Antinuclear

Tony Abbott and Campbell Newman cannot be trusted about the true economics of coal

Will Abbott and Newman show us their coal portfolios? Will they hold their investments until 2020? olddogthoughts November 16, 2014  Standing up for coal – Abbott and Newman give investment advice  November 16, 2014 by: Kaye Lee
Tony Abbott has told a G20 leaders’ discussion on energy he was “standing up for coal” as the Queensland government prepares to unveil new infrastructure spending to help the development of Australia’s largest coal mine.Abbott, who recently said coal was “good for humanity”, also endorsed the mine, proposed by the Indian company Adani, to the meeting.

The Australian government has given all environmental and regulatory clearances for the $7.5 billion coal mining, rail and port project, said Gautam Adani, chairman, Adani Group, in an interview to The Indian Express.

And Campbell Newman is happy to put your money where his mouth is. “We are prepared to invest in core, common-user infrastructure,” Mr Newman said.  “The role of government is to make targeted investments to get something going and exit in a few years’ time.”

Despite poor market conditions, high costs and the massive outpouring of concern over the environmental impacts of their projects, Indian companies GVK and Adani remain hell-bent on opening up the Galilee Basin in Queensland. The smallest mine is as large as Australia’s biggest operating coal mine and the largest, twice the size. All of the proposals in the Galilee Basin would produce enough coal to chew up 7% of the world’s remaining carbon budget, drastically reducing our chances of keeping a lid on global warming.

Adani and fellow Indian company GVK are pushing their projects and Adani wants to start construction early next year, but the key problem is access to funds.

Few banks are willing to lend when coal prices are so low and the industry is facing issues with climate change.

There are also issues with both companies…………………..

So we have a company [Adani Mining] with $1 billion in debt, negative shareholders funds, zero revenue and high cash burn with $15 billion still to spend, and the parent company, Adani Enterprises, has debts of $US12 billioTim Buckley, director at the Institute of Energy Economics and Financial Analysis, puts it bluntly: “This project is not commercially viable”. Apart from the financial deficiencies of the main participants, he says thermal coal is in structural rather than cyclical decline.

In another red flag, Linc Energy accepted $155 million from Adani a couple of months ago for its option in the project. It is worth asking why Linc boss Peter Bond would sell a royalty of $2 billion over 20 years – perhaps worth $600 million today – for just $155 million…………

And then there’s GVK…………

Building Australia’s largest black thermal coal mine in the untapped Galilee Basin would challenge experienced operators, but the combination of an inexperienced developer, slack demand globally for thermal coal and a deteriorating cost of production scenario in Australia moves the project beyond speculative……….

According to The Institute for Energy Economics and Financial Analysis, GVK‘s Alpha project appears likely to remain “stranded in the valley of death”.

Six of the top ten and nine of the top twenty coal funding banks have now stated that they don’t plan to fund the expansion of Abbot Point.  Given the global scale and Australian focus of Galilee Basin projects, the Big Four banks in Australia (Commonwealth Bank, Westpac, ANZ Bank and National Australia Bank) will be critically important to the financing of this multi-billion work……..

It is already costing the banks. Several thousand customers have so far joined the rapidly growing divestment movement, moving to other banks in protest of the big four’s massive lending to the fossil fuel industry. And thousands more, worth hundreds of millions of dollars, sit in waiting, ready to shift their business based on whether the Australian banks will stand up and defend the Reef or fund its demise.

Rather than taking investment advice from Abbott and Newman, it’s time for us all to let our banks know what we Australians want. http://olddogthoughts.com/

November 17, 2014 - Posted by Christina Macpherson | AUSTRALIA - NATIONAL, business, politics