Carmichael coal mine

Carmichael coal mine

Location
Carmichael coal mine
Location	about 160 km northwest of Clermont
Queensland
Country	Australia
Coordinates	22°08′S 146°27′E
Production
Products	Thermal coal
Type	Open-pit, underground
Owner
Company	Adani Group

The Carmichael coal mine is a proposed thermal coal mine in the north of the Galilee Basin in Central Queensland, Australia. Mining is planned to be conducted by both open-cut and underground methods. The mine is proposed by Adani Mining, a wholly owned subsidiary of India's Adani Group. The development was initially intended to represent an AU$16.5 billion investment, however, after being refused financing by over 30 financial institutions worldwide, Adani announced in 2018 that the mining operation would be downsized and self-funded to AU$2bn.

At peak capacity the mine would produce 60 million tonnes of coal a year, much of it "low quality, high ash". In court, Adani said it expects the mine to produce 2.3 billion tonnes over 60 years. It would be the largest coal mine in Australia and one of the largest in the world. The mine would be the first of a number of large mines proposed for the Galilee Basin and would facilitate their development.

Exports are to leave the country via port facilities at Hay Point and Abbot Point after being transported to the coast via rail. The proposal includes a new 189 km rail line to connect with the existing Goonyella railway line. Most of the exported coal is planned to be shipped to India.

The mine has drawn immense controversy about its claimed economic benefits, its financial viability, plans for government subsidy and the damaging environmental impacts. Broadly, these have been described as its potential impact upon the Great Barrier Reef, groundwater at its site and its carbon emissions. The emissions from burning the amount of coal expected to be produced from this one mine, whether sourced from it or elsewhere, would, in a "worst-case" scenario be, "approximately 0.53-0.56% of the carbon budget that remains after 2015 to have a likely chance of not exceeding 2 degrees warming...over at least 60 years... Approval of the Mine, therefore, could be either consistent or inconsistent with the goal of limiting warming to 2 degrees, depending on a range of external factors..."

The Australian Conservation Foundation (ACF) has a legal challenge to the approval given to Adani by the federal Environment Minister relating to water.

Location

The mining lease mostly covers the Moray Downs cattle station. The majority of the mine lies within the Isaac Region, with a small portion in the Charters Towers Region local government area. Road access is made by the Gregory Developmental Road, an undeveloped section of the Gregory Highway.

History

In 2010, the Queensland Premier Anna Bligh announced the Coordinator-General declared the proposed Carmichael Coal Mine and Rail Project was being assessed as a 'Significant Project'. Since then proposal has gone through many changes. The operational life was originally proposed for 150 years. This was later reduced to 90 years and is now proposed for 60 years.

On 8 May 2014, Queensland's Coordinator-General gave approval for the project to proceed. 190 conditions were set by the state during both construction and operations phases of the mine with particular attention paid to groundwater and water bores which may be potentially affected.

On the 29 July 2014, federal Minister for Environment, Greg Hunt gave approval for the mine to proceed. Federal approval was granted after 36 conditions were stipulated.

Exporting coal from the Carmichael mines requires new terminals and seabed dredging at the Abbot Point coal port. In early September 2014, it was reported the plan to dump dredge spoil in the Great Barrier Reef Marine Park area had been scrapped. The plan to dump the spoil at sea was widely criticised on the grounds that the fragile coral and seagrass ecosystem could be damaged. Documents released under Freedom of Information showed Great Barrier Reef Marine Park Authority scientists had opposed the dumping plan. The Palaszczuk Queensland Government is now the development proponent for a proposal to dump dredge spoil on land within the terminal site.

On 5 August 2015, the federal Department of Environment and Adani signed consent orders in the Federal Court to set aside approval of the Carmichael project. The Department did not correctly follow requirements under federal environment law to consider conservation advice regarding two endangered species affected by the proposal, the yakka skink and the Ornamental Snake. This led to considerable controversy. The Department is presently reconsidering the proposal.

By mid August, Adani had ceased commercial relationships with a number of engineering contractors and banks.

Project size and operations

Mine

The mine is planned to contain six open-cut pits and five underground mines. The surface disturbance area is 27,892 hectares (68,923 acres). The mine site covers an area of 44,700 hectares (110,456 acres), around 447 square kilometres (173 sq mi), and is about 50 kilometres (31 mi) long.

