It's a good day for GVK and Adani Enterprises. The state government of Queensland, Australia, has cleared expansion of a port for their coal mining projects.
Adani can now go ahead with plans to finance the development of its $16.5 billion Carmichael mine, and GVK with its $6 billion Alpha mine. Both projects involve building ports and railroads to ferry coal from mines that are based 500 km away in the untapped Galilee Basin. Adani's project will be Australia's largest thermal coal mine.
The announcement was unexpected because the newly elected Labor government is perceived to be less supportive of the coal industry than its predecessor. Environmental groups had earlier protested against both projects which they say would create more pollution and damage the Great Barrier Reef, one of Australia's natural landmarks.
Their main issue was that the mining would involve dumping 3 million cubic meters of soil dredged at Abbot Point port into the sea 15 miles from the Reef. The federal government had earlier banned all dredge dumping around the Reef because of environmental concerns. Instead, new rules say that dredge spoil should now be dumped on land.
GVK and Adani reached an agreement that the soil would be dumped at the port itself, on a site earlier slated for a coal terminal. This expansion has cleared the way forward for the projects that are expected to create 4,000 jobs.
"I welcome today's announcement because it demonstrates the priority the government has placed from the outset on ensuring economic development proceeds in Queensland subject to robust environmental standards," Adani Australia CEO Jeyakumar Janakaraj said in a statement.
The funding for the projects is still not certain. Adani is in more advanced stages of talks, and is hoping reach a final investment decision later this year. Global coal prices have crashed to five-year lows, and continued protests by green parties had added to the uncertainty. Major US and European banks including Citigroup, Morgan Stanley, Goldman Sachs, Deutsche Bank, Barclays and HSBC have refused to finance Galilee Basin projects.
The new Queensland government has said that the government will lend its support to promoting the projects, but won't provide any funding. The previous state government was more supportive, and had proposed to help fund the port expansion and a rail line for Adani's Carmichael project.
(With inputs from Reuters)