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BW Businessworld

Why Adani Is Confident About The Future Of His Australian Coal Mine

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Till a year ago, Adani faced similar problems in developing the Mundra Port and SEZ in the Kutch region of Gujarat, points out Neeraj Thakur

After a federal court in Australia revoked environment clearance for Gautam Adani's coal mining project in Australia, many Indian newspapers and websites headlined "Snake, lizard stall Adani's Australia project". The headlines had a tinge of sarcasm towards the Australian court's concern for some reptiles at the cost of the project. The ruling, however, did not perturb the mining company which stated that the decision of the court was a result of "technical legal error" which would be sorted by the government.
 
Despite opposition from the environmentalists, Gautam Adani has always been confident of the future of his Australian coal mine project. The latest ruling by the court citing danger to vulnerable species, the Yakka Skink and the ornamental snake, in the region did not dwindle the faith of the Indian businessman. Adani has already invested about $3 billion in the project and plans to take the investment up to $16 billion. But what is it that makes the Indian mining giant so sure about a project that saw  eleven of the world’s biggest private investment banks, including Citigroup, Morgan Stanley, Goldman Sachs, and JPMorgan Chase,  refuse to provide financing, citing environmental concerns over the reef and fossil fuel development? Adani is sure because he knows that the executive is far more powerful than the judiciary, be it in India or down under in Australia.
 
Till a year ago, Adani faced similar problems in developing the Mundra Port and SEZ in the Kutch region of Gujarat. At one point of time, his company faced charges of destroying the mangroves, blocking of creeks and non-compliance of other clearance conditions.
 
Based on the findings of a committee headed by Sunita Narain, the High Court of Gujarat had even ordered the closure of the 12 operational units in the industrial enclave run by Adani ports and Special Economic Zone Ltd (APSEZ). The 12 units, according to the high court, were operating despite a May 2012 high court order that all units in the zone be shut down due to lack of environment clearances.
 
Despite all the hue and cry of environmentalists in India, the APSEZ is functional today with the clearance of the government. Interestingly, the government of India, desperate to achieve growth bypassing environmental laws, allowed Adani group to procure belated environmental clearances.
 
Business tycoons like Adani flourish because the government is desperate to achieve GDP-numbers-based growth over environment. In India, the National Democratic Alliance (NDA) government in its attempt to give a push to the infrastructure projects has diluted many of the existing environmental laws by  either introducing new guidelines to the existing laws or by weakening the statutory institutions. According to Greenpeace, “the government approved close to 120 projects without even forming a standing committee of the national board of wildlife. When the Supreme Court intervened on the issue, the government asked the Supreme Court to stay away from intervening in matters pertaining to approvals within sanctuaries and national parks because that accounts to delay of projects.
 
Down under, the tone of the Australian Prime Minister Tony Abott is similar to the one heard from the policy makers of the Indian government. Abott strongly condemned the ruling of the Australian court and said “if we get to the stage where the rules are such that projects like this (Adani’s coal mine) can be endlessly frustrated, that's dangerous for our country and it's tragic for the wider world”.
 
Abott further harped on the argument of economic development and said “the country must, in principle, favour projects like this because it was vitally important for Queensland’s economic development and the human welfare of literally tens of millions of people in India”.
 
Australian government, too, is trying to change the laws of the land to bypass the rights of the local communities in giving approval to a mining project. The changes are set out in the Minerals and Energy (Common Provisions) Bill 2014 introduced to Queensland Parliament on 5 June 2014.
 
Under the bill, the Queensland Government proposes to reduce public rights to object to the grant of a mining lease, so that only ‘affected persons’ would be entitled to object.
 
According to Independent Australia, “This new term includes only those landowners whose land would be subject to the proposed mining lease or whose land would be necessary for access to the land subject to the proposed lease or the relevant local government".
 
Adani-owned Carmichael coal mine in Queensland’s Galilee Basin, would be the biggest-ever in Australia. It would include six open cut pits and five underground mines, spread over 28,000 hectares. To explain in numbers, the mine would be seven times the area of Sydney Harbour.
 
According to the Green Institute of Australia, the lifetime carbon dioxide emissions of the coal mined in the Galilee Basin would be around 24.7 billion tonnes. This would be five per cent of the carbon budget available for the whole world between 2010 and 2050, if the world has to restrict global temperature increase to within 2 degree Celsius.
 
However for Australia, which is dependent for exports of its natural resources to import other things, weak price of commodities like, coal, bauxite and iron ore have taken away many jobs and the country is staring at its first economic recession in 20 years. The unemployment rate in Australia touched 6.4 per cent in February 2015, highest in 12 years.
 
Adani had promised creation of 10,000 jobs per year and royalty worth $22 billion from its Carmichael coal mine, a claim that ran into controversy after Adani’s  expert witness, Dr Jerome Fahrer, said that the mine would create an average of 1464 full-time-equivalent jobs a year and royalty upto $4.8 billion.
While the claim of job creation and royalty amount is being contested, the export from coal mine gives Australian government hope of generating revenue through royalties, taxes and economic activity around the mining area.
 
If the Indian government can overlook the rights of fishermen and villagers who were affected by the Mundra project of Adani, can the life of some snakes and lizards keep the Australian government from going ahead with the giant mining project in Queensland?