Operations at the mine are expected to consume 12 billion litres of water each year. It is required to return only 6% of this water in the first five years. The mine will take a total of 297 billion litres of water from underground aquifers.

The Carmichael River runs through the middle of the mine site. Bridges and flood levees must be built before the Southern mines are constructed.

In the Queensland Land and Environment Court, Adani said it expects the mine to produce 2.3 billion tonnes of coal over 60 years. This implies average production of around 40 million tonnes a year. According to the current Environmental Impact Statement, the Carmichael mine would produce 60 million tonnes of coal per year (at peak capacity).

Rail line

Two parallel proposals for rail lines between the Carmichael mine and port facilities were floated during the planning process.

In 2014, Adani signed an agreement with South Korean construction company POSCO to develop the North Galilee Basin Rail Project. This 388 kilometres (241 mi) standard-gauge rail line would provide capacity of 100 million tonnes of coal per year, increasing access to the Galilee Basin. Authorities suggested the line be financed by the Northern Australia Infrastructure Facility (NAIF), though the Queensland provincial government rejected a funding request in November 2017. In September 2018, Adani announced that it had abandoned plans to build the standard gauge line in favor of constructing a 200 kilometres (120 mi) 1,067mm line to a connection with existing narrow-gauge trackage.

Queensland freight rail operator Aurizon had separate plans to develop narrow-gauge rail lines in the Galilee Basin to serve what it described as "several" entities planning mines in the area, including Carmichael, but with no firm agreements close to complete it withdrew a loan request from the NAIF in February 2018.

Port expansion

The mine requires a significant expansion of port facilities. Deutsche Bank and HSBC declined to fund the Abbot Point port expansion due to environmental concerns affecting their reputation.

Jobs and economic benefits

Announcing the federal approval for the project, Environment Minister Greg Hunt stated it would contribute $930 million to the Mackay region's GDP and $2.97 billion to the Queensland economy each year for the next 60 years. Hunt claimed the 4 billion tonnes of coal resource extracted over its lifetime would be worth $300 billion. In court, Adani said the lifetime output of the mine would be 2.3 billion tonnes of coal.

Jobs

Adani claims the mine will create 10,000 jobs. The company took out a television advertisement during the 2015 Queensland election including this claim. Former Prime Minister Tony Abbott cited the 10,000 jobs figure as evidence "this mine is good for the country". In Queensland's Land Court, Adani's expert witness, economist Jerome Fahrer from ACIL Allen consulting, rejected the 10,000 figure, saying the project would create less than 1,500 jobs. Fahrer described the method used to produce the 10,000 figure as 'deficient'. In May 2015 a complaint was lodged with the Australian Securities Exchange alleging Adani was providing misleading information about the project. The CEO of Mine Operations, JJ Jakanaraj stated "We will be utilizing at least 45, 400-tonne driverless trucks. All the vehicles will be capable of automation. When we ramp up the mine, everything will be autonomous from mine to port. In our eyes, this is the mine of the future"

Financing

The Government-owned State Bank of India has signed a MOU with Adani that it will offer a $1 billion loan to the project. It was widely reported that the Bank had withdrawn this offer. This was rejected by the bank's Chairman.

A number of major international banks have publicly ruled out financing the Carmichael Mine and Rail Project, or the Abbot Point Coal Terminal on which the Carmichael project depends. This includes more than half of the top 20 coal financing banks globally. Banks currently ruling out funding include: Citigroup; JP Morgan Chase; Goldman Sachs; Deutsche Bank; Royal Bank of Scotland; HSBC; Barclays; BNP Paribas; Credit Agricole; Societe Generale; National Australia Bank. Adani spokespeople have said statements from banks they have not approached have “no bearing” on the project. Standard Chartered was previously involved in providing financing to the project. Adani has ended the bank's advisory contract.

