The dispute over the Adani Group’s proposed Carmichael mine and the associated port at Abbot Point has long been cast as a choice between jobs and the environment. Climate change is already well on the way to destroying the Great Barrier Reef, among many other things, and the development of the massive coal reserves of the Galilee Basin would make it almost impossible to stabilise the global climate.
On the other hand, we are promised an economic bonanza with 10,000 jobs and billions of dollars in royalties and taxes. For hard-pressed cities like Townsville and Rockhampton and for governments with a chronic shortage of funds, this seems too good to turn down.
It’s becoming increasingly evident, however, that the choice is a false one. In all probability, neither the jobs nor the revenue will ever materialise. Rather, the whole project will turn into a sink, into which public money is poured for no return.
In June this year, when Adani announced the establishment of a regional headquarters in Townsville, expected to employ 500 people, the commencement of pre-construction works in the September quarter, and the reiteration of the 10,000 jobs claim. To address the task of filling all those positions, Adani created a “jobs portal”.
By September, nothing had happened. The Townsville headquarters was staffed mainly by about 80 workers transferred from Brisbane. The start of pre-construction was re-announced, this time for October. The jobs portal had advertised less than a dozen Adani jobs (at the time of publishing, there are seven jobs on offer). The contractor supposed to begin work on the site was similarly invisible.
Then came the revelations from the Guardian, and then Four Corners, on Adani’s environmental and financial practices, revealing that the chain of companies through which the project is controlled stretches back through the Cayman Islands to an even more opaque tax haven in the British Virgin Islands.
As usual, Adani’s response was to play the jobs card, announcing that the fly-in, fly-out (Fifo) workforce for the mine would be divided between the two leading claimants, Townsville and Rockhampton. The response was predictably enthusiastic, with the Queensland premier. Annastacia Palaszczuk, describing it as “great news for those regional communities that have been struggling”. The euphoria surrounding the announcement obscured the fact that the promised job bonanza had been scaled back, with the mine now expected to employ about 2,000 workers and the regional headquarters only 150.
Even bigger news was buried, or ignored altogether. In return for their selection as the Fifo hubs, the Townsville and Rockhampton councils agreed to pay $18.5m each over the next two years to build an airstrip at the mine site.
The use of local government money to build infrastructure for Adani epitomises the entire project. The construction of the rail line connecting the mine site to the port depends on getting a loan of around $900m from the commonwealth government’s Northern Australia Infrastructure Facility. Publicly owned export-import banks in Australia and elsewhere are also being pushed to fund the project.
Adani upped the pressure to fund the project last week, announcing that it would break ground on the rail line “within days”. With construction already underway, what government would dare to pull the plug? However, a closer reading suggests that the ground breaking will be of the kind seen on an episode of Utopia, in which assorted dignitaries use ceremonial shovels to “mark the official start” of the project (which already had its first “official start” back in June). This was confirmed by the announcement that the official start, planned for Friday, had been postponed indefinitely because of a forecast of rain.
Even with generous public support, it seems unlikely that the Carmichael mine can be made economically viable. Why then, does Gautam Adani, the ultimate owner of the Adani Group, continue to push the project? It could be simply the hubris of a wealthy and powerful man, unaccustomed to defeat.
More likely, however, is that the manoeuvres around this project are part of a more complex strategy. As analysis by the Institute for Energy Economics and Financial Analysis has shown, Adani needs to refinance its Abbot Point coal terminal by by November 2018. In the absence of Galilee Basin coal, the export volumes through the port won’t be sufficient to service the debt.
So, it’s in Adani’s interest to keep the Carmichael project alive as long as possible. On the other hand, any Adani money invested in the project, beyond the large sum that has already been spent, is likely to be lost.
Fortunately for Adani, it seems, both national and local governments appear willing to use public money to finance the supporting infrastructure (air and rail links) needed before the mine itself can begin operations. The result is that if the mine does not go ahead, Adani’s losses will be minimised. The Australian public will be the proud owners of a railway to nowhere, with an airstrip at the end.
Professor John Quiggin is an Australian Laureate fellow in economics at the University of Queensland.
This article first appeared in The Guardian on 18 October 2017