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Business News/ Companies / News/  Adani gets Australia’s nod for $15.5 bn coal mining project
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Adani gets Australia’s nod for $15.5 bn coal mining project

The approval has been given subject to the company fulfilling a string of strict conditions meant to protect environment

It is estimated that the project will provide electricity for up to 100 million people in India. Photo: BloombergPremium
It is estimated that the project will provide electricity for up to 100 million people in India. Photo: Bloomberg

Mumbai: The Adani group on Monday won the Australian government’s conditional approval to build a $15.5 billion coal mine and rail project in Queensland, extending a run of good fortune for its billionaire founder Gautam Adani.

The approval is subject to Adani Mining Pty. Ltd fulfilling a string of “strict conditions" meant to protect the environment.

“After undertaking a thorough assessment and consideration under national environment law, I have approved the Carmichael coal mine and rail infrastructure project, subject to 36 strict conditions," said Greg Hunt, Australia’s minister for the environment.

“The absolute strictest of conditions have been imposed to ensure the protection of the environment, with a specific focus on the protection of groundwater," said Hunt in a statement. “It is estimated the project will provide electricity for up to 100 million people in India."

The Carmichael project in the untapped Galilee Basin, designed to produce 60 million tonnes a year of thermal coal used in power stations, has been opposed by environmental activist groups, which objected to new coal mines as well as the rail lines and ports needed to ship the coal.

The Australian approval is another victory for the $9.2 billion Adani group, whose founder is considered to be close to Prime Minister Narendra Modi.

On 17 July, the Australian Parliament decided to repeal a carbon tax that had been levied since 2011 to limit pollution, helping coal exporters, including the Adani group, ship coal overseas at a lower cost.

A day earlier, in India, Adani Ports and Special Economic Zone Ltd (APSEZ) secured environmental and coastal regulation zone clearance for its controversial SEZ in Mundra, Gujarat, from the government after being entangled in litigation for more than two-and-a-half years. That was the last critical approval the port company had been waiting for.

On 26 May, coincidentally the day the Modi government was sworn in, APSEZ bought Dhamra Port Co. Ltd from Larsen and Toubro Ltd and Tata Steel Ltd for 5,500 crore after nearly a year of negotiations.

The Australian government’s approval for the Queensland project will lead to the creation of the largest coal mine in Australia, and one of the world’s largest.

Adani Enterprises Ltd, the parent of Adani Mining, had acquired the project in 2010 with the aim of generating output by 2016, and sought permission for building a 300km rail link.

The group is “committed to adhering to the strict regulatory and environmental approval processes that apply to all of its planned projects", the company said.

Experts said the clearance of the project, which has a lifetime resource value of at least $300 billion, was a big boost to the group despite the 36 conditions imposed by the Australian government at a time when coal prices are low amid excess supply and lower demand from China.

To be sure, the Australian economy will derive its share of benefits from the project.

“At full export capacity, the project is expected to contribute almost $930 million to the Mackay region’s gross regional product and $2.97 billion to the Queensland economy each year for the next 60 years," Hunt said in his statement, posted on the Australian government’s website.

The government approved the project subject to conditions including one requiring the company to ensure that a minimum of 730 megalitres of water are returned to the Great Artesian Basin every year for five years, apart from monitoring changes in the groundwater level.

The Adani group operates mines in India, Indonesia and Australia and imports trading coal from many other countries. Currently, it is one of the largest coal importers in India.

“Developing the Carmichael coal mine with relating rail and port infrastructure will deliver Adani’s core pit to plug strategy," the group had said in May 2014.

The global environmental group Greenpeace hit out at the Australian government for approving the project.

“Federal environment minister Greg Hunt has ignored expert advice and handed access to precious water reserves and the Great Barrier Reef to Indian coal giant Adani today, approving the construction of Carmichael mine in north Queensland, which will be Australia’s biggest coal mine if built," Greenpeace said.

“The federal environment minister has laid out the red carpet for a coal company with a shocking track record to dig up the outback, dump on the Great Barrier Reef and fuel climate change," said Greenpeace programme director Ben Pearson.

Hunt had given the go-ahead to Adani to clear over 20,000 hectares of bushland to build Carmichael mine, despite serious warnings from a government-appointed Independent Expert Scientific Committee about its impact on the water table, in addition to the threat posed to nationally listed threatened species, Greenpeace said in a statement.

“The decision brings dredging and dumping in the Great Barrier Reef World Heritage Area a step closer, as the Carmichael mine would require a new coal export terminal at Abbot Point, for which dredging must occur. The dumping of this spoil in the World Heritage Area was cited by Unesco as a reason why it continues to consider placing the Reef on its World Heritage ‘in danger’ list," the statement said.

Ruchira Talukdar, the Australian Conservation Foundation’s healthy ecosystems campaigner, said, “Any investors looking at the project should be fully aware of the many layers of risk that surround this project. Federal approval is merely one layer within a complex approval process that still has a long way to go before construction of the project can begin. The project still requires a Queensland government environmental authority, a Queensland government mining lease, and a water licence."

In India, the Adani group has attracted controversy because of its founder’s perceived proximity to Modi. Congress vice-president Rahul Gandhi and Aam Aadmi Party leader Arvind Kejriwal have claimed that land had been given at throwaway prices to the Adani group when Modi was chief minister of Gujarat, alleging crony capitalism. Adani has, in published interviews, denied the charges and said he had received no special favours.

Independent stock market analyst S.P. Tulsian said the Modi government had stated clearly that it was pro-growth and wouldn’t let projects in India be stalled for lack of approvals. Others like Vedanta Resources Plc. and the Aditya Birla Group too have had projects stuck at different stages for lack of regulatory approvals. “All these groups stand to benefit from this new government. It will be wrong on our part to draw the inference that the Adani Group is benefiting because of the closeness to Modi. It will not be a fair assessment. If they are in the good books then that will always be an advantage, but it will not be express," Tulsian said.

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Published: 28 Jul 2014, 09:40 AM IST
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