Smaller Carmichael to start construction

CONSTRUCTION of Adani Mining’s proposed Carmichael mine and rail project in Queensland’s Galilee Basin will begin next month after the company decided to finance the project on its own and simplify its design to reduce the initial capital requirements for the project.
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Adani Australia CEO Lucas Dow making the project announcement at the Bowen Basin Mining Club

Adani Mining CEO Lucas Dow said the company will now begin developing a smaller open cut mine comparable to many other Queensland coal mines and will ramp up production over time to 27.5 million tonnes per annum and create 1500 jobs.

The current project encompasses an investment of $2 billion, with annual production of 10-15Mtpa of thermal coal.

This is smaller than the original project proposed in 2010, which was expected to export 60Mtpa and require investment of $16.5 billion.

Adani will also be reverting to a narrow gauge rail link to the port at Abbot Point, after the Queensland government indicated that it would veto a mooted $900 million loan to the company by the North Australia Infrastructure Facility.

"Our work in recent months has culminated in Adani Group's approval of the revised project plan that de-risks the initial stage of the Carmichael mine and rail project by adopting a narrow gauge rail solution combined with a reduced ramp up volume for the mine," Dow said.

"This means we've minimized our execution risk and initial capital outlay. The sharpening of the mine plan has kept operating costs to a minimum and ensures the project remains within the first quartile of the global cost curve."

All coal produced in the initial ramp up phase will be consumed by the Adani Group's captive requirements.

"The construction for the shorter narrow gauge rail line will also begin to match the production schedule," Dow said.

"We have already invested $3.3 billion in Adani's Australian businesses, which is a clear demonstration of our capacity to deliver a financing solution for the revised scope of the mine and rail project.

"The project stacks up both environmentally and financially. 

"Today's announcement removes any doubt as to the project stacking up financially.

"We will now deliver the jobs and business opportunities we have promised for North Queensland and Central Queensland, all without requiring a cent of Australian taxpayer dollars."


Federal Resources Minister Matt Canavan tweeted it was great news that Adani had announced it plans to start work before Christmas.

Canavan congratulated Adani for "its focus and commitment to the project in the face of longstanding, ill-informed protest activity and an indecisive state Labor government".

"Adani's ability to re-scope and finance its Carmichael mine and rail project proves it is a viable, job-creating concern which stands on its own two feet financially and environmentally," he said.

The Queensland Resources Council CEO Ian Macfarlane said the investment in the project was a sign of the strength of the Queensland resources sector.

"This is great news for Queensland and great news for regional Queensland in particular, because every new resources project benefits all of us," Macfarlane said.

"Adani has shown it is committed for the long-term for an investment that will create jobs now and decades into the future.

"In recent months Adani has made sensible revisions to the project to ensure it can get underway as soon as possible, including a scale up to capacity and a decision to use common narrow gauge infrastructure.

Queensland Greens Senator Larissa Waters linked the approval of new coal mining projects like Adani to the current bushfires sweeping through Central Queensland.  

"Queensland is burning right now," she tweeted.

"This is the new normal - and climate change means these extreme weather events will get even worse! Yet LNP and Labor keep backing new coal and are in complete denial about its impact. They are complicit in this devastation."

According to IBISWorld, Adani's decision to go ahead with the descaled plans is risky, as the demand for coal around the globe is decreasing and its homeport of India is rapidly transitioning towards renewable energy sources. 

IBISWorld Senior Industry Analyst Jason Aravanis believes that the project is still a high-risk investment for the corporation.

"The investment decision for the Carmichael project is surprising, given the gloomy outlook for global coal demand. Adani's power stations in India alone generated losses in 2018 due to their reliance on expensive imported coal," he said.