In a surprising turn of events during a one day international cricket match between Australia and India at the Sydney Cricket Ground on Friday, two protesters ran into the field with t-shirts saying "Stop Adani", and brought the match to a brief halt. They carried placards urging the State Bank of India to not give a $1 billion loan to the Adani group for a coal mine project.
So, why are Australians peeved with Indian industrialist Gautam Adani, the chairman and founder of the Adani Group and the second richest man in India?
The Carmichael Affair
In 2010, India saw its single largest mining investment in Australia after the Adani Group purchased a coal tenement in the Galilee basin of Queensland, Australia, from the now-liquidated Australian energy company Linc Energy for $2.7 billion in cash and royalty. A year later, it bought the Abbot Point Coal Terminal from the Queensland government, to facilitate the export of coal to India.
The proposal also included the building of a 190km railway line to connect the Carmichael mine to the Abbot Point Coal terminal for a deal that initially spanned 150 years, but was later reduced to 60 years.
For Queensland - a solid coal exporting state - this looked like a great way to boost local employment, and for the swiftly rising Adani Group this was a chance to meet the ever-growing demand for coal back home for India's power hungry cities and yet-to-be electrified rural areas
But ten years later, the entire project has been wrangled up in a quagmire of legal battles and financial hurdles. Also, as climate change came under increasing global attention during the past decade, a push towards decreased dependency on fossil fuels meant that the time for coal industry is about to run out. None of this boded well for the Adani Group that was heavily invested in the Carmichael coal mine.
Despite these hurdles, the Carmichael coal mining project is well underway, and is expected to make its first export to India in 2021.
Financial Viability
Critics of the project have consistently questioned its financial viability. While the Adani Group had initially announced an investment of AU$16 billion, in 2018 it scaled down the project greatly and announced that the entire thing would be self-funded for AU$2 billion.
In 2015, the State Bank of India, India's largest public sector bank, signed a memorandum or understanding with the Adani Group for a loan of $1 billion to fund the project, but it failed to raise any further money from global coal financiers.
The group's request for funding was turned down by some of the top coal financing banks globally, which includes BNP Paribas, Credit Agricole, Societe Generale, Barclays, Citigroup, Deutsche Bank, Goldman Sachs Group, HSBC Holding, JPMorgan Chase, Morgan Stanley and Royal Bank of Scotland. Attempt to talk to Chinese and Korean banks also turned out to be futile.
Then comes the issue of insurance. In June, three insurance groups - AXA XL, Liberty Mutual and HDI - that had underwritten for parts of the coal mine project stated that they will no longer renew their insurance of the project once it expires next year. A week later, a similar statement was made by Aspen Insurance - who backed out from continuing to insure the project. Last month, Reuters reported that Lloyd's of London firm Apollo will also not renew their insurance to the Carmichael coal mine after its currently written insurance expires in September 2021.
While its still unsure how the company intends to have the project insured, as far as funding goes the $1 billion loan from SBI seems to be the only option currently to have the project running. In response to reports on India's largest public sector bank about to finalise the massive coal loan, French asset management company Amundi stated yesterday that it will evict one of SBI's green bonds from the flagship Amundi Planet Emerging Green One fund if it agrees to fund the coal mine project.
While the Adani Group got approval to produce 60 million tonnes of coal per annum, it is initially projected to produce only 10 million tonnes per annum, leading many to question how viable this entire project is financially.
BOOM reached out to the Adani Group for a comment, and the story will be updated if and when they respond.
Climate Change And Damage To Indigenous Lands
One of the strongest drivers against the project has undoubtedly been the growing activism around climate change that has pushed for a growing need to terminate our dependency on fossil fuels in the past 10 years.
The Galilee basin, apart from being one of the largest high quality coal reserves in the world, is also the home to some rare species such as the yakka skink, the ornamental snake, and the waxy cabbage palm. Environmentalists believe that the local ecosystem will be deeply affected by the mining operation and endanger the local fauna.
