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Australian think-tank ‘not sure’ if Adani project will ever become viable

M Ramesh Chennai | Updated on January 23, 2018

“The Australian PM is supporting the project not because it could go ahead, he is supporting it because it is sure to fail. When it fails, this will provide the PM and the mining industry with an opportunity to paint environmentalists as the enemies of the economy and to try to reform planning and environmental laws,” said Roderick Campbell, Research Director at the Australia Institute.









The Australia Institute, an influential apolitical think-tank based in Canberra, has said that Adani Group’s $16.5- billion Carmichael mine project “is not financially viable at this point and is highly uncertain that it ever will be”.

In an e-mailed response to BusinessLine, Roderick Campbell, Research Director at the Institute, who appeared as an expert witness on economics in the Queensland Land Court case, pointed out that even after the Queensland government offered to subsidise the mine’s infrastructure by $326 million, “the project was still struggling to attract finance”.

Earlier this month, a federal court in Australia stayed the approval given to the project by the government, which Campbell termed “largely symbolic”.

“A far more important decision for the project will be the outcome of a challenge in the Queensland Land Court,” said Campbell.

PM’s support

The project has always been highly political and now more so than ever, with the Australian Prime Minister himself supporting the project publicly, he said.

“In my view, the PM is supporting the project not because it could go ahead, he is supporting it because it is sure to fail.

“When it fails, this will provide the PM and the mining industry with an opportunity to paint environmentalists as the enemies of the economy and to try to reform planning and environmental laws,” Campbell said.

More recently, the Australian government has said that the ‘railway line’ part of the Adani project is being considered for a subsidised government loan — which has been promptly criticised by many including Connie Hedegaard, former European Commissioner for Climate Action.

Stranded assets

In another development, the Adani group refused comments on a Citi report that counts the Carmichael project among “stranded assets” (projects that turn unviable after commencing operations).

In a report last week titled ‘Energy Darwinism II’ – a sequel to a report of 2013 – Citi, without naming the Adani project specifically, had said that new coal provinces “such as Australia’s Galilee Basin” might get stranded. Adani’s Carmichael project is in the Galilee Basin.

Citi report

The report, which is part of the Citigroup’s ‘global perspectives and solutions’ series, says that “high-cost, long-life projects would be most vulnerable, if product demand and prices weakened over time”.

The report examines whether it is the end of the road for coal, arguing mostly in the affirmative, and notes that the market capitalisation of the listed coal companies has come down from $50 billion in 2012 to $18 billion now.

Published on August 26, 2015

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