From Crikey’s Paddy Manning:
It speaks volumes that Australia’s largest coal project is now so completely dependent on government financial support.
But as the NSW government discovered with the Cobbora coal mine it hoped to sell off — underpinned by subsidised off-take agreements with power stations — even over-the-top state subsidies might not be enough to make an uncommercial project viable.
Queensland funding would be conditional on opening the infrastructure up to the other possible users in the Galilee, but, as Crikey wrote here last week, the two other major proponents are struggling to get off the ground. The scenario canvassed in today’s Courier-Mail, with not one but two state-funded rail lines built to the Galilee, is exceedingly unlikely.
Gina Rinehart’s Hancock Prospecting partnership with GVK is years away, mired in financing difficulties and a corruption scandal back in India, while Clive Palmer said yesterday his Waratah Coal was unlikely to take upNewman’s offer.
Palmer’s spokesman told Crikey the Newman announcement was pre-election political spin: “a good news story on the back of high unemployment figures”. Palmer remains miffed at the support for his two Indian rivals in the Galilee, and implacably hostile to Newman. As the spokesman said: “On one hand this government wants to sell assets and now they want to invest in helping one company.”
…Adani Mining is moving steadily, aiming to take a final investment decision by the end of next year and to produce first coal by 2017. Even with the finance it still has billions to raise and there are questions about the commitment of its partner in the rail project, Korea’s steelmaker POSCO.
There is a long way to go.
The subsidy list is embarrassingly long:
- no royalties
- hundreds of millions of dollars for infrastructure
- removing the carbon price and mining tax
- $1 billion loan from Bank of India
- personal dispensation for Adani from India’s drive toward coal self-sufficiency
- favourable coal price terms from Indian power plants
The only benefit left is the volume growth accounting entry as the jobs created will simply displace those in other mines as a result of lower coal prices.
But by then Comrade Campbell will be elsewhere, perhaps Canberra.
