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Sep 21, 2017

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Federation Square in Melbourne was sparkling new, 20 years ago; its deconstructive crap-clad style has dated so badly that it may now require a heritage listing. City Square — a genuine public space — was destroyed by the Kennett government, and Fed Square put up instead, a warren of restaurants, bars and cafes. The political intent was obvious: to deprive Melburnians of a central place to hold large political and social movement rallies.

So it proved on the weekend, when the management of Fed Square censored a political rally held by the “Stop Adani” movement, which had hired the square’s big screen to show a series of slides and information about the Galilee coal project. According to a report in The Guardian, the rally was threatened with eviction at the last minute unless they removed a whole series of slides, deemed to be “political”. Faced with a possible lockout, the rally complied — even though they weren’t told which slides were offensive.

Federation Square is managed by a private company, Fed Square Pty Ltd, which is wholly owned by the state government. Doubtless, whoever imposed the ban was a junior functionary, making an error of judgement, but the Fed Square board makes for interesting reading: one of its five members is Patrick Conlon, former South Australian Labor minister, for everything at one time or another, but mainly infrastructure. Once of the Left, Conlon left it in 2010, realigned as “non-factional”, left the ministry in 2012, and took part-time lawyering work while still an MP in 2013.

The chair of Fed Square Pty Ltd is Deborah Beale, otherwise known as the first Mrs Bill Shorten. Shorten divorced the daughter of former Liberal MP and minister Julian Beale in 2000, before marrying the daughter of former governor-general Quentin Bryce in 2009.

Just the board, of course, but not a good look is it? Labor is already taking flak for the outrageous double-duty role of lobbyist Cameron Milner, simultaneously representing Adani through his “bipartisan” lobby group The Next Level, and advising Queensland Labor Premier Annastacia Palaszczuk. Milner is a former operative in the Victorian Labor Right, who headed north after one of the incomprehensible battles of the rightoids here. He left lobbying work with Adani to become Shorten’s chief of staff, and then left that role after the 2016 election to return to spruiking the Galilee basin and Queensland Labor, apparently a devotee of doomed projects.

[How much you’re paying for Adani’s polluting mine to save Turnbull and Palaszczuk’s jobs]

To add to the mix, Conlon has previously worked with Minter Ellison from 2013 onwards — an engagement absent from his CV on the Fed Square website. Minter Ellison has earlier, in 2011, advised GVK, another Indian company, which is the second-largest investor in the Galilee basin, through the Hancock-Alpha project, part-owned by Gina Rinehart. 

Deborah Beale herself is tied into Queensland finance, as a director of Pinnacle Investment Management, helmed by Queensland “Medici Prince” Steve Wilson, who once had an investment company with current Queensland employment minister Grace Grace. Wilson founded Hyperion Asset Management (Beale’s current gig, as CEO), which gained funds management business from Queensland union super funds in the early 2000s (when the Queensland Council of Unions General Secretary was … Grace Grace).

There’s quite likely not much to see here. Most smart political operatives know that censoring or obstructing a peaceful protest only extends the publicity and discussion. The ALP is going to be fighting for its life in the Northcote byelection in November, against the Greens; for people in Northcote, watching a PowerPoint presentation in the open-air on a late winter Saturday night is about as much fun as you could possibly have. Labor’s embrace of Adani may or may not hurt them in Queensland, but it’s going to rip the hell out of them in inner Melbourne, first at state, then at federal level.

Does the Andrews government really want to be the fall-guy for federal and Queensland problems? Or is it possible that it could draw on what remains of its civic and popular traditions, and remind Fed Square Pty Ltd that Federation Square is a public gathering place for the free exchange of ideas. The place should be in public hands, through the council or a public board, not a private company. It might avoid the regrettable influence that Adani, Queensland Labor, Shorten et al, are so freaked by the “Stop Adani” movement that even a slide show represents a threat.

Asia-Pacific

Jan 19, 2015

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Adani chairman Gautam Adani

Tony Abbott’s commitment to the Anglosphere, increased carbon emissions and the mining lobby has hit spectacular new heights.

