LAUNCESTON, AUSTRALIA – The world’s biggest planned coal mine is once again lurching toward the finish line as India’s Adani Enterprises moves ahead with a final decision on its Carmichael project in Australia. Even if Adani does approve the $4 billion thermal coal and rail project in central Queensland state, the venture is shaping up as a turning point for coal in Australia, with consequences for the industry across Asia.
The first implication of the Carmichael saga is that it shows that major coal projects in Australia need subsidies from governments to be viable, undermining the industry assertion that coal is the cheapest source of energy and has a major competitive advantage in Asia.
While various Australian governments have invested in infrastructure for mining in the past, the Carmichael mine had been touted as proof that profitable ventures could be done entirely by the private sector, with government support limited to ensuring a competitive regulatory framework.
Much of the recent controversy over the mine has centered on two issues, both of which go to the heart of just how cheap coal is as a fuel source. First, Adani delayed making a final investment decision on the 25-million-tonne-a-year mine, saying on May 22 that it had yet to reach a deal on royalty payments with the Queensland state government.
While the details of the company’s talks with the state government haven’t been made public, the main issue appears to be Adani’s desire to have either a royalty holiday for the initial period of operation, or extended payments.
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