster for Resources and Northern Australia Matt Canavan.

“How in hell can the Queensland Labor Government not even have the appropriate tax regime in place, two years after they’ve been in Government?,” he said during a 23 May doorstop interview.


“This project’s been assessed now for more than seven years, and the Queensland Labor Government is so chaotic, so wracked with indecision and in-fighting, that they can’t even tell Adani what taxes they will pay if they make a decision to invest in the mine.”


On 27 May Premier Annastacia Palaszczuk announced a new development policy under which the Adani Carmichael mine would “pay every cent of royalties in full”.

“My sole focus this week has been to lead negotiations that ensure Queenslanders get the best deal that will see more jobs and more money flowing into our state,” Ms Palaszczuk said.

“This is the right policy that will provide certainty and deliver jobs, royalties and opportunities for years to come.

“It will unlock these resource areas so that projects can proceed and deliver thousands of new jobs for regional Queenslanders.

“The same approach will apply to all greenfield projects in these Basins and the North West Minerals Province such as the Adani Carmichael Coal project.

“Opening up these three regions for development has the potential to support thousands of new jobs that are needed in regional centres along the coast as well as in outback Queensland.”

Deputy Premier Jackie Trad said that if royalties were deferred they would be paid with interest and with security of payment in place.

“Consistent with our election commitments, cabinet has [also] determined that any NAIF funding needs to be between the Federal Government and Adani,” she said.

The Northern Australia Infrastructure Facility (NAIF) is a Federal funding scheme to encourage and finance private sector investment in economic infrastructure that benefits northern Australia.

The NAIF was enacted in May 2016 and may approve a total of $5 billion in loans to 30 June 2021. No projects had yet received NAIF funding.

QLD Treasurer Curtis Pitt said on 29 May the State continued to support the NAIF, to which Adani had applied.

“The NAIF is a concessional loans scheme,” Mr Pitt said.

“NAIF was established by the Federal Government and any project financing approved by the independent NAIF board will flow between the Federal Government and a project proponent.

“We will not stand in the way of those arrangements [and] in the case of the Carmichael mine, any funds will pass directly from the Federal Government to Adani.”

After an 11th-hour scramble the QLD Government made its position clear that royalties would be paid and they would not stand in the way of any NAIF funding approval Adani received.

On 30 May Adani said it had reached an agreement with the State Government on royalty payments for the Carmichael project.

“This shows a strong commitment by the State Government to the project and is a benchmark decision to take this project forward,” Adani said in a statement.

The Adani parent company board said it would consider the final investment decision at its next board meeting.

“I welcome the fact that belatedly, the Queensland Government has sorted out their internal ructions and divisions and are now fully behind the project, signing a deal… with Adani to proceed with the project on a royalties arrangement,” Mr Canavan said.

“And the Queensland Government has confirmed that they will play their role in regards to any funding from the Northern Australia Infrastructure Facility.”




The regional centres of Rockhampton, Mackay and Townsville are set to reap massive benefits if Carmichael clears these final hurdles.

Townsville Chamber of Commerce president Troy Popham said the project had been portrayed as moving forward for a number of years and has built momentum in a region that would have otherwise remained soft on the mining sector.

“A lot of suppliers and businesses have been hanging on for what you would call an ‘economy in transition’, and if the project were to not go ahead it would instil a lot of doubt and really subdue business confidence in the region,” he said.

Adani has flagged Townsville as the project’s regional headquarters.

Mr Popham said it was a great decision that would provide much needed downstream revenue to the region.

“There’s also discussion as to whether Townsville would act as a fly-in fly-out (FIFO) base for the project,” he said.

“From a risk management point of view it would make sense to base 3000 FIFO workers in more than just one location to mitigate travel delays from things like natural disasters.”

In April last year Rockhampton was identified as a FIFO hub for the Carmichael project by Downer Mining, the project’s prime contractor.

While that decision was not set in stone, Rockhampton Major Margaret Strelow said she was determined her town wouldn’t miss out once the Galilee Basin was opened.


“We have been working very hard for the past two years with Adani and GVK Hancock and I am very excited to know that Rockhampton will play a key role in supporting and delivering services as the Galilee Basin opens,” she said.


Councillor Neil Fisher said discussions with stakeholders and contractors had commenced.

“The rapport we have built up with the resource industry during the last four years has now put Rockhampton at the forefront where we will become an integral part of the development of the Galilee Basin,” he said.

“We are very fortunate to have the skill level within our community to assist in developing new projects in our region; we’re excited to see that the development of Carmichael mine will draw on those skills in the coming years.”

Some of the supply chain opportunities for the region include engineering, construction, maintenance, heavy machinery, equipment, transport, camps, and labour hire.

Mackay is set to be the operational hub for the project – a base for suppliers to provide heavy equipment and engineering services for Carmichael.

Resource Industry Network (RIN) director Mick Crowe said the Mackay region was well-placed to service the project in an operational capacity.

“The operational hub is where the real work will happen and drive major job generation,” Mr Crowe said.

“The Mackay industry sector has long supported Adani in its journey and this workshop is a great opportunity for potential suppliers to hear first-hand from key personnel as well as a means of building relationships and creating communications.”

Mr Crowe said being named as an operational hub for Adani recognised the expertise in Mackay.

He said it demonstrated that the Adani team understood where they could best access the world-class engineering and heavy industrial support they would need for the projects.

“Being an operational hub will mean the major Tier 1 contractors who will carry out the mining and support services will now likely be based here and would operate side by side with our services companies,” he said.

“This means jobs for our region, both during construction and for the future life of the mine in a maintenance capacity.

“The flow-on effect of employment throughout our communities will be hugely beneficial for our economy.

“It will be the catalyst for other businesses to invest in our region when they see the investment by Adani and the boost in our regional economy.”