Skip to main content

Greenpeace targets Adani Group's Australian coal mining project: 'It's uneconomical'

By Rajiv Shah
Top international environmental group Greenpeace in a new report has targeted premier Gujarat-based business group Adanis, saying that one of its overseas operations in Australia for mining coal may have become “uneconomical.” Titled “The Adani Group: Remote Prospects. A financial analysis of Adani’s coal gamble in Australia’s Galilee Basin”, and prepared by the Institute for Energy Economics and Financial Analysis, Cleveland, Ohio, US, for Greenpeace Australia Pacific, the report states, “We view Adani Enterprises’ development of the Carmichael deposit as an uneconomic proposition. The low energy and high ash content are major constraints to the value of the coal.”
Adanis term Greenpeace report “shortsighted”
The Adanis have termed the Greenpeace-commissioned report as “short-sighted”, prepared by “vested interests” who “ignore the long-term fundamentals that underpin Adani’s project in the Galilee Basin and the development of the country (Australia) at large.” Issued by Adani Abbot Point Terminal Pvt Ltd in response to Australian media reports (see South Asia Times) on the Greenpeace report, the statement says, “Development of the Galilee Basin is essential for both Queensland’s and Australia’s economy. Recognizing this, the Queensland government recently released its Galilee Basin strategy that confirms its commitment to developing this important region.”
Saying that the Adanis are “a key partner in that development”, the rejoinder says, “Adani Mining will be a long-term player in Australia and has complete confidence in the viability of the pipeline of projects it is currently developing, including the Carmichael Coal Mine and Rail Project, and the expansion of the Abbot Point Coal Terminal. In the short to medium-term these projects will create many thousands of jobs and generate significant flow on economic benefits. The motivation at the heart of these reports is short-sighted.” 
The Carmichael, at 10 billion tonnes, is considered the largest single coal deposit in the world. Last year, Adanis announced plans to proceed with a $10 billion development of its Carmichael scheme, including large-scale infrastructure investment, that would create 9,000 jobs, and export coal to India from 2016. Questioning the ambitious plan, the Greenpeace-sponsored report has said, “The remote location and lack of infrastructure will significantly add to the cost of mining and transporting the coal to market.” The report, running into 68 pages and authored by Tim Buckley and Tom Sanzillo, adds, “The financial leverage within the Adani Group adds significant financial risk to this project.”
Even as giving credit to the Adani Group for “an excellent ports and logistics business in India”, the report says, ”The distraction of a major expansion outside the geographic and product expertise of the Group is likely to continue to erode shareholder value.” Detailing the project, it adds, “Adani Enterprises is proposing to develop an at peak 60 million tonne per annum (Mtpa) thermal coal mine complex in the Galilee Coal Basin, 160 km north-west of the town of Clermont, central Queensland, Australia. Coal produced would be transported by a greenfield rail line to Abbot Point Port, where the company proposes a new 70Mtpa coal terminal (T0) in additional to an existing terminal (T1) for which it has a 99-year lease.”
Pointing out that the “Adani Enterprises anticipates selling much of the coal in India to support the nation’s plan to expand the use of coal-fired generation for its electricity grid”, the report says, “We view this US$7 billion (bn) proposal – the Carmichael Mine and Rail project (the Carmichael project) – as uncommercial for investors. The project’s economics don’t stack up. The short- and long-term price of coal globally, and within the principal outtake market of India, does not support the cost structure of this mining project.”
