From Matthew Stevens:
…it is increasingly difficult to believe that Adani will linger too much longer before pulling the plug on this pariah of a coal project that has, so far fruitlessly, absorbed just shy of $2 billion.
…Projects are designed and costed around schedules. Carmichael’s milestones, ultimately, reflect Adani’s increasingly immediate need for coal to feed its own power stations. By our reckoning Adani needs about 10 million tonnes a year of reliable high-quality coal supply by 2017. For four years Adani has worked to make Carmichael the solution. But all the evidence suggests the project is now the problem and that Adani is close to burying Carmichael and seeking more certain alternatives.
Depending on you view point, that is either a massive win for the environment regionally and globally, or a highly indicative setback for the Australian economy and for the people whose current and future welfare depended on development of the Galilee Basin’s coal.
Wrong. The problem with this project is that it is a proto-communist, loss making dog, that will do economic harm not benefit. The thermal coal price is currently sitting at roughly $60 with a very firm trend suggesting worse ahead:
I expect thermal coal to eventually settle towards the 2003 price as the glut refuses to shrink because Chinese demand keeps falling, driving an epic and seemingly endless cost-out cycle for existing mines.
Does this process need a massive new mine that is thought to have a breakeven near $100? Or will that mine simply accelerate the closure of other cheaper mines as well as drop Australian productivity in the name of Indian resource nationalism?
If Adani wants coal the world (even just Australia) is swimming in cheap and cheerful stuff that is for sale. Buy that.
Never one to miss a chance to put the boot into his enemies, our 19th century PM stepped up, from The Australian:
Tony Abbott has declared that the overturning of the proposed Queensland Carmichael mega coalmine means courts can be used to “sabotage” worthy projects, in his strongest defence yet of coal production in Australia.
“As a country we must, in principle, favour projects like this,” the Prime Minister told The Australian last night.
“This is a vitally important project for the economic development of Queensland and it’s absolutely critical for the human welfare literally of tens of millions of people in India.”
But is it vitally important for the development of Australia? No, it will just shut other mines.
