Indian billionaire Gautam Adani says Australia's biggest ever coal mine is going ahead after his company announced a final investment decision on the Carmichael project.
But environmental groups immediately branded Tuesday's announcement a con because Adani has not secured the finance to reach financial close, the major hurdle to construction of the $16.5 billion project.
One of the mine contractors in the Adani statement, Downer EDI, appeared to pour cold water on the announcement, saying it had received an updated letter of award to an agreement struck in 2014 and no binding deal had been signed.
Downer noted in its update to the Australian Stock Exchange that Adani had simply provided further clarification on the scope of work to be performed and the process for negotiating a binding mining services contract.
The proposed mine has become a hot political issue, with at least 20 environmental groups, including Great Barrier Reef campaigners, pitted against the Coalition, which is considering pouring public funds into rail infrastructure to get coal to port, and an enthusiastic Queensland Labor government.
Queensland Premier Annastacia Palaszczuk welcomed the Adani investment decision, claiming: There will be jobs right across this state. This project will deliver those jobs.
Adani had threatened to shelve the project before the Queensland Government agreed to a favourable deal on royalty payments.
In a statement, Adani said it had signed letters of award for design, construction, operations, supply of materials and professional services, with Downer to take the lead on building and operating the mine, located in Queensland's Galilee Basin.
This is an historic day for Adani, an historic day for regional Queensland, and an historic day for Indian investment in Australia, Mr Adani said
This is the largest single investment by an Indian corporation in Australia, and I believe others will follow with investments and trade deals.
We have been challenged by activists in the courts, in inner-city streets, and even outside banks that have not even been approached to finance the project. We are still facing activists. But we are committed to this project.
The Adani statement gave no hint as to how it would secure finance, with all four of the big Australian banks having declined to loan money to the project.
Stop Adani Alliance spokesman Geoff Cousins, who is also president of the Australian Conservation Foundation, said it was groundhog day because the company had announced other investment decisions over the past six years.
Adani is yet to lure any financial institutions willing to bankroll the project, which is proving hugely unpopular with the Australian public. Without this support and public subsidies, the heavily leveraged balance sheet of Adani Enterprises leaves no internal capacity to fund this $5 billion project proposal, Mr Cousins said.
If the federal government hands Adani $1 billion of public money for this destructive mine that will destroy our reef, we will consider all avenues, including legal action, to stop it.
David Barnden, a lawyer at Environmental Justice Australia, said financial close was far more important than reaching final investment decision.
Financial close for Adani's mine cannot occur without funding, he said.
Major Australian banks are shunning new coal mines, in accordance with the Paris Agreement. Adani's Carmichael mine is far from a certainty.
Adani has said it plans to mine 2.3 billion tonnes of coal over the mine's 60-year lifespan despite India making recent announcements about transitioning away from coal-fired power in future.
Construction of the mine could eventually entail six open-cut pits and five underground mines over an area 30 kilometres long.
Adani Australia chief executive Jeyakumar Janakaraj said the company had already invested $3.3 billion in the project, including buying the bulk coal handling port at port of Abbot Point adjacent to the Great Barrier Reef.
The company has also announced in the past few weeks contracts totalling more than $150 million for railway tracks and concrete sleepers for the 388-kilometre standard gauge rail link between the mine and Abbot Point.
Maree Dibella, co-ordinator of the North Queensland Conservation Council
said it was impossible to trust Adani.
Just three weeks ago, Adani announced it was suspending its final investment decision indefinitely in a move designed to force a royalty deal. Today they're here in Townsville, cutting a ribbon to open their office, promising our community the world, she said.
Based on reserves and approvals, Carmichael mine could produce up to 60 million tonnes of coal for export per annum, doubling Queensland's thermal coal exports.
If Carmichael was a country it would become the fourth-largest supplier to Asia, ahead of South Africa.
Opponents claim the effort to keep global temperature increases below two degrees celsius is incompatible with a coal mine at the scale of what Adani has proposed.
Burning the coal produced by Carmichael would release up to 120 million tonnes of CO2 per