Referring specifically to the environmental issues which might inflate the project costs, the report states, “One of the key issues Adani Enterprises faces is the very high ash content of the Carmichael thermal coal. With an ash content of 25-30 per cent before washing and blending, this coal would not comply with proposed new Indian rules with respect to imported coal for ultra mega power plants (UMPPs) in India. The stipulated maximum ash content set by India’s Ministry of Environment and Forests (MoEF) is 12 per cent."
The report quotes the MoEF as saying, “The validity of environmental clearance granted is subject to compliance with the coal quality parameters indicated.” It underlines, “Getting the ash content for Carmichael coal down from 25-30 per cent to 12 per cent is likely to pose significant challenges for Adani Enterprises with respect to their strategy of vertically integrating from the Carmichael project through to the supply of thermal coal into Indian UMPPs.”
The mining site
The report specifies, “The Environmental Impact Statement (EIS) shows the coal produced will vary from 20-40% ash, with an average of 25% over the mine life forecast. With the 75% level of coal preparation and washing forecast by Adani Mining, this gives a 79% yield over the life of the mine… Every 1% higher ash content over the 5,500kcal benchmark assumption of 20% would result in a price penalty of US$0.50/t. The implication is that working with the September 2012 EIS assumption of an ash content averaging 25% would result in a US$2.50/t penalty to Adani.”
Given all this, the report believes that “Adani Group is also financially and operationally constrained and faces a series of logistical barriers in Australia”. The “key issues” it raises include:
· The Carmichael project is uneconomic – a high cost coal product in a low priced coal market with an uncertain future.
· Carmichael coal is a low quality, high cost product challenged by low market prices. Carmichael has a high strip ratio and the coal quality is low by Australian standards (20-30% ash and energy content of 5,260kcal net as received (NAR)).
· Open cut mining to 280 metres is significantly deeper than required in the south of the Galilee Coal Basin.
· India’s power market is fatally flawed. It cannot absorb the high price of coal from the Carmichael project. The domestic price of coal in India is in the US$30/t range and the price Carmichael coal requires is over US$95/t (inclusive of shipping). Successful sales to India of Carmichael coal will place a substantial pressure on power generator profits and the price of electricity in India.
· The Adani Enterprises’ external equity market capitalisation is US$5.17bn against estimated Carmichael project costs of US$7bn. Despite this weak capitalisation, Adani Enterprises has announced an enormous list of new capital intensive ventures.
· The Adani Group is highly geared. Against an external market capitalisation of US$5.17bn, the Adani Group has an estimated US$12bn of net debt, a significant portion of which is US$-denominated with limited hedging.
· Adani Power is financially weak and operationally underperforming. Adani Power’s share price is down 46 per cent year-to-date and down 74 per cent over three years – a massive underperformance relative to the MSCI India Index. Adani Enterprises is down 39 per cent year-to-date and down 70 per cent over three years.
· Adani Enterprises does not have a long or successful history of coal mining: Adani Enterprises has mined 2-4Mtpa in Indonesia over 2010-2013, its first experience in coal mining. Adani Enterprises is now proposing to build the biggest coal mine complex in Australian history.
· The Adani Group has suffered a series of delays to its Australian mining, rail and port plans. Adani Enterprises initially expected to have the Carmichael project selling coal by 2014. Adani Enterprises concedes this timetable has been pushed out to 2016, but the report estimates that its partial production will start in 2017 and full production not before 2022.
· Carmichael coal is in a very remote location. Carmichael is 400 km from the coast and there is no rail infrastructure within 200 km. There is also no commercial power or water infrastructure within 200 km and there is no sealed road access for 90 km.

