 Hello and welcome to NewsClick. I'm Poranjoy Gohar Thakurtha and with me here in the studio I'm very happy to welcome Tim Buckley. He's an energy finance analyst based in Sydney, Australia, who's been very, very closely tracking the activities of the Adani Group in Australia. His official designation is Director of Energy Finance Studies at the Institute for Energy, Economics and Financial Analysis. Thank you so much Tim for giving us your time. It's been now eight years that we've been hearing that the Adani Group is going to set up in Queensland a major coal mining project together with a railway line and a port. What is the current status of the project? And this was supposed to be a huge project. At one point of time we were hearing that 16 billion dollars, the equivalent of 16 billion US dollars would be spent on the project. What is the current status of this project? As you mentioned, eight years ago Adani entered the Australian market and as of today the project has still really not advanced in any form for either the railway line or the mine development. Adani did end up buying a major port and so they own the Abbott Point Port and have the capacity to export coal from the Galilee if they build the railway line and if they build the mine. But eight years in the project is yet to get to financial close. So you're saying it's the financial closure which hasn't happened yet? Correct. So Adani at the time they acquired it was the strategy for exporting coal from Australia back to India was 100% aligned with the Indian government strategy. India could not produce enough thermal coal for its own consumption and the government had made it very clear that it wanted its leading private corporations to go offshore, find resources and bring the resources home. That strategy has totally changed and the need for the coal in India is now very very questionable. At the same time global financial institutions are increasingly moving away from financing coal and so Adani has found themselves caught in a situation where they've invested a lot of money a lot of time and yet they're unable to get to financial close. They're unable to get backers of the project in Australia. I'm going to come back to you on the financial aspects of the project but before that you could perhaps comment a little bit about the opposition within Australia on the ecological impact that this project would have on the Great Barrier Reef which is supposed to be one of the seven wonders of the natural world. It's a world heritage location and the Galilee Basin is huge. It's 250,000 square kilometers which makes it bigger than the United Kingdom but it's not just the coal mine, the railway line, the port at Abbott Point. All of these were opposed by activists. As you mentioned there's been enormous community unrest about the project and that comes because ultimately Adani is not just developing one coal mine, they are developing an entire new coal basin and that coal basin has 10 different projects. So Adani is the first mover. If its project gets up and running another nine different coal mines will be enabled through the infrastructure it builds. So from a global perspective it's probably the single biggest new proposed thermal coal basin in the world and it's probably paralleled only with the Canadian tar sands in terms of the magnitude of the carbon emissions that would be generated on the back of the project. So it's a globally significant project. At the end of the day if the world is to stay on track for the Paris Climate Agreement there is no way the world can justify building a brand new massive coal basin and we're not talking just 30 million tonnes, we're talking 300 million tonnes, building a brand new massive coal basin and we're not talking just 30 million tonnes, we're talking 300 million tonnes. Actually I mean I've got all kinds of figures and one of them said that that entire Galilee basin could have you know over 20 billion perhaps 27 billion tonnes of coal and this is the proposed project is not just the biggest greenfield coal mining project of its kind anywhere in the world but it's the biggest in Australia and if completed would qualify to be among the top maybe dozen coal mining projects anywhere in the world is that correct? Absolutely and it just facilitates nine other projects which would all fit in the top 10 or 20 projects in the world so it's a major project for Australia. The Australian government's taken a very different view to environmentalists they've said we'll be exporting all of our emissions so it doesn't affect our country we'll export them to India and they'll let you. In fact this the main project is supposed to mine about 40 million tonnes of coal every year and and of that about two-thirds are supposed to be exported to India am I correct? Yeah that the project started at 60 million tonnes per annum for 60 years it's been downsized to 40 recently it was downsized to 30 and then most recently it's been downsized to 27 million tonnes but irrespective 27 30 50 it's still an enormous project it's the largest in the world proposed. I want you to talk about a little bit about you know there was some opposition from wildlife experts saying that there were certain species over there whose existence could be endangered by the project has has that controversy been is that a closed chapter? Unfortunately the courts have ruled that it doesn't matter that they're endangered species involved the courts have ruled that's not sufficient ground to close the the development proposal but Australia has a very portrait record of protecting endangered species but I think going back to your earlier question the project is yet to get full approval and the approvals still outstanding relate to water Australia as you might be aware is is in the middle of the worst route in Australian history recent history anyway and the water requirements for the Idani project are in the order of about 22 billion litres a year of water drawing from ground and from flood waters so huge water impacts and that's got a lot of the farming community very much offside and so that's been a point of contention at the same time as you mentioned the Great Barrier Reef is 400 kilometers away but you enable a huge new carbon basin to be burnt over the next 20 or 50 years you effectively destroy the ability of the world to deliver on the Paris climate agreement so if we cannot restrict climate change to one and a half to two degrees then there is no chance that the Great Barrier Reef will survive the report from the UN the UN IPCC last month said that 99% of the Great Barrier Reef would be destroyed this century if climate change can't be held at one and a half to two degrees so that is as you said one of the seven wonders of the world it's also one of Australia's biggest tourist attractions it employs so it