It’s hard to know where to start with the list of appointees to the Australia-India CEO Forum by Trade and Investment Minister Andrew Robb on his trip to the country last week to kick-start (you guessed it) negotiations for a free-trade agreement. But perhaps let’s begin with the appointment of Sam Walsh, the chief executive of a British company that mines coal, as co-chairman.

The naming of the Rio Tinto CEO, who presided over Rio’s China bribery scandal when he was head of its iron ore division, comes as the world’s second biggest miner is in peak lobbying mode with the Indian government.

“India has a very exciting future, and I look forward to playing a part in developing new investment opportunities in this vibrant nation,” Walsh gushed in Robb’s media announcement. Is he or what? Rio is desperate to convince the Indian Prime Minister Narendra Modi he should give his approval for the $500 million Bunder diamond mine and also the $2 billion Odisha iron ore project in which Rio owns a 51 % stake.

To add fuel to the fire, so to speak, Walsh’s co-chair is Gautam Adani, billionaire chairman of Adani, one of the two Indian companies preparing to dig countless millions of tonnes of emissions-increasing coal out of Queensland’s Galilee Basin. (The other company is GVK, which is partnering with Gina Rinehart, who was clearly too busy for the CEO Forum but did attend at least some of last week’s unwieldy 450-business, eight-city delegation to India.)

A simple question to Robb’s office about why a UK-based executive was named to the Australia-India CEO Forum was met with silence. To remind readers of the difference between a company domiciled in London and one in Melbourne, as Rio once was, tax payments tell the tale. Out of a total US$1.8 billion in tax for the first six months to June 30, 2014, Rio paid about US$0.630 billion in Australia. Yet its Australian iron ore business alone earned US$4.6 billion, compared with earnings for its total global operations of US$4.4 billion; that’s correct, less than Australian iron ore. The clear winner: the UK Chancellor for the Exchequer.

But this decision, as peculiar as it is, has minimal political import compared with Adani’s appointment, a clear signal that the Abbott government has now thrown itself squarely behind a $16.5 billion coal project that last week was the subject of a third court action attempting to have approval for the Carmichael mine overturned on environmental grounds.

“We will argue that the minister failed to consider the greenhouse gas emissions arising from the burning of coal mined from the project and the impact of those emissions on nationally protected matters, such as the Great Barrier Reef,” environmental lobby group Environmental Defenders NSW said in court documents.

“The rest of Robb’s list reads like a who’s who of the Australian resources sector … “

Very deep environmental concerns aside, there is also a whiff of panic about the exercise.

“There’s something special going on in India,” Robb said. Indeed there is — Australia’s exports to the country have been sliced almost in half between 2009-10, when they were about $16 billion a year, and last year, when they were $8.3 billion. Of that, $4.9 billion was for coal.

Despite this sagging trade, India now looms as the last chance saloon for Australia’s resources and energy sector, although it remains a minnow of a market after the north-Asian countries. The Coalition has proven that not only can it fritter away the benefits of the mining boom — exhibit A, the Howard government, which chose middle-class welfare over a plan for the future — it can’t figure out a way forward without it.

Commodity prices are in slump that is worse than during the global financial crisis, but rather than come up with a plan for diversification, the government keeps pushing the mining sector as our best bet.

Relatively self-sufficient in iron ore — although at current prices, premium Australian product must be tempting — it’s coal that the Indians will need in coming decades as they begin to build coal-fired power stations in a bid to finally get consistent growth in an economy that never fails to disappoint. Not only will Australia maintain its appalling record for carbon emissions, it will be contributing to an escalation of Indian emissions, too. As the Chinese put the screws on the iron ore sector, refusing to shut down uneconomical domestic production as they wreak revenge on, yes, Rio Tinto and BHP Billiton, India has emerged as the Australian mining sector’s best hope at a significant future market — hence the massive government support for the Galilee Basin projects. The lack of imagination takes one’s breath away.

Here is how Adani welcomes his appointment: “India has no more reliable friend or partner than Australia, which is showing its clear intention to help power India’s future.”