Comments

Post a Comment

TRENDING

Gram sabha as reformer: Mandla’s quiet challenge to the liquor economy

By Raj Kumar Sinha*  This year, the Union Ministry of Panchayati Raj is organising a two-day PESA Mahotsav in Visakhapatnam, Andhra Pradesh, on 23–24 December 2025. The event marks the passage of the Panchayats (Extension to Scheduled Areas) Act, 1996 (PESA), enacted by Parliament on 24 December 1996 to establish self-governance in Fifth Schedule areas. Scheduled Areas are those notified by the President of India under Article 244(1) read with the Fifth Schedule of the Constitution, which provides for a distinct framework of governance recognising the autonomy of tribal regions. At present, Fifth Schedule areas exist in ten states: Andhra Pradesh, Chhattisgarh, Gujarat, Himachal Pradesh, Jharkhand, Madhya Pradesh, Maharashtra, Odisha, Rajasthan and Telangana. The PESA Act, 1996 empowers Gram Sabhas—the village assemblies—as the foundation of self-rule in these areas. Among the many powers devolved to them is the authority to take decisions on local matters, including the regulation...
Post a Comment
»

MG-NREGA: A global model still waiting to be fully implemented

By Bharat Dogra  When the Mahatma Gandhi National Rural Employment Guarantee Act (MG-NREGA) was introduced in India nearly two decades ago, it drew worldwide attention. The reason was evident. At a time when states across much of the world were retreating from responsibility for livelihoods and welfare, the world’s second most populous country—with nearly two-thirds of its people living in rural or semi-rural areas—committed itself to guaranteeing 100 days of employment a year to its rural population.
Post a Comment
»

A comrade in culture and controversy: Yao Wenyuan’s revolutionary legacy

By Harsh Thakor*  This year marks two important anniversaries in Chinese revolutionary history—the 20th death anniversary of Yao Wenyuan, and the 50th anniversary of his seminal essay "On the Social Basis of the Lin Biao Anti-Party Clique". These milestones invite reflection on the man whose pen ignited the first sparks of the Great Proletarian Cultural Revolution and whose sharp ideological interventions left an indelible imprint on the political and cultural landscape of socialist China.
Post a Comment
»

Concerns raised over move to rename MGNREGA, critics call it politically motivated

By A Representative   Concerns have been raised over the Union government’s reported move to rename the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), with critics describing it as a politically motivated step rather than an administrative reform. They argue that the proposed change undermines the legacy of Mahatma Gandhi and seeks to appropriate credit for a programme whose relevance has been repeatedly demonstrated, particularly during times of crisis.
Post a Comment
»

Rollback of right to work? VB–GRAM G Bill 'dilutes' statutory employment guarantee

By A Representative   The Right to Food Campaign has strongly condemned the passage of the Viksit Bharat – Guarantee for Rozgar and Ajeevika Mission (Gramin) (VB–GRAM G) Bill, 2025, describing it as a major rollback of workers’ rights and a fundamental dilution of the statutory Right to Work guaranteed under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). In a statement, the Campaign termed the repeal of MGNREGA a “dark day for workers’ rights” and accused the government of converting a legally enforceable, demand-based employment guarantee into a centralised, discretionary welfare scheme.
Post a Comment
»

Swami Vivekananda's views on caste and sexuality were 'painfully' regressive

By Bhaskar Sur* Swami Vivekananda now belongs more to the modern Hindu mythology than reality. It makes a daunting job to discover the real human being who knew unemployment, humiliation of losing a teaching job for 'incompetence', longed in vain for the bliss of a happy conjugal life only to suffer the consequent frustration.
59 comments
»

Making rigid distinctions between Indian and foreign 'historically untenable'

By A Representative   Oral historian, filmmaker and cultural conservationist Sohail Hashmi has said that everyday practices related to attire, food and architecture in India reflect long histories of interaction and adaptation rather than rigid or exclusionary ideas of identity. He was speaking at a webinar organised by the Indian History Forum (IHF).
Post a Comment
»

India’s Halal economy 'faces an uncertain future' under the new food Bill

By Syed Ali Mujtaba*  The proposed Food Safety and Standards (Amendment) Bill, 2025 marks a decisive shift in India’s food regulation landscape by seeking to place Halal certification exclusively under government control while criminalising all private Halal certification bodies. Although the Bill claims to promote “transparency” and “standardisation,” its structure and implications raise serious concerns about religious freedom, economic marginalisation, and the systematic dismantling of a long-established, Muslim-led Halal ecosystem in India.
Post a Comment
»

From jobless to ‘job-loss’ growth: Experts critique gig economy and fintech risks

By A Representative   Leading economists and social activists gathered in the capital on Friday to launch the third edition of the State of Finance in India Report 2024-25 , issuing a stark warning that the rapid digitalization of the Indian economy is eroding welfare systems and entrenching "digital dystopia." 
Post a Comment
»