Australian coal as unbankable as it is unburnable


The Queensland Government and Indian coal conglomerate Adani are mired in controversy again this week, with a freedom of information request uncovering documents that show the Queensland Treasury not only assessed the $16 billion Carmichael mine as unbankable, but it was frozen out of key decisions on the project. The documents show that Adani’s high level of debt and unclear corporate structure left senior Treasury officials expressing serious concerns about approving the mine. They were worried the project would be pushed through without proper due diligence by the Department of State Development, Infrastructure and Planning, led by Deputy Premier Jeff Seeney. In November 2014, Seeney’s department signed a series of agreements with Adani, putting Queensland taxpayers on the hook for $455 million without any guarantee it would be repaid. Since then, the incoming Palaszczuk Labor government delayed Abbot Point dredging decisions and promised to cut taxpayer support for the controversial rail link between the Galilee basin and the port. As both are needed for Adani’s project to get off the ground, Adani recently suspended work on the Carmichael project and rumours are circulating that it may dump it altogether. This has been interpreted as a veiled threat to the government to get on with approvals and taxpayer support, which appears to have worked, with it calling for expressions of interest on port dredging. With a UNESCO decision on the Great Barrier Reef “in danger” listing imminent, the Palaszczuk government has a crucial decision to make. It can either stick to its election mandate and protect the Great Barrier Reef; or it can break its major election promise, ignore treasury advice, due diligence, and revelations of inflated job and royalty figures, and risk the reef for an unbankable, unburnable coal project.


Key Points

  • Even the Queensland Treasury doesn’t see Adani’s coal project as viable. Documents obtained under freedom of information show the Treasury is concerned about Adani’s level of debt, its capacity to take on the multi-billion dollar Queensland projects, its ability to repay the public money given to the project, and even its level of transparency. Eleven international banks, including HSBC and Deutsche Bank, have already ruled out financing the project, and with the growing global stampede away from coal Adani is looking increasingly desperate.
  • It is extraordinary that Treasury would be frozen out of decisions made about a $16 billion project that was to be handed hundreds of millions of taxpayer dollars. Proper due diligence is bafflingly absent from Adani’s Carmichael project, and missing despite it admitting to have inflated job and royalty figures, a lack of clarity on its corporate structure, and grave threats to the Great Barrier Reef. Elected in one of the largest swings in Australian political history on a platform of reef protection and restoring integrity to Queensland politics, the Palaszczuk cannot ignore its own Treasury’s advice, abandon due diligence, and allow climate and reef-destroying destructive coal projects to go ahead.



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Key quotes

  • “The only person foolish enough to invest in this white elephant has been Campbell Newman, using Queenslanders’ money against the advice of his Treasury. Now Labor are treading the same path by using taxpayer money to dredge the Reef for the same unviable project, despite campaigning on ‘saving the Reef’ to win the election. Queenslanders were furious with Campbell Newman for trying to squander funding that could have gone to education and health on the dying coal industry and they booted him out at the election. The same will happen to Tony Abbott if he follows in Campbell Newman’s footsteps by giving handouts to big mining companies to dig up the Galilee through the Northern Australia Infrastructure Facility.” Australian Greens Deputy Leader, Qld Senator Larissa Waters.
  • “Queensland Treasury knows Adani’s Carmichael proposal is an economic basket case in Australia. The Queensland premier must immediately call a halt to any moves to spend taxpayers’ money on Adani’s port, mine and rail projects – including via subsidies – and require a full and formal due diligence assessment of Adani’s capacity to undertake this development.” NQCC spokesperson Jeremy Tager.
  • “The minute Adani stops moving forward, the project is just dead, in my view. And the reason is you’ve got billions of dollars of debt in Australia and they’ve got this interest bill. They’ve been drawing a line in the sand and that is that they need financial close by October 2015. If they’ve got no banks lined up, which I don’t think they have, you can’t go to financial close.” The Institute for Energy Economics and Financial Analysis’ Tim Buckley.
  • “It appears the Department of State Development went rogue on this particular project and they didn’t want to consult with Treasury, they didn’t want to consult with Premier and Cabinet. They didn’t want advice.”  NQCC spokesperson Jeremy Tager.
  • “Without putting too fine a point on it, this is shaping up as the whitest of white elephants. No, more than this, this is an elephant which does not merely lack financial viability but which is also a calamity for the environment.” Journalist Michael West.

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