The proposed Carmichael thermal coal project – which is set to deliver significant economic benefits for Queensland and Australia – will need to reassure stakeholders around its potential environmental and land-use impacts, as well as how it fits into the broader climate-change agenda post-Paris Agreement.
- The Carmichael mine is a proposed thermal coal project in the Galilee basin of central northern Queensland, Australia, to be developed by the Australian subsidiary of the Indian conglomerate Adani Group. Carmichael is expected to include six open-cut pits and five underground mines, spanning a total distance of over 30km and making it potentially the largest coal mine in Australia. The project is expected to cost A$16.5 billion, and would at peak capacity produce 60 billion tonnes of coal per year, with the output planned for export to support growing energy demand in the Asian market.
- Carmichael has been approved by Queensland and federal regulators, subject to strict environmental conditions and stipulations related to indigenous rights; nonetheless its development continues to be stalled. The project has faced legal challenges from environmental and Aboriginal groups, who have cited its expected carbon emissions and the proximity of proposed infrastructure development to indigenous burial grounds, as well as Adani’s alleged environmental impacts from prior operations in India. Due to political pressure, the Queensland government has also reconsidered its position on key aspects of the project including funding. Consequently, the Carmichael project highlights that extractive projects in OECD jurisdictions, even if economically beneficial, are not immune to stakeholder risk.
- The Carmichael project is expected to be a commercial boon to the region – the remote Galilee basin of central northern Queensland – but it has received mixed support from government officials. Carmichael is expected to provide over 1,000 full-time permanent jobs, as well as significant tax revenues for the state government, in a region which currently has an unemployment rate of 6%, the second highest statewide rate in Australia. As a result, the Queensland government, including the sitting premier, Annastacia Palaszczuk, has assessed Carmichael as a “significant project”, and awarded final state and federal approvals for the project in December 2016. Nonetheless, stakeholder pressure has caused an ongoing degree of uncertainty around levels of government support for the project. For example, the incumbent Queensland Labor government has clashed internally on various project issues including, for example, a “royalties holiday” offered to Adani Group. Furthermore, following legal challenges during the approvals process brought by the Mackay Conservation Group, who argued that the Coordinator-General had failed to take into account local biodiversity issues, the federal government made approvals for the project subject to strict environmental conditions. Meanwhile, the premier of Queensland – who was initially supportive of Carmichael and encouraged the Adani Group to seek financing from the Northern Australia Infrastructure Facility for its rail extension – vetoed Adani’s application for the Infrastructure Facility funds in December 2017, which she had promised to do if re-elected in the November 2017 state elections.
- The Carmichael project has regularly faced stakeholder concerns regarding its environmental, land-use and climate-change impacts. Opposition has tended to be led by the single-issue Stop Adani campaign, which regularly organises protests and civil disobedience against the project. Aboriginal groups have opposed the expansion of the existing Abbot Point Port, a key infrastructure component of the Carmichael project, due to its proximity to traditional burial grounds and sacred sites. Meanwhile, the project has also attracted attention from environmentalists, who oppose the plans to export coal mined from Carmichael via a route that passes through World Heritage Sites including the Great Barrier Reef. The company has worked to address some of these stakeholder concerns; for example, it has altered plans to dump dredge spoil near the Great Barrier Reef to dump on-site instead. Nonetheless, these planned mitigation measures appear to have done little to stem stakeholder opposition, particularly given concerns surrounding the Adani Group’s environmental performance in India, where the it was previously charged by the Gujarat High Court with illegally clearing protected mangroves, causing “extensive environmental abuse”.
- While the coal extracted from Carmichael would supply a ready demand in Southeast Asia, potential investors have seemingly been hesitant to be tied to the project, in part as a result of climate-change concerns. In addition to the Queensland government vetoing public financing through its infrastructure development fund, Adani has struggled to win backing from private-sector funders. The “Big 4” of Australia, the four largest banks holding over 90% of gross loans and advances in-country, have either publicly stated they will not fund Carmichael, or have implemented climate-change policies effectively banning them from providing funds for thermal-coal projects. Foreign investors have appeared similarly hesitant: for example, Korean and Japanese banks have publicly distanced themselves from the project due to climate-change concerns. Such actions may serve as an important signal to producers of thermal coal that investors and other stakeholders, particularly those in OECD nations, are viewing climate change as increasingly material in terms of project risk and impact.
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