could have at one level those who are the proponents of the project are saying is going to create a lot of jobs but here you're also suggesting there could be also loss of jobs or loss of employment if the number of tourists who visit the Great Barrier Reef I mean if their numbers come down in the future in the future absolutely there are 60-70,000 jobs directly occurring because of the tourist industry on the Great Barrier Reef alone so that is put at risk okay if I can ask you a little bit about the opposition from the aboriginals the indigenous traditional owners of the land I might be mispronouncing it Wangan and Jagalingu W&J they had gone to the national native title Shibunal at one stage opposing the land that was given opposing the grant of the title to the land to this project what is the current status so the W&J continuing to fight the indigenous land use agreement the Iliwa is what it's referred to in Australia they would argue that the consent was never given for the Iliwa to be approved that is gone through the Supreme Court it has been rejected by the Supreme Court the W&J are now appealing that decision to a full bench of the Supreme Court in Australia so they probably won't see a decision for another 12 months so at the moment there is no approval for Adani to go ahead with the mind they don't have an Iliwa in place that is uncontested and that is a major problem and that's part of why I mentioned financial close hasn't been achieved if you do not have an Iliwa you don't have traditional owner approval you haven't got uncontested approval to develop the project international banks aren't going to go near this project while the traditional owners are disputing the right of the project to proceed so that is probably the single biggest legal obstacle to the project and that's why eight years in they still haven't got okay Tim would I be correct in presuming that among the political leadership in Australia at present both the ruling party as well as those in the opposition and it's a very close contest I mean we in India we see the the it has traditionally been a very very closely contested political situation where two parties are sort of vying with each other would I be correct to say that within both the major political parties in Australia there are both supporters and opponents to the project and most of those who are from Queensland have tended to support the project I think that's a fair representation and if you stand back and look at Australia it's like India we are a very cold dependent country so of our major exporters coal for coke and coal for steel production thermal coal for power generation are two of our four biggest exporters along with LNG and I know so when you talk about politicians being very pro mining in Australia they are very pro mining it's a major employer it generates a lot of export revenue it generates some royalties for the states and so it's very difficult to see Australian politicians stand against coal but we did just have a major by-election on the weekend the Wentworth by-election and that was where the ruling party the federal ruling party was thrown out of the a seat that they've held since Federation so virtually for over a hundred years the Liberal Party has held the seat of Wentworth they lost the seat with a 20 swing the single most important identified issue under contention was the issue of climate change so are you suggesting that the opposition to the project by from civil society activists could kind of tilt the balance and sort of influence public opinion against the project absolutely it's a very controversial project and I think the Wentworth by-election highlights that the community feels that our politicians have not been listening and that they have not considered climate change a serious issue and ultimately the Galilee is of global significance on climate change the threat to the Great Barrier Reef the threat to the planet has not been understood by our politicians not accepted by the politicians and it's now a political reality it's probably the single largest issue in Australian politics okay Tim you know over the last couple of years and a little longer perhaps you've been very very closely fracking not just the big Adani project or the proposed project in in Queensland Australia but what the Adani group is doing within India in particular the project of Adani power limited in Mundra as well as the Gouda coal fired project which is in Jharkhand in eastern India which is a very very unusual project because it seeks to import coal from Australia bring it to a port in eastern India called Dhamra take it to Jharkhand which is in eastern India bordering the state of Jharkhand and West Bengal and what is even more interesting is that the entire the electricity that is generated would get exported to Australia to Bangladesh oh I'm so sorry Bangladesh that's correct yeah in eastern India so so the point is why have you sought to link the Adani's groups project in Australia with what's happening in Mundra in western India and the Gouda project which will be supplying electricity to Bangladesh a lot of the work we do at IEFA is analyzing the transformation of electricity markets globally and we look at India as being a world leader in electricity sector transformation it has been absolutely amazing to watch that the decline in renewable energy prices in India in the last two years we've seen over a 50 percent reduction in tariffs for renewables renewables are now the low-cost source of electricity in India in Australia and Adani is in it too Adani is absolutely remember so he's not just into coal based power correct he's also one of the major players in in solar energy yes please the Adani green power IPO the initial public offering went through three months ago it has made Adani one of the top five players in the renewable energy space in India so you're right Adani is very much a foot in both camps India will be using coal for decades to come but the growth of the Indian economy needs to be on a sustainable footing and it needs to source low-cost renewable energy that is the government's plan and so I think we have a pivotal point in Indian energy markets where the reliance on coal historically is being absolutely accepted it's a necessary function of underpinning economic growth but going forward the power is going to increasingly come from renewables and Adani at the moment is trying to use effectively be energy agnostic one minute the project in Mundra the under Adani power it was based on imported coal but from Indonesia now it's run run into all kinds of problems together with two other projects and there's a high-powered committee which has submitted its recommendations on what can be done to ensure that these assets don't get completely stressed or don't become non-performing that's one part