Confidence in Carmichael

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 03 Jun 2016   Posted by admin


The Carmichael coal mine and rail project is a key part of the Adani Group’s vertically integrated Pit-to-Plug business model.

By Reuben Adams

ADANI Mining’s gigantic Carmichael coal mine and rail project has been impacted by a myriad of challenges and amendments since it was first announced as a significant project in 2010. Despite weak coal prices and ongoing legal action, Adani Mining chief executive Jeyakumar Janakaraj is confident that construction will kick off on the $21.7 billion project in 2017.

The Carmichael coal mine and rail project is a key element to the wider Adani Group’s vertically integrated Pit-to-Plug business model which involves extraction, processing and export to overseas power plant customers – including the Group’s own power station projects.

The greenfield Carmichael coal mine in Queensland’s Galilee Basin, about 160km north west of Clermont, includes six open cut and up to five underground mines, on-mine infrastructure and associated mine processing facilities.  The mining leases – 70441 Carmichael, 70505 Carmichael East and 70506 Carmichael North – contain an estimated 11 billion tonnes of thermal coal.

The proposed 100 million tonnes per annum North Galilee Basin Rail (NGBR) project would comprise a 380km standard gauge, greenfield rail line and associated infrastructure. 4km long trains would operate up to 24 hours a day, 7 days a week, every day of the year carrying about 23,500t of coal to the proposed Abbot Point T0 export terminal.

Naturally, the approval process for such a large and complex project has been long. In April, a key milestone was reached when Queensland State Development and Natural Resources and Mines minister Dr Anthony Lynham approved the three individual mining leases.

While there were a still number of steps before construction could start – such as secondary approvals for rail, port facilities, power, water, road works and the airport, and a financial assurance with the Department of Environment and Heritage Protection – Adani Mining chief executive Jeyakumar Janakaraj was confident that they were “all coming up in time”.

Dr Lynham said overall, the coal, rail and port project had 19 permits and approvals at local, State and Federal level, including nine primary approvals from the State and Commonwealth Government.

Approvals

Adani is still facing well-publicised federal court challenges from the Australian Conservation Foundation and traditional owners, but Mr Janakaraj said that Adani’s ultimate decision to build Carmichael would be based on regulatory approvals.

“The approvals process is obviously elaborate and detailed,” he said. “The problem is not the approvals process – the problem is that people are trying to use loopholes in the approvals process to unnecessarily delay decision-making.

“That is where the approvals process is flawed, and those loopholes need to be tightened up. We have all of our approvals for the port and the rail. These legal challenges have no meat in them; their purpose is to delay.”

Adani was confident that these Federal Court challenges would be overturned, Mr Janakaraj said.

Adani estimated the mine, rail and port project would generate more than 5000 jobs at the peak of construction and more than 4500 jobs at the peak of operation.

Adani estimated the mine, rail and port project would generate more than 5000 jobs at the peak of construction and more than 4500 jobs at the peak of operation.

“It is not something that we can predict or something that we can expedite, but we are confident knowing the importance of such a large project and the robustness of the Australian legal system,” he said. “Most of the Court case judgments should come before [October]; one or two pending after that.”

An Adani Mining spokesperson said that the company had since concluded an Indigenous Land Use Agreement (ILUA) with that Traditional Owner group (Wangan and Jagalingou) with a 294-1 vote, as well as having concluded ILUAs with every other Traditional Owner group spanning its mine, rail and port projects.

There was an additional Federal Court challenge from one part of one Traditional Owner group, the spokesperson said.

“The appeal, from W&J [Wangan and Jagalingou] member Adrian Burragubba, follows an earlier decisive determination by the National Native Title Tribunal last year finding that the mining leases should be granted (which has obviously happened since),” the spokesperson said. “So the ACF and other activist groups are certainly persistent challengers, but on the Traditional Owner front it is one part of one group, where the broader group has emphatically voted to conclude an Indigenous Land Use Agreement.”

Adani will make a financial decision on the project in about six months and, if all goes to plan, will begin construction in the second half of 2017.

Benefits

While a number of pundits have expressed concerns about the projects viability in the face of sluggish coal prices, Mr Janakaraj was confident Carmichael would make enough money to service debt and equity at current prices.

Our mine will be in the lowest quartile in costs of production; we are extremely confident that our costs of production will be very low,” he said. “We have an advantage of scale; our open pits will run at about 20mt, each pit. The underground when it comes online will be 15mt. So we have these advantages, and we also have advantage of quality, of course. These things together give us financial leverage.”

Adani estimated the mine, rail and port project would generate more than 5000 jobs at the peak of construction and more than 4500 jobs at the peak of operation. Mr Janakaraj said this project would not just benefit India or the 300 million people without power, but would also create huge job opportunities and open up a new basin for Australia.

If all goes to plan Adani will begin construction in the second half of 2017.

If all goes to plan Adani will begin construction in the second half of 2017.

“It’s an extremely complementary strategy between India and Australia; security for India, jobs for Australia,” he said. “It is not just about opening Adani’s one mine either – we would like to see other mines open in the Galilee Basin and improve Australia’s cost competitiveness in the global coal market. So it is there as a nation building project as well.”

Member for Mackay Julieanne Gilbert and Member for Mirani Jim Pearce welcomed the “positive” progress on the project for their regions, which have been hit hard by the commodity price downturn. Mrs Gilbert said the city of Mackay welcomed potential business for the city’s mining engineering and services sector, hand-in-hand with the assurance of strict environmental conditions to protect the reef.

“[The approvals] will be a real boost in communities like Moranbah, where jobs and confidence are very much tied to the resources’ sector’s fortunes,” Mr Pearce said.