The latest brainwave from the Federal government is to lavish a $1 billion taxpayer subsidy on a foreign billionaire to build the world’s biggest new brown coal mine.
Seven reasons why this is a breathtakingly inane idea:
1. Sheer white-elephantness: The project’s bankers have long fled the scene. Thermal coal is in structural decline. The economics don’t stack up.
2. Tax: forget it. Adani has been raking in $150 million of earnings (EBITDA) a year from its coal-port but paid tax in only one year out of six, and very little at that.
The proposed federal loan is likely to be routed through another structure though – Adani Rail and Infrastructure – owned by an entity in the tax haven of Singapore whose ultimate parent is a personal Adani family company in the Cayman Islands. Again, forget tax.
4. Water concessions: coal mining is notoriously water intensive. Another subsidy flung Adani’s way is the recent water concession by the state government.
Queensland doesn’t charge miners for water and Adani’s Carmichael mega-mine will be draining the bores at precisely the same time the farmers need the water most.
5. “But this is a common-use facility”: no it’s not. The NAIF proposal is for a “standard-gauge” rail-line compared with the state’s other “narrow-gauge” rail-lines which are inter-connected. This is a stand-alone thing, a stranded asset, a true white elephant.
6. “This is a nation building exercise. GVK will benefit too”: No, it’s not, and no they won’t”. GVK has a market cap of $US130 million, debts of $US3 billion and still owes Gina Rinehart $560 million before it even begins to contemplate project finance.
7. “The project will help the poor of India”: it will help poison the poor of India and cement Australia’s reputation alongside Donald Trump’s regime as the bogans, sans pareille, of world climate policy. Carmichael coal is low-energy, high-ash – not efficient but highly damaging for the environment.
Meantime, Indian Energy Minister Piyush Goyal continues to reiterate his nation’s commitment to an aggressive solar roll-out and to cease seaborne thermal coal imports by 2020. He is on track to achieve this.
There is little flesh around the proposal. Apart from a leak to Rupert Murdoch’s Courier Mail newspaper – glowing coverage by one billionaire tax scoundrel and fossil-fuel champion for another – not much more has been said.
Michael West established michaelwest.com.au to focus on journalism of high public interest, particularly the rising power of corporations over democracy. Formerly a journalist and editor at Fairfax newspapers and a columnist at News Corp, West was appointed Adjunct Associate Professor at the University of Sydney’s School of Social and Political Sciences. You can follow Michael on Twitter @MichaelWestBiz.