Antinuclear

Australian news, and some related international items

As Australian government plans to subsidise Adani coal megamine – China steps into the picture

could it be that our own government is walking into the middle of an economic contest between China and India for control over industry and infrastructure?

Surely our government wouldn’t be using public money to subsidise Adani’s mine, undermining its own country’s interest and supporting China to strengthen its grip on power and infrastructure in countries neighbouring India? 

Or would it?

Adani takes another climb up Mount Absurdity http://www.theage.com.au/business/mining-and-resources/adani-takes-another-climb-up-mount-absurdity-20171101-gzd485.html, Julien Vincent ,NOVEMBER 2 2017

Last month I claimed that using a $900 million, publicly funded loan to bail out Adani’s otherwise unviable Carmichael coal mine proposal was the height of absurdity.

How wrong I was.

With Australia’s Big Four banks among the two dozen that by policy or commitment won’t be going anywhere near the project, it’s no secret that Adani is desperate for finance.

The Australian government has been equally desperate, creating an agency and filling it with taxpayers’ money so we can fund a project opposed by the majority Australians.

But the government’s efforts to support Adani stretch well beyond the financial.

We learned last week the former deputy prime minister Barnaby Joyce and Trade Minister Steven Ciobo had been providing assurances to the Chinese government over Adani receiving its approvals.

A Freedom of Information request by The Australia Institute has turned up more than 200 pages relating to requests for foreign government financing of Adani’s projects.

Adani’s sights appear to be set squarely on securing a Chinese state-owned enterprise (SOE) as a partner, which in turn could facilitate Adani securing “export credits”, a form of long-term, low interest debt. Export credits become an option only when an investment supports the national interest of the country providing the credit, be it strategic or financial.

This is where you’ll need to don your mountaineering gear, because we’re about to leave base camp at Mt Absurdity and go for a climb.

Given that the proposed $900 million loan from the Northern Australia Infrastructure Facility (NAIF) would be the most subordinated of any debt to the project – last in line to get paid and potentially a form of quasi-equity – the Australian taxpayer now faces the prospect of subsidising a Chinese SOE investment.

Moreover, if China’s Export-Import Bank or another provider of export credits comes in, by definition that means some of the economic, employment or strategic benefits would be shifted to China, a result that Australia would also be subsidising.

Adani has been courting China Machinery Engineering Corp (CMEC), a potential construction partner in the project.

CMEC is a majority state-owned subsidiary of Sinomach, one of the world’s biggest providers of machinery and equipment for infrastructure projects. It has a range of businesses, but by far the biggest is providing equipment for coal power stations, which it has busily been getting on with across South Asia over the past decade.

If CMEC becomes involved in the Carmichael project, it would immediately open the door to Adani for Chinese finance, but quite how this squares with the promise that Downer EDI will be granted the construction contract is unclear.

One can only imagine Downer’s executives staring with furrowed brows at their much-vaunted, but presumably not legally binding, Letter of Award to build the Carmichael mine, wondering whether it’s actually worth the paper on which it is written.

Adani has alluded to the hope that CMEC could take an equity stake in the Carmichael project and since, unlike its Australian counterpart, the Chinese government likes to get a viable return on investment, this could open up a whole range of new issues.

CMEC is at the heart of China’s Belt and Road expansionist program of building out power generation and infrastructure in key strategic countries such as Pakistan, Bangladesh and others across South and South-East Asia.

Given that excessive costs have led to Adani putting its main imported coal power station in India up for sale for 1 Rupee, CMEC-built power plants in highly sensitive developing nations would likely serve as a destination for the low-quality Carmichael coal, which is now too costly to burn in India.

You can be sure it hasn’t escaped the attention of the Chinese government that this is an opportunity to use coal mined in Australia by Indian President Narendra Modi’s close friend, Gautam Adani, to feed coal plants central to a One Belt One Road plan, which India has unsurprisingly refused to support.

But could it be that our own government is walking into the middle of an economic contest between China and India for control over industry and infrastructure?

Surely our government wouldn’t be using public money to subsidise Adani’s mine, undermining its own country’s interest and supporting China to strengthen its grip on power and infrastructure in countries neighbouring India?

Or would it?

And if it were, could we have finally reached the towering summit of Mt Absurdity?

Maybe, but I won’t make the mistake of calling it again.

Julien Vincent is executive director of Market Forces.

 

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November 3, 2017 - Posted by | AUSTRALIA - NATIONAL, politics, politics international

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