of the story but we also see in Jharkhand the Gordha project is being seen as a project that might that's it may be importing coal from Australia but at the end of the day it's going to supply cheap power to Bangladesh so how is it linked to what's happening in Australia and why has why have you in particular you've written you you put out a public in the public domain a paper which has been very very critical of this project why you use the word cheap power for Bangladesh our analysis shows it's anything but cheap in fact it's probably going to be twice the price of alternative sources of power generation for Bangladesh so that is effectively the critical point of contention it is not a project that supplies cheap power to Bangladesh it's actually a project that locks in really expensive imported power and as you mentioned it's imported coal from Australia to India converted into electricity then exported to Bangladesh the transmission, rail, sea, port costs are astronomical and at a time when India is now producing surplus power for the first time in more than a decade you have the opportunity to supply very cheap renewable energy to Bangladesh and instead Adani is proposing really expensive dirty. What you're suggesting this project should be scrapped all together but they've already sort of acquired a lot of land and there is no time like the present to stop a project that's not going to be commercially viable but then both the government of India as well as the government of Bangladesh has to be convinced that this project is not going to be useful or helpful that's true but you only have to look at the tariff agreement and the tariff agreement is to supply power at five or six rupees per kilowatt hour at the same time the Prime Minister of Bangladesh is talking to your Prime Minister Modi about buying renewable energy from Gujarat transforming it transporting it across the country and then exporting to Bangladesh you could be doing that at three rupees a kilowatt hour and so ultimately what we would be arguing is when markets are in a massive point what is going to be the price of the Godav electricity? Probably five and a half to six rupees so it could be almost double the price now you will have higher transmission cost to take electricity from Gujarat all the way to Bangladesh but that might get you up to four rupees not five not six material cheaper and so ultimately if there is a point of disruption the logic is that you re-evaluate projects so you mentioned the land has been acquired but nothing's been built so that is the best point to stop you actually should return the land to the people you've acquired it from cancel the project and find a better lower cost okay time alone will tell whether that actually happens or not but before I conclude I want to return to the original to the subject I'm talking about the project in Australia what's your hunch you're saying there's no financial closure yet the local indigenous peoples their originals they've challenged the ruling of the Supreme Court to a higher bench and what do you think is likely to happen in the foreseeable future and as you've also written the project has been downsized you know whether it be the railway line or the capacity of the coal mine so all of this has happened in the recent past what could happen in the coming in the near future in the foreseeable future I think the point you made about downsizing is really important so Adani announced two months ago that they've downsized the railway development they've halved the price it's gone from a two billion dollar rail development to a one billion US dollar development that is all about trying to reduce the project to a level where effectively the Adani family can fund it themselves and proceed without any international banking support I just think the world has moved on from developing new greenfield coal mines globally and in Australia the financial institutions have moved on but we do we are talking about one of the most powerful men in India we're talking about a billionaire a billionaire who's invested over a billion dollars in Australia in this project and he's not used to losing so unfortunately the decision really sits with Gautam Adani does he want to actually take this project forward and risk his own capital if he can't convince other people to do it and that so far so far there's no indication that Mr Gautam Adani will pull out I mean though yes over the last eight years the project has undergone a number of modifications he's attempting downsizing various banks and financial institutions have not gone ahead with him but you think he's really determined to put this project because after all for him you know it's also a lot at stake I mean it catapults him from being not just one of India's billionaires or one of India's richest men's but a person with business interests across the globe true but businessmen successful businessmen businessmen have to underwrite successful projects and I don't think this is a project we will make a viable rate of return I don't think it is a project that makes any ecological sense I don't think it's a project that the community of Australia is going to allow to go ahead so he has to weigh up a project that he has put his own capital in and he's invested a lot of money with ongoing civil disobedience against the project and a project that probably does it also has some of Australia's richest persons helping him including Gina Reinhart who's one of Australia's richest women her firm is partnering Adani the port project no they're standing they've got their own project we've not seen Hancock prospecting move at all in eight years they're busy developing iron ore and they're developing other projects they haven't invested so that was just a proposal which has yet to come through it's a project waiting if Adani proceeds Hancock prospecting might but ultimately I'd come back does India need the coal and the answer to that does India need imported coal not at all India has more than enough coal but more importantly more enough but of poor quality true that is true but what you're far better off doing is focusing on the future technology and renewable energy and that is the low cost source I think your prime minister has articulated that beautifully and that is the vision of the future for India and let's wait and watch and time alone will tell whether the Adani project in Australia to set up the world's largest greenfield coal mining project together with a railway line and a port actually materializes or not thank you very much Tim for coming here and giving us your time and you've just heard and watched Tim Buckley he's an energy finance analyst based in Sydney Australia discussing the likely future of the Adani groups project in Australia thank you for being with us and keep watching NewsClick