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Home / Industry / Banking /  Snake, lizard stall Adani’s Australia project

Mumbai: A rare lizard and a snake have stalled Adani Mining’s $12-billion Carmichael coal mining project in Queensland, Australia.

Overturning environment permissions for the mine, the federal court of Australia on Wednesday said the country’s environment minister Greg Hunt had “ignored his own department’s advice about the mine’s impact on two vulnerable species, the yakka skink and the ornamental snake". The yakka skink is a lizard seen mostly in Queensland.

The Guardian reported that the federal government has said it will take between six and eight weeks to revisit and reconsider its decision. The government described the decision of the court as a “technical, administrative matter", implying that the issue is really whether Hunt considered the impact of the project on the two species, and that its review process will assess this.

That would seem to suggest that the setback to Adani is temporary and a statement from the Indian conglomerate reinforces that.

Jainco Corporate Advisors Pvt. Ltd’s managing director Navin Kumar Jain said the Australian court’s decision is based on legal vulnerability of a “technical" nature, which can be easily sorted out by the Australian federal environment department.

A spokesperson for Adani’s Australian business, too, pointed to what he called a “technical legal error" by the federal environment department, which the company believes has turned the approval to an adverse decision.

“Adani acknowledges the federal environment minister has consented to remake the July 2014 environmental approval decision for the Carmichael Coal Mine and Rail project after a conservation group’s judicial review application. It is regrettable that a technical legal error from the Federal Environment Department has exposed the approval to an adverse decision," he said.

The spokesperson said the approval included appropriate conditions to manage the species protection of the yakka skink and the ornamental snake.

“However, we have been advised that, because certain documents were not presented by the department in finalizing the approval, it created a technical legal vulnerability that is better to address now. Adani will await the minister and his department’s timely reconsideration of its approval application under the Commonwealth Environment Protection and Biodiversity Conservation (EPBC) Act," the spokesperson said in the statement.

The order came on a legal challenge by Mackay Conservation Group against the approval to dig Australia’s largest coal mine in Galilee Basin.

The decision leaves Adani, which is yet to secure sufficient financial backing for Carmichael and had recently slashed its workforce on the project, without legal authority to begin construction, The Guardian said.

Adani has been in talks with Export-Import Bank of Korea and some Chinese banks to raise $1 billion for the project; the talks are now on hold. State Bank of India, the nation’s largest lender, decided earlier this year not to pursue a $1 billion loan agreement for the Australian project.

BNP Paribas SA, Credit Agricole SA, Societe Generale SA, Barclays Plc., Citigroup Inc., Deutsche Bank AG, Goldman Sachs Group, Inc., HSBC Holding Plc., JPMorgan Chase and Co., Morgan Stanley and Royal Bank of Scotland have refused to fund the project for environmental reasons.

Adani initiated the Carmichael coal project in 2010 with plans to develop a coal mine, a connecting rail link and the Abbot Point port to transport coal to India, but the A$10 billion project soon ran into protests from environmentalists.

The Australian Conservation Foundation (ACF) welcomed the ruling against the project. In an emailed statement, ACF said the federal court had rejected the government’s approval of Adani’s Carmichael coal mine, giving environment minister Hunt the perfect opportunity to reconsider his decision and reject the proposal this time.

ACF recently wrote to Hunt, drawing the minister’s attention to new evidence showing that Adani’s planned mega mine would pollute the basin’s groundwater and destroy 10,000 hectares of the habitat of the largest known population of the endangered southern black-throated finch.

“Greg Hunt must now review his approval of the Carmichael mine—and this time he should reject the disastrous proposal," said ACF’s chief executive officer Kelly O’Shanassy.

“In recent weeks, ACF has been talking to potential investors about the serious problems with this proposal, of which there are many. If it went ahead, this project would destroy wildlife habitat, damage precious artesian water and contribute to the global climate problem once the coal is burned. Many investors also feel the drop in the price of coal is making the project unviable," O’Shanassy said.

“We believe the weight of this new information means the minister cannot—must not—make the same approval decision he made before," she said.

In its statement, Adani stressed the need to press the pedal on approvals.

Adani is in the fifth year of developing the project and the need to finalize approvals and timelines is critical so Adani and the community can realize the benefits associated with its investments to date, including 10,000 jobs and $22 billion in taxes and royalties to be reinvested back into the community, the statement said.

“For the past six to 12 months, Adani has maintained a level of investment and project timelines based on anticipated approvals timelines and milestones. As a result of changes to a range of approvals over that time, it’s necessary our timelines and budget reflect those changes," the company’s spokesperson added.

The court’s decision and the delay are a setback for the company, said Ramesh Vaidyanathan, a managing partner at law firm Advaya Legal.

“The only ray of hope appears to be a correction of the ‘technical legal error’ that Adani believes will get addressed when the application is reconsidered."

“Given that this is not the first such Indian investment facing “green heat" in Australia, one wonders whether these investors accorded environmental due diligence the attention it deserves. At some level, I dare say, things got aggravated perhaps because of the Indian infrastructure developer mindset of ‘let’s deal with it as we go along’," Vaidyanathan added.

Adani’s rival and infrastructure conglomerate GVK Group is also seeking permissions to dig a mine in the basin, a 247,000-sq. km. expanse in north-eastern Australia.

In 2011, GVK acquired Australian Coal Mines in Queensland with 8 billion tonne reserves for $1.26 billion and envisaged an investment of $10 billion for setting up mines, a 500km rail project and a 60 million tonne per annum port project which will form one of the world’s largest integrated coal mining operations.

Still, the delay could cost Adani dear, according to Jainco’s Jain, who pointed to the time and cost overruns that will hit the commercial viability of the project that has already been affected by falling coal prices.

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