The financial case against Australia’s largest coal mine – by Jennifer Rankin (The Guardian – May 14, 2015)

http://www.theguardian.com/international

The Guardian is a well-known left-wing British broadsheet. (Stan Sudol – RepublicOfMining.com)

The threat of the Carmichael mine to the environment is clear but as coal prices fall, bad economics could be the strongest case against the project, experts say

The case against building Australia’s largest coal mine has focused on the threats of runaway climate change and ruin of the Great Barrier Reef. But finances may yet prove the key.

Leading economists and City analysts are baffled by plans from India’s Adani Group to build the A$16.5bn (£8.4bn, $13.2bn) Carmichael mine and Abbot Point port expansion – just as coal prices have collapsed.

If the Carmichael project fails to convince investors, it could jeopardise plans for at least eight other mega mines in the coal-rich Galilee basin.

The Queensland government has been an enthusiastic supporter of mining the Galilee basin: it has poured A$2bn (£1bn) of public money into funding the expansion of the port, according to the Australia Institute.

But Tom Sanzillo , director of finance at the Institute for Energy Economics and Financial Analysis, said the plans do not add up. “The combination of the expense of the development – a mine, a railway and a port – and a weakening of the coal price around the world combine to make this project financially unviable.”

He used to manage New York’s $156bn (£100bn) pension fund, one of the largest in the United States. Now he is advising investors to stay away from coal: “I advise pension funds to divest from coal right now. They have already lost enough money, they should cut their losses and get out.”

As China’s demand for coal slows, the coal boom of the last decade has turned to ash. The price of Australian coal fell to $56 a tonne earlier this month [April] – less than half its level four years ago.

Since 2010, two coal-fired power plants have been shelved or cancelled for every one completed, according to a CoalSwarm/Sierra Club survey. The amount of worldwide coal-fired generating capacity in the planning pipeline has dropped by 23%, from 1,401GW in 2012 to 1,080GW in 2014.

For the rest of this article, click here: http://www.theguardian.com/environment/2015/may/14/the-financial-case-against-australias-largest-coal-mine

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