Is it time for Adani Mining to raise the white flag on its Carmichael project?
The Guardian reported yesterday the company has stopped engineering work on the $16.5 billion project, advising four major engineering contractors to stop work around the mine including the joint venture rail line and expansion of Abbot Point port.
According to the Guardian report, it makes no sense halting work at this stage even as a savings measure, raising speculation the company is preparing to scrap the massive project.
Tim Buckley of the Institute for Energy Economics and Financial Analysis said to stop work at this stage “just crucifies the project, it all goes out the window”.
“The minute Adani stops moving forward, the project is just dead, in my view,” Buckley said. “And the reason is you’ve got billions of dollars of debt in Australia and they’ve got this interest bill.
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“They’ve been drawing a line in the sand and that is that they need financial close by October 2015.”
Adani Mining released a statement supporting its commitment to the Carmichael project:
"For the past six to 12 months, Adani has maintained a level of investment, jobs and sub-contractor engagement for its mine, rail and port projects in anticipation of finalising approvals and decisions. The project budget was based, understandably, on these anticipated approvals timelines and milestones," the company said in a statement.
"As a result of changes to a range of approvals over that time, it’s necessary to synchronise our budget, project timelines and spending to meet those changes. Adani has made a commitment to build a long term future with Queensland that will deliver 10,000 jobs and $22 billion in royalties and taxes that will be reinvested back into community services.
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"However, it is important to note we are now into the fifth year of development and approvals and therefore the need to finalise those approvals and timelines is critical."
To add insult to injury, a new report by the Climate Council says coal mining in the Galilee Basin – the Carmichael coal mine location -- is not environmentally or economically sustainable.
“If we’re to stay in within carbon budget and avoid dangerous climate change, we can't have any new coal developments anywhere around the planet,” said Professor Tim Flannery, chief councilor and co-author of the report.
“In fact we're going to have to close prematurely a quite a number of coal mines if we were to stay within that budget.
“So economically it doesn't make sense, and analysts say they can't see a recovery in the coal price for years into the future, so economically the mine doesn't make sense and as I said environmentally it doesn't make sense either.”
Since its inception the Carmichael coal project has faced a wide array of criticism from environmentalists and Indigenous Landholders. Heightened pressure to protect the Great Barrier Reef has caused major roadblocks for the project as well as mounting lawsuits.
Zimbabwe targets £8.8bn mining industry by 2023
Zimbabwe’s government plans to fast-track exploration, evaluation and digitalisation of selected reserved mining areas under the Ministry of Mines and Mining Development as part of wider measures to achieve a £8.8 billion mining industry by 2023, according to a senior government minister.
Information Minister Monica Mutsvangwa said other plans include stopping the issuance of special grants in the reserved areas under the Ministry of Mines and Mining Development until the exploration and evaluation is complete and a robust value addition program for diamonds is implemented.
Mutsvangwa was speaking at a post-cabinet media briefing on December 15.
She adds that the issuance and renewal of special grants for energy should also be based on the financial and technical capacity to value add all types of coal, as well as for ideal exploration of Coal Bed Methane.
For renewal of special grants, consideration should take into account the period the Special Grant has been held as well as plans with milestones for value addition of the special grant, Mutsvangwa says. She adds that the Zimbabwean government expects gold to drive the mining sector in order to achieve the ambitious target, with the precious metal expected to contribute approximately £2.96 billion to the overall target.
Mining is one of Zimbabwe’s major contributors to its economy, alongside agriculture, which is the mainstay. The mining sector accounted for more than 60 percent of the country’s foreign currency receipts in 2019, and contributed around 16 percent to national Gross Domestic Product, the Chamber of Mines says.
The country’s mining industry is focused on a diverse range of small to medium mining operations. The most important minerals produced in Zimbabwe include gold, asbestos, chromite, coal and base metals.
Zimbabwe expects its economy to expand by 7.4 percent in 2021 from a projected contraction of 4.5 percent this year, due to the effects of drought and the COVID-19 global pandemic.
When presenting the 2021 National Budget in November this year, Finance and Economic Development Minister, Professor Mthuli Ncube, said that the mining sector is projected to rebound by 11 percent next year after surviving a COVID-19 induced shock that saw the sector contract by 4.7 percent in 2020. In September, mining bans in national parks were introduced, according to news agencies.
He added that the National Budget would allocate £1 billion towards the operations of the ministry for planning, promotion and exploration, data capturing, and automation, among other key mining processes.
Other factors necessary for the achievement of the £8.8 billion target include a stable macroeconomic environment, policy consistency, and availability of long-term capital to fund mining projects along the entire mineral value chain, the minister said.
Stopping "illicit financial flows" from gold smuggling is another key issue to address, according to media reports.