Large coal projects in Australia typically engage with one or more of the ‘big four’ Australian banks in arranging or providing debt. On 5 August 2015, Commonwealth Bank announced that its advisory contract with Adani had ended, nonetheless have not ruled out funding Adani and are viewed as the most likely local backer. On 3 September 2015, National Australia Bank announced it would not fund the project. On 28 April 2017, Westpac announced it would not fund the project. Whilst the remaining bank - ANZ - has not explicitly ruled out funding, they have distanced themselves from Adani and announced a strategic shift away from Coal.

Environment groups have pursued campaigns to pressure banks to rule out funding the project. Some have encouraged customers to switch bank accounts and mortgages away from the large banks funding coal projects.

Financial viability

Analysts doubt the mine is viable given current seaborne (imported) thermal coal prices and market trends. In November 2013 Morgan Stanley valued the mine at $0 and said

“While the company expects the environmental clearance to come through in F2H14, it does not plan to spend money on developing the mine until coal prices rise from current levels”.

In November 2014 Daniel Morgan, global commodities analyst at investment bank UBS, said

"On a standalone basis, the economics just don't stack up – I'm talking about costs and return on capital. You'd need a price of about $100-$110 a tonne for it to stack up".

Seaborne thermal coal prices (Newcastle benchmark) have dropped from highs of around US$140/t in 2012 to around US$60/t in 2015 is due to increases in production and reduction in seaborne coal demand.

In September 2015, UBS said in a briefing note "no new coal mines needed on 5+ year view" and projected prices recovering to $88/t by 2019—still below the required price for Carmichael.

Tim Buckley, director of energy finance studies Australasia at the Institute of Energy Economics and Financial Analysis, argues that the Carmichael mine is a 'stranded asset'. Buckley cites a range of factors including: structural decline in seaborne coal markets; Adani's already high debt gearing; difficulty raising capital, a recent company restructure; approval delays.

Documents from Queensland Treasury released under Freedom of Information showed senior officials advising Ministers that Carmichael "is unlikely to stack up on a conventional project finance assessment".

Most of the coal from the mine would be purchased by Adani in India. LG has announced it will not proceed with a contract to buy coal from the mine.

Proposed government subsidies

The Queensland and Australian Governments have proposed various forms of assistance to the project. This is despite the G20 commitment to phase out "inefficient" fossil fuel subsidies.

Queensland state subsidy

Queensland Government budget papers show spending of $9.5 billion between 2008 and 2014 assisting the mining industry. Queensland Treasury wrote in a submission to the Commonwealth Grants Commission:

Governments face budget constraints and spending on mining-related infrastructure means less infrastructure spending in other areas, including social infrastructure such as hospitals and schools.

The Newman Queensland Government initially claimed it would not support the Carmichael project. But in 2014 it proposed a "royalty holiday" or reduced royalty rates, as well as proposing to "co-invest" in infrastructure. The Labor Opposition criticised this as a "blank cheque". Treasurer Jeff Seeney argued

“The Queensland government, like governments across the world, have always provided some major incentives and the incentive we have decided to provide relates to infrastructure rather than the traditional handing out of grants.”

During the 2015 Queensland election, the Labor Opposition promised not to fund the rail project linking the mine to the port. Since Labor's election victory, the new Queensland Treasurer confirmed the government will not fund the rail line but did not rule out other forms of support such as a royalty holiday. Premier Palaszczuk said she is "absolutely committed" to the project going ahead and called for federal funding for the rail line.

Federal subsidy

The 2015-16 Federal Budget outlined the $5 billion Northern Australia Infrastructure Facility "to provide large concessional loans for the construction of ports, pipelines, electricity and water infrastructure that will open our northern frontier for business." The website states "The Commonwealth will not lend to projects that are commercially viable without Government assistance." It is reported the Abbott government is considering using this fund to ensure the Carmichael rail line is built.

Environmental impacts

Greenhouse gas emissions

According to the mine's environmental impact statement it will produce 200 million tonnes of carbon dioxide over the expected 60-year life of the mine. This includes gases produced during the mining process and from emissions created from the mining and transportation of the coal. Deciding on the approval for the mine, The President of the Land Court of Queensland stated, "there will be no increase of greenhouse gas emissions if the Carmichael mine is approved. This is because alternative supply will be sourced elsewhere to meet global demand if the mine is not approved."

The burning of that coal has been estimated to produce another 130 million tonnes of carbon dioxide every year.

