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Documents released by Queensland government suggest Adani’s plan to eventually build one of the world’s largest coalmines has not been drastically changed. Photograph: Dan Peled/EPA
Documents released by Queensland government suggest Adani’s plan to eventually build one of the world’s largest coalmines has not been drastically changed. Photograph: Dan Peled/EPA

Documents suggest Adani retained long-term plan to build Australia's biggest mine

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Exclusive: ‘Later development plan’ for Carmichael mine says Adani’s long-term goal is to ramp up production to 55m tonnes per year


Documents released by the Queensland government suggest Adani never scrapped its plans to eventually build one of the world’s largest coalmines in central Queensland, despite the company’s public statements the Carmichael project had been drastically scaled back.

Guardian Australia has obtained the current version of the “later development plan” for the Carmichael mine – a document required to be filed with Queensland mining authorities under state law – which clearly says that Adani’s long-term plan is to ramp up production to 55m tonnes per year.

Adani had initially planned a massive 60m tonne mine but in late 2018 the company announced it would build a much smaller version – initially exporting 10m tonnes a year, with annual production ramping up “over time” to 27m tonnes.

The plan was pitched as “comparable to many other Queensland coalmines” in an apparent effort to smooth the approvals process and head-off environmental activism.

However, the company’s later development plan – lodged about six months before that public announcement to reflect “optimised” plans and not updated since – indicates an intention for Carmichael to increase to 27m tonnes in its second year of production and eventually produce 55m tonnes per year.

The document said the number of initially planned open-cut pits would be reduced from six to four.

All of Adani’s approvals are issued on the basis it is building a 60m tonne mine. The ABC reported earlier this year that Adani’s former mining boss in Australia, Lucas Dow, was recorded saying the project could expand beyond what it had publicly announced, up to its approved capacity.

Adani – which last week rebranded its Australian mining business to “Bravus” – maintains it is building only a 10m tonne mine, in line with financing obtained from its parent company.

It has previously refused to commit to a long-term plan for a scaled-back mine.

“Just like other coal producers in Queensland, we are required to provide various planning documents to the state government to ensure we comply with our regulatory obligations,” an Adani, now Bravus, spokeswoman said.

“We are in the process of constructing a 10m tonne per annum mine, in line with financials approvals provided by our board.”

‘A minuscule amount’

The later development plan is one of several documents related to the Carmichael project released under Queensland right to information laws to environmental group Lock the Gate.

Another document shows Adani was required in July to pay $26.4m to cover rehabilitation costs for the first five years of work at the Carmichael mine – about 2% of the cleanup amount previously estimated by the environmental group.

“There is simply no way that amount covers the cost of rehabilitating this level of disturbance as well as all the mine infrastructure,” Lock the Gate mine rehabilitation coordinator Rick Humphries said.

Humphries said that – based on estimates in the development plan – the rehabilitation bond amounted to about 0.5% of the revenue Adani expected to make during the same period.

“This is a minuscule amount, given Adani plans to leave behind unrehabilitated mine pits after mining, which will drain central Queensland groundwater aquifers,” he said.

“Queenslanders should not be left to live with the huge mess Adani plans to leave behind, and certainly shouldn’t pay for it.”

Lock the Gate conducted an analysis in 2017, based on publicly available information and the government’s own tools to estimate the cost of rehabilitation. It estimated disturbance in the first five years would cost about $1.27bn.

A Queensland Department of Environment and Science spokesman said Adani would have to apply for a new “estimated rehabilitation cost” decision if it wanted to continue mining beyond the first five years covered by the initial bond.

Adani said its rehabilitation approach was subject to comprehensive conditions, and had been approved by the state and federal governments.

“Bravus is not receiving any special or preferential treatment,” the spokeswoman said.

“Progressive rehabilitation will be undertaken, which involves the staged restoration of disturbed areas during the exploration, construction or development and resource extraction phases of a mining project, instead of large-scale works at the end of operations.

“Bravus is committed to ensuring that land disturbed by mining activities is progressively rehabilitated to a safe and stable landform that does not cause adverse environmental impact and can sustain an approved post-mining land use.”

Global shift from coal

While Adani insists its operation is efficient enough to withstand coal price “cycles”, analysts say the documents show signs its business plan is in stress.

Adani’s projected revenue in the first year of production would be about $1.15bn – based on an expectation of a $70 per tonne coal price and initial export volume of 16m tonnes, according to the later development plan.

In the second year, exporting 27m tonnes, Adani projects its revenue would increase to $1.9bn.

Adani maintains it only has initial finance to build the smaller 10m tonne mine. This year, the coal price has dived to near-record lows, with the Newcastle thermal coal price hovering around US$48 per tonne.

Tim Buckley, energy analyst from the Institute for Energy Economics and Financial Analysis, says the landscape has shifted dramatically in past months, as China, Japan and South Korea have each announced aggressive plans to transition energy production to renewables and 142 globally significant financial institutions now have formal coal divestment policies.

Global corporate leaders are likewise aligning with the Paris agreement, with Toshiba and Siemens Energy both announcing overnight immediate exits to new coal power plant development work.

Buckley said the notion the coal price would now return to a boom-bust cycle was “extreme wishful thinking”.

“Given the world has changed dramatically in the past few months, it’s probably not a question of whether they plan to expand, but whether they would even want to,” he said.

Buckley said Adani’s decision to continue with the Carmichael project appeared to be linked to the Abbot Point coal terminal, which has debt refinancing issues and required additional throughput, given a utilisation rate averaging less than 60% over the last six years.

He said it would be in the company’s financial interests to seek additional metallurgical coal customers for Abbot Point, which would also attract investors who had refused to be involved in Carmichael as a thermal coal project.

An Adani spokesman said coal was still needed to provide baseload power in India and south-east Asia.

“Furthermore, due to the high quality of our coal and the low strip ratio, Carmichael coal is in the lowest cost quartile, which means the economics are good and we can be profitable through the cycles,” he said.

“We have already secured the market for the 10m tonne per annum of coal produced at the Carmichael mine. The coal will be sold at index pricing and we will not be engaging in transfer pricing practices, which means that all of our taxes and royalties will be paid here in Australia.”

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