The rest of Robb’s list reads like a who’s who of the Australian resources sector: BHP’s coal chief Dean Dalla Valle; Woodside chief Peter Coleman; Vanessa Guthrie, managing director of Western Australian uranium miner Toro. Plus there are plenty of Melbourne Club companies: Telstra (chaired by former Macquarie Bank director and current the chair of the Business Council of Australia Catherine Livingstone); Toll Holdings; ANZ and Visy. Macquarie and IAG are there too. Universities Australia’s Sandra Harding gets a guernsey for supporting the government’s egregious attempt at university “reform”.

It’s an achingly familiar list with not a small business to be seen and just a single medium-sized one — the token agricultural representative, the Murray Goulburn Co-op. This from the “party of small business”.

It only serves to underscore the cloying relationship between the anti-science, anti-broadband Abbott government and the coal, uranium and mining lobbies. Robb has signalled that Australia’s intentions in India, the world’s largest democracy and the country always held up by right-wing Communist-haters as something of an alternative to China, will be the latest Asian nation to use Australia as its quarry.

On the Indian side, the government’s imagination runs riot once more. Along with Adani, there are names from India’s own energy lobby along with a handy A-Z of the country’s largest family-controlled conglomerates.

It’s a cosy, coal-centric mates club, and the messages from the government here are all wrong: welcome, men and women of Australia, to the 20th century.

Companies

Nov 18, 2014

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Among his achievements in this landmark visit, Indian Prime Minister Narendra Modi has definitely given Adani Mining’s $16 billion Carmichael coal project in the Galilee Basin a big shot in the arm.

The giant project was touched on in Modi’s Canberra press conference with Prime Minister Tony Abbott this morning, and his parliamentary address was long on the economic opportunities for Australia as a “major partner in every area of our national priority” including “energy that does not cause our glaciers to melt, clean coal and gas, renewable energy, [and] fuel for nuclear power”.

In Brisbane yesterday, Modi said the Carmichael project would “set a new standard for India-Australia co-operation”, and the rhetoric was backed up with a fistful of dollars: Adani was given a US$1 billion line of credit by the majority government-owned State Bank of India.

Queensland Premier Campbell Newman announced that in addition to the open-ended royalty holiday already on offer to the first mover in the Galilee Basin — and Adani is unquestionably the most advanced — the state government was willing to invest hundreds of millions of taxpayer dollars to fund the associated rail and port projects.

As The Australia Institute’s Richard Denniss points out this morning, for at the least the beginning of its projected 90-year life, the 11 billion-tonne Carmichael mine will pay no royalties, and would not proceed without subsidies. It will be interesting to see how Queensland taxpayers feel about that in the coming state election.

This was not the state government’s plan: only in August Deputy Premier Jeff Seeney told The Australian Financial Review that it was up to the proponents in the Galilee Basin to sort out their own project funding.

It speaks volumes that Australia’s largest coal project is now so completely dependent on government financial support.

But as the NSW government discovered with the Cobbora coal mine it hoped to sell off — underpinned by subsidised off-take agreements with power stations — even over-the-top state subsidies might not be enough to make an uncommercial project viable.

Queensland funding would be conditional on opening the infrastructure up to the other possible users in the Galilee, but, as Crikey wrote here last week, the two other major proponents are struggling to get off the ground. The scenario canvassed in today’s Courier-Mail, with not one but two state-funded rail lines built to the Galilee, is exceedingly unlikely.

Gina Rinehart’s Hancock Prospecting partnership with GVK is years away, mired in financing difficulties and a corruption scandal back in India, while Clive Palmer said yesterday his Waratah Coal was unlikely to take up Newman’s offer.

Palmer’s spokesman told Crikey the Newman announcement was pre-election political spin: “a good news story on the back of high unemployment figures”. Palmer remains miffed at the support for his two Indian rivals in the Galilee, and implacably hostile to Newman. As the spokesman said: “On one hand this government wants to sell assets and now they want to invest in helping one company.”

