This post originally appeared on VICE Australia.
Despite ongoing protests, new resolutions to curb climate change, and the plummeting price of coal, the Australian Government yesterday re-approved dredging of the coal port at Abbot Point. Assuming the scheme is financed, this will mean 1.1 million cubic meters of seabed will be dredged from the Great Barrier Reef and dumped in plastic-lined beds in the Caley Valley Wetland.
As you may recall Abbot Point is a coal port around two hours south of Townsville on Australia's east coast. Last year the port funneled 22.1 million tons of thermal coal into Asia, which sounds like a lot, but was only a minute fraction of Queensland's total reserves. Now, with permission to deepen the port and build a new pier at Abbot Point, the state of Queensland may become one of the world's largest coal exporters.
The reason is the Carmichael Mine. A self-made Indian billionaire named Gautam Adani is convinced India's energy future can be secured with Australian coal. In 2010 his company—aptly named Adani—announced plans to tap reserves in the Galilee Basin. If built, the resulting Carmichael coal mine will become the world's largest, producing some 60 million tons of thermal coal every year.
The plan has been enormously controversial. In February it was one of the reasons Queensland voted a more environmentally conscientious government into power, which vetoed dumping dredge spoil at sea, but refused to rule out dredging entirely. A revised plan to store the dredge spoil on-land was subsequently approved by the new state government in August.
Yesterday Federal Environment Minister Greg Hunt approved the revised expansion plan for Abbot Point. This new plan reduces a cap on dredging from 3 million cubic meters buffer zone to separate any dumped spoil from the wetlands. For the approval to be honored, the project's expansion needs to begin within five years.
This last caveat is a problem. It's well known Adani is shouldering huge amounts of debt while the price of coal continues to fall. In November a ton of coal fetched $56.25 USD, which is significantly less than what Adani needs to break even. This is the reason Rio Tinto walked from the project in 2012, followed by BHP Billiton six months later. All four major Australian banks have also refused financing.
Then there's the environment. In Paris Australia pledged a 26-28 percent reduction in CO2 emissions (from 2005 levels) by 2030. This conveniently omits emissions produced overseas using our coal, as the Carmichael Mine will annually produce 79 million tons of planet heating carbon dioxide—20 percent more than the entire yearly output of New York City. For a country tackling global warming, green-lighting the Adani project seems seriously counter-productive.
Despite this drawback it looks like things are going Adani's way, at least for the moment. First the Federal Government reapproved the Carmichael mine in April after being postponed by an environmental lawsuit. Then last week the LandCourt of Queensland overturned a bid to halt the project on the grounds it would devastate populations of a native finch. And now the lynchpin to the whole project—the dredging of a deep port at Abbot Point—has been approved.
Still, there is the small issue of money. Adani needs to find some $16.5 billion , which on Tuesday the Queensland premier vowed wouldn't come from state coffers. Given so many investors won't throw cash at a devaluing resource, funding might prove to be the most difficult obstacle yet for Adani.
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