In court, Adani claimed it expected the mine to produce 2.3 billion tonnes of coal over 60 years, averaging to just under 40 million tonnes of coal a year, equivalent to 4.7 billion tonnes of carbon dioxide. This is "approximately 0.53-0.56% of the carbon budget that remains after 2015 to have a likely chance of not exceeding 2 degrees warming."

A Greenpeace report showed the output from Carmichael would exceed the yearly carbon dioxide emissions from fuel combustion in many countries.

Region/Country/Economy	2009 CO2 emissions from fuel combustion (million tonnes)
Carmichael Coal Mine (peak production 60mtpa)	128
Vietnam	114
Belgium	101
Carmichael Coal Mine (production claimed in court, average 40mtpa)	85
Philippines	71
Austria	63
Qatar	57
Finland	55
Hungary	48
Denmark	47
Switzerland	42
Sweden	42
Norway	37

Local impacts

Water

Adani has applied for a water licence to extract up to 12.5 GL per year from the Belyando River for use at the Carmichael mine. The mine will also use groundwater that flows to the surface during the process of “dewatering” the open cut pits and underground mines.

According to the Supplementary Environmental Impact Statement (SEIS) submitted by Adani, “maximum impacts in excess of 300m are predicted” for the local water table. Beyond the mine boundary, Adani's groundwater model predicts water table levels to drop “typically between 20 and 50m” and “up to around 4m in the vicinity of the [Carmichael] river”. Impacts on ground water were central to a case in the QLD Land Court, where Adani's expert witness defended inferences drawn from drilling data, against allegations that this was insufficient to determine risks of collapses underground that could impact groundwater systems.

Endangered species

The mine site area is home to a number of threatened species, including the yakka skink, ornamental snake, and the waxy cabbage palm. Moray Downs, which is covered by the mine site, is home to the largest known community of black throated finches . The finches' population is in decline, and the southern subspecies is threatened.

Bygana West Nature Refuge: endangered koala habitat

The Carmichael project's open-cut mine most of the Bygana West Nature Refuge, which includes two endangered regional woodland ecosystems and habitat suitable for a variety of animals including koalas.

Legal Challenges

There have been a number of legal challenges to the project.

Native Title claims

Adani Mining Pty Ltd and Another v Adrian Burragubba,
Patrick Malone and Irene White on behalf of the Wangan and Jagalingou People

Indigenous landholders mounted a challenge to Carmichael Mine, and called on the Queensland Government to refuse a mining lease to Adani Mining. In a major test of Australia's native title laws, the Wangan and Jagalingou people rejected the Indigenous Land Use Agreement with Adani. Adani then launched legal action (Adani Mining Pty Ltd and Another v Adrian Burragubba, Patrick Malone and Irene White on behalf of the Wangan and Jagalingou People) in the Native Title Tribunal in an attempt to enable the Queensland government to compulsorily acquire the land and push the mine ahead.

Adrian Burragubba, spokesperson for the Wangan and Jagalingou people, said

"But I think there is a concern that the values that have been expressed in the Native Title processes, probably since 1997, are that mining is really equivalent to the public interest, mines must go ahead, and it's about compensation. So I think the [W&J people] don't have a lot of confidence that 'no' is really on the table, even though the legislation does provide it is on the table."

The traditional owners against the development claimed the project would "devastate their ancestral lands and waters, totemic animals and plants, and cultural heritage".

Environmental law

Mackay Conservation Group v Commonwealth of Australia and Adani Mining

In January 2015, the Mackay Conservation Group, based in Mackay, challenged the July 2013 federal approval of the Carmichael project by Greg Hunt, Environment Minister, under the Environment Protection and Biodiversity Conservation Act 1999. The Group was represented by the Environmental Defenders Office of NSW. The case involved three main contentions:

• That the Minister unlawfully excluded consideration of greenhouse gas emissions to emissions directly associated with the operation of the mine. The Minister did not consider the much larger emissions associated with burning the coal from the mine.
• That the Minister failed to consider Adani's poor record of environmental management in India, including building without approvals and illegally clearing mangroves, instead relying on a statement from the company that it has a good track record.
• That the Minister did not consider "approved conservation advice" for two endangered species that would be affected by the mine, the yakka skink and the ornamental snake, as required by federal law.

