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 Michael West Media in 2016 to focus on journalism of high public interest, particularly the rising power of corporations over democracy. West was formerly a journalist and editor with Fairfax newspapers, a columnist for News Corp and even, once, a stockbroker.