From its very beginning, the operation at the Abbot Point Coal Terminal has been perceived as a major threat to the Great Barrier Reef. In 2017 the Adani Group was brought to court, after it was accused of allegedly discharging floodwater containing more than eight times the level of sediment allowed from the terminal, following Cyclone Debbie.
The activism around climate change came to a boil last year after more than 18 million hectares of land was engulfed in one of the most intense bushfires in recent history in Australia in what is now called the Black Summer. The fires claimed at least 34 human lives and billions of other vertebrate animals. For activist groups like #StopAdani, this is a clear indication of the need to halt the operations of the mine.
In a statement following the protest at the cricket match yesterday, the group said, "Last summer, Australia choked on smoke from bushfires while people's homes burnt and billions of animals perished. It would be reckless for the State Bank of India to fund Adani's climate-wrecking coal mine. Mining and burning this coal will fuel climate impacts in Australia and India, bringing more droughts, floods, deadly heat waves, and bushfires. Adani's proposed coal mine is planned to be one of the largest new coal mines in the world and will have disastrous consequences for the global climate."
Another major controversy regarding the project was that it is located on lands traditionally owned by two native factions - Wangan and Jagalingou - and are considered sacred by both. Reports suggest that the Adani Group ployed questionable tactics to get the native groups to agree to a voluntary agreement on the use of sacred lands for mining.
However, despite these concerns and constant activism by climate change activists and indigenous groups, the Carmichael Mine is currently operational and ready to ship home some good old carbon. And none of it would have been possible without a little hand from the Indian and Australian governments.
With A Little Help From The Governments
The close proximity of Gautam Adani with the current Narendra Modi led BJP government has been well documented since before Modi had come to power, and continues to be reported on in the present day.
However, to sort out a mining project in Australia, Adani needed to get the Australian government on its side - something he successfully managed through lobbying and exploiting Australia's love for the coal industry. In 2015, former Prime Minister Tony Abbott said it was "tragic for the wider world" if the Carmichael coal mine project was delayed due to legal challenges that arose from the perceived threat posed to some rare species of reptiles in the region.
Despite its support to the coal mining operations, the Abbott's Liberal Party was voted back in power last year with Scott Morrison taking charge, and the government continued its support to see through the coal mining operation.
Australia's fondness for coal comes from the fact that the fossil fuel has been a major driver of Australia's economy, making Australia the biggest exporter of coal in the world. Almost 70% of the coal produced in Australia is exported, mainly to fuel hungry, fast-growing Asian countries like Japan, China, Korea and India.
Australia is also known to house a large number of climate change deniers, and it is reflected in the current Scott Morrison administration as well as other members of the Liberal Party.
The Carmichael Coal Mine affair has been a major polarising issue for Australians, symbolising their fight against climate change. Activists have faced pushback with the government often siding in favour of the coal industry which supports to see through the Adani operation, and have also faced harassment and mounting pressure from the Adani Group.
Last month, court documents accessed by The Guardian revealed that Adani had a private investigator take covert photographs of environmental activist Ben Pennings walking his nine-year old daughter, and also had him follow and surveil Pennings' wife, to allegedly intimidate Pennings to back out from campaigning against the building of the rail project connecting the mine and the port.
Despite the coal mine operations and works for building the rail network being well underway, the hurdles are far from gone for the Adani Group.
While it is at the cusp of finally getting the $1 billion loan from SBI, it has failed to raise sufficient funds to meet initially planned investment of AU$16 billion. With most top global banks turning down support, the Adani Group has taken huge reputational hits, with most top global banks turning down support. There is also the problem of not having sufficient insurance to cover the project, adding to the further loss of reputation for Adani - the company and the industrialist.
Although the project's operational life is officially set to 60 years, the fate of Carmichael Coal Mine is currently uncertain, subjected to future decisions by Australian governments and courts.