There are misgivings on India’s side as well. Quite apart from the legal challenge from India’s Conservation Action Trust, referred to here last week, Indian tweeters today bemoaned Modi’s support for the Carmichael mine, calling it a repayment for billionaire friend, supporter and chairman of the Adani Group Gautam Adani, who is on this trip (and has apparently joined five of the PM’s six recent overseas jaunts).

Modi is a reformer, and India is in the middle of a wrenching restructure of its coal industry, hoping to double production, opening it up to private investment and selling down the state-owned company Coal India, which mines the vast bulk of the country’s abundant coal.

Adani Mining is moving steadily, aiming to take a final investment decision by the end of next year and to produce first coal by 2017. Even with the finance it still has billions to raise and there are questions about the commitment of its partner in the rail project, Korea’s steelmaker POSCO.

There is a long way to go.

Asia-Pacific

Nov 13, 2014

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Paddy Manning interviews Indian activist Debi Goenka about the case against Adani’s Carmichael coal mine.

It will be strange optics if, only days after China and the United States unveiled a historic climate deal, India and Australia proclaim their commitment to building the biggest coal mine in the southern hemisphere.

Indian Prime Minister Narendra Modi will arrive in Australia tomorrow ahead of the weekend’s G20 leaders summit in Brisbane, and he will address Australian Parliament on Monday. Last week Queensland Premier Campbell Newman hinted that Modi was likely to make a major announcement about Indian power giant Adani’s Carmichael project, which will open up the Galilee Basin, a whole new thermal coal province.

Adani is tight-lipped, but environment sources fear the announcement could confirm Adani as “first mover” in the Galilee — giving the company an open-ended holiday from state coal royalties — or go further and abolish any appeal rights against the project.

Adani is the last man standing in the Galilee, and Newman is on a veritable crusade to ensure the $16 billion project, including a 400-kilometre rail line and new export terminal at Abbot Point, is developed as soon as possible.

There were three possible players in the Galilee Basin, but Clive Palmer’s Waratah Coal project effectively collapsed two years ago after Newman rejected his preferred rail corridor to get the coal to the coast — a dispute that fueled formation of the Palmer United Party.

The second most likely, Gina Rinehart’s partnership with another Indian company, GVK, has been looking shakier all year.  Last week Hancock wrote off $641 million after GVK missed the final tranche $560 million payment it was to make to complete the purchase of its 79% stake in the Alpha projects in the Galillee, sold for $1.2 billion in 2011. Hancock may still hope to collect the money from GVK; Rinehart is pals with founder Krishna Reddy and dragged Coalition frontbenchers Barnaby Joyce and Julie Bishop over to his daughter’s wedding. The diminishing iron ore heiress, battling her children in court and a plunging iron ore price, is in no position to walk away from half a billion dollars. But even Rinehart’s famous appetite for litigation will not help if her Indian partner goes broke. What looked like a savvy, top-of-the-market coal deal has turned out to be nothing of the sort. GVK’s partner in the rail component of the Galilee, Aurizon, the former QR National, acknowledged in October that any go-ahead was years away. Among the many climate questions hurled at chairman John Prescott, the former BHP chief presiding over his last Aurizon AGM in Perth yesterday, was a pointed reference to the corruption charges against GVK and Reddy. Prescott admitted neither he nor Aurizon chief Lance Hockridge knew anything about it.

That leaves Adani, which has secured almost all the necessary planning approvals — state and federal — to build the Carmichael mine but now has to raise the money. To do that, Adani is hoping to offload a stake in the existing coal terminal it bought for $2 billion at Abbot Point in 2011 — outbidding an extremely over-geared Nathan Tinkler — in another top-of-the-market deal.

Funding the Carmichael project is not going to be easy with coal prices depressed and eight global investment banks already indicating they will not fund the project. Adani said in a statement those banks weren’t asked to fund the project — or weren’t in greenfield project finance anyway — and points to the new China-backed Asian Infrastructure Investment Bank as a possible source of funding for coal-based energy projects.

Adani certainly won’t be able to fund it alone; this week it reported widening losses in the September quarter from subsidiary Adani Power (which will buy the coal from Queensland) — although parent Adani Enterprises, which reported overnight, is profitable. Adani Power has lost money for the last three years, and its balance sheet is looking “ridiculously” stretched according to analysis by Tim Buckley of the Institute for Energy Economics & Financial Analysis, with seven times more debt than equity.  Adani says those debt levels are irrelevant, as the Indian entities won’t be called on to fund Carmichael, and anyway all the money’s not needed up-front. Australian subsidiary Adani Mining’s latest accounts showed $1 billion in debt and a net deficiency of assets, which Buckley says underlines the question: where on earth will the money to develop this mega-project come from? Korea’s deep-pocketed steelmaker POSCO has taken a small minority stake in the $3 billion rail component, but that still leaves billions to raise.

Which brings us to one fat, buzzing fly in the soup: a five-week case set down in the Land Court for March, that threatens to blow out the project timetable. Possibly the last of the merits review appeals to be heard in Queensland after the Newman government abolished appeal rights, the case will be the culmination of years of work by the environmental movement to frustrate and oppose new coal projects. Remember the hysteria whipped up around the Greenpeace anti-coal strategy leaked to The Australian Financial Review in 2012? It has come to this: no case will prove more important than the Carmichael case. The judge, Land Court president Carmel MacDonald, previously rejected climate change arguments against Xstrata’s now-shelved Wandoan mine in 2012.

There are two objectors to Carmichael. Leading the case is local green group Land Services Coast and Country, represented by Queensland’s Environment Defenders Office. The EDO’s lawyer Sean Ryan told Crikey this would be “biggest case we’ve ever run”. The other objector is an Indian NGO, the Conservation Action Trust — the first foreigner to take legal action in Australia against a development proposal. I interviewed CAT director Debi Goenka when he visited Australia to speak at a conference. The Land Court does not have rules of standing, which would ordinarily preclude a foreigner taking court action here. Anyone who objects to a proposal, as CAT did, can appeal the approval. CAT’s submission is based on objections to Adani’s environmental track record in India, a relevant consideration to the court’s consideration. There has been no strike out motion from Adani.

The odds are certainly against the objectors, and not only financially. Adani has the Queensland government on side. Recently Newman ordered the North Queensland Bulk Ports clearing work to start at the site where spoil will be dumped from dredging to make room for Abbot Point’s new coal terminal — even before the dredging has received final approval.

The key will be whether Modi’s government wants to rely on Australian coal for its development, or would prefer to encourage development of India’s own coal resources. Last week, at a World Economic Forum in India, Energy Minister Piyush Goyal spoke on an hour-long panel and, while he mentioned doubling India’s coal production by 2019, did not once mention coal imports, let alone Australia. In fact overnight Goyal canvassed ending India’s coal imports altogether. Instead, much of the session on “Lighting India” was devoted to renewables. Also on the WEF panel was a representative of the Rockefeller Foundation, which recently announced it would divest from fossil fuels entirely and is funding development of a thousand mini-grids in rural India. That’s tackling energy poverty, in a way the coal industry talks about (but never actually does).

How that squares with Modi’s forthcoming announcement will be interesting to see.

Companies

Aug 6, 2014

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The development of Queensland’s vast new interior coal province, the Galilee Basin, is a riddle wrapped in a mystery inside an enigma. The Abbott and Newman governments are absolutely determined to see the world’s biggest coal mines opened up there this decade, despite a market glut and in the face of global warming. Defying science and economics, these projects just won’t die.

Queensland Premier Campbell Newman in particular is doing everything he can, offering royalty discounts to first movers in the Galilee and unlimited access to water from the Great Artesian Basin. In the last month, proponents of the two most advanced projects in the Galilee Basin — both from India — have confirmed indicative deals to build the hundreds of kilometres of new rail needed to get the coal to port, suggesting the projects may be getting real traction.