The Federal Court set aside the approval on the latter ground. Despite reports Federal Court "overturned" the approval, the decision occurred by consent order signed by the Department of Environment and Adani.

The Department is currently reassessing the proposal.

Adani Mining Pty Ltd v Land Services of Coast and Country Inc.

In May 2014 the Queensland Coordinator General recommended the project be approved and there was a call for public comment and objections. Coast and Country, represented by Environmental Defenders Office Queensland, brought a case to the Queensland Land Court. They contended:

1. "Adani grossly overstated to the public the number of jobs, and royalties the mine would have for Queensland;
2. The mine, rail and port as well as the burning of coal will cause damage to the Great Barrier Reef from climate change and ocean acidification;
3. The mine will destroy the core population of endangered Black Throated Finch and may impact Waxy Cabbage Palms, and the potatoes grown in the area too;
4. The mine will threaten the base flow of the Carmichael River and may threaten the ancient springs estimated to be one million years old; and
5. The project is extremely risky and unlikely to be financially viable."

Australian Conservation Foundation Inc v Minister for the Environment - Emissions challenge 2016-17

The Australian Conservation Foundation (ACF) made a judicial review challenge under the Environment Protection and Biodiversity Conservation Act 1999 which was dismissed in 2016 followed by an appeal to the Full Court of the Federal Court of Australia. ACF lost the appeal in 2017. Adani Mining PTY LTD were the second respondents in the case.

The main contention was that the Minister did not consider the impact of greenhouse gas emissions on the Great Barrier Reef.

The case was dismissed because the court found that the cause and effect was complicated, the lower court stating that it was "not possible for him [the Minister] to draw firm conclusions as to the likely contribution of Adani’s action to a specific increase in global temperature" and that if the coal was stopped from the Carmichael Mine it would likely be substituted from somewhere else. Dr Justine Bell-James has criticised the market substitution defence stating that it is the “only significant barrier remaining to a successful climate change case". The Court ordered ACF to be part of the legal costs for Adani and the Minister. The environmental approval was approved which lasts for 99 years.

Australian Conservation Foundation Inc v Minister for the Environment - Water challenge 2018

The Australian Conservation Foundation (ACF) being represented by Environmental Defenders Office Queensland lodged a judicial review challenge in the Federal Court of the Federal Environment Ministers decision to not apply legislation regarding water. The issue had previously been highlighted by environmental groups such as Lock the Gate Alliance. The review challenges the Environment Minister Melissa Price's decision to waive a full environmental assessment for a pipeline that will extract up to 12.5 billion litres of water a year from the Suttor River in central Queensland. Adani notified the government that the act was a controlled act but the government decided that it was not a controlled activity under the EPBC Act and that no environmental impact assessment (EIS) was needed for it to proceed. Under the amendments to the EPBC Act the Minister must obtain advice from an Independent Expert Scientific Committee on Coal Seam Gas and Large Coal Mining Development if an activity is likely to have a significant impact on water resources or impact on a protected ecological communities, species (such as the black-throated finch, world heritage sites, national heritage sites or protected wetlands. The water trigger was added to the EPBC act in 2013 the amendment was introduced by the then Federal New England MP Tony Windsor.

Criticism of legal action

Substantial controversy about federal environmental law followed the 2015 Federal Court decision to set aside the Carmichael approval (agreed by consent orders signed by the government). Government Ministers criticised the group bringing this case under federal environment law, calling them "vigilante litigants" engaged in economic "sabotage".

The government is seeking to change the law to prevent 'third parties’ from bringing cases where they are not directly impacted by the proposal. Prime Minister Tony Abbott urged the business community to get behind these changes, saying "if the Adani mine does not go ahead soon, we are crazy." Radio broadcaster Alan Jones, on many issues a supporter of the Liberal Government, has launched a TV ad, stating:

"I may live nowhere near the Liverpool Plains or the Great Barrier Reef. But I sure as hell am concerned they are protected. ... The latest move by the Abbott government puts at risk not just our environment but our very democracy"

See also

• Coal mining in Australia
• List of mines in Australia