The climate consequences are enormous: at full production, annual emissions from just two of the most likely mega-mines planned for the Galilee will run to 250 million tonnes per annum — almost twice the 130-odd million tonnes a year Australia is trying to save by cutting emissions by 5% by 2020.

At the beginning of 2013, Greenpeace fingered the Galilee Basin as one of 14 “worst of the worst” fossil fuel expansion projects in the world — if all 14 go ahead as planned, they would lock in more than two degrees of warming.

For the past few years, Galilee coal has been considered uneconomic, as has been argued in a report by progressive-leaning think tank, the Institute of Energy Economics and Financial Analysis. Given the distance to the coast and the lack of rail or port infrastructure, the projects are often said to be uneconomic with thermal coal prices below US$100 a tonne. Right now, thermal coal is trading in the spot market below US$70 a tonne, and lots of commodity analysts do not expect a recovery in the short or medium term, with bearish notes coming from HSBC, Deutsche, Citigroup, Bernstein, Standard & Poor’s and Moody’s in recent months. Coal mines have been shut or put up for sale, and a string of new projects have been shelved.

Defenders of the Galilee Basin projects say the downturn in the thermal coal price will be temporary and point to the long-run demand for more coal-fired power generation in developing countries like India, the world’s third-largest coal consumer in 2010, which could double its demand for coal by 2040.

Last week’s federal environment approval of the giant Indian power company Adani’s $16 billion Carmichael mine, 100 kilometres north of Emerald, was a milestone, but it merely adds to the list of Galilee Basin approvals already racked up, including the construction of a new coal loader at Abbot Point, near Bowen, where Adani hopes to dump dredge spoil right next to the Great Barrier Reef. Adani’s rival GVK also has a big project planned for the area, which we will discuss tomorrow.

Adani is controlled by the country’s 16th-richest man, billionaire Gautam Adani, which is aiming to create a vertically integrated business in Australia supplying coal for its own power stations in India. It can afford to take a longer-term view of the project’s economics. And as Guy Pearse, David McKnight and Bob Burton’s Big Coal points out, Adani has gained carbon credits under the United Nations Clean Development Mechanism for installing particular technology in its power plant at Mundra, meaning the company will be rewarded for climate abatement for burning the coal from the Galilee Basin:

“It raises the farcical possibility that Australian electricity generators might soon ‘offset’ emissions from burning coal with carbon credits purchased at new Indian coal-fired power plants burning even more of the same Australian coal”.

Adani owns the existing coal terminal at Abbot Point, which it bought for almost $2 billion at the top of the coal market in 2011, outbidding then-coal baron Nathan Tinkler. But all of the purchase price was borrowed money — a good chunk loaned by Australian banks and the largest tranche from India. The existing terminal has a capacity to export 50 million tonnes of coal a year but current throughput is half that, as production has wound back at existing mines, and the port would be barely profitable after interest. Press reports have Adani looking to sell a stake in the port, possibly to part-fund Carmichael, and the recent privatisation of the Port of Newcastle supports a decent valuation.

Opening up the Galilee Basin is the only rationale for the construction of new port capacity at Abbott Point. Even then it’s line-ball, and Adani recently threatened to cancel the project if the Queensland government did not approve dredging, which it wants to complete between March and June next year.

The problem is that Adani, already heavily geared with more than $10 billion in net debt, needs to raise billions more in project finance — not easy in today’s tough coal markets. Selling down part or all of the existing terminal at Abbott Point won’t be enough to fund the Carmichael mine and rail. Then three weeks ago, Adani pulled a rabbit out of its hat, announcing an agreement with Korean steelmaker POSCO to build the 388-kilometre standard-gauge Galilee Basin Rail Line, through a corridor already declared a state development area. Construction starts early next year. This was a major leg-up for the Carmichael project: a final contract should be signed by the end of this year, giving POSCO will take an equity stake in the rail line and borrow to fund procurement, perhaps from the state-owned Export-Import Bank of Korea.

It may be enough to help Adani leapfrog GVK, which was previously seen as the most advanced proponent in the Galilee.

*Tomorrow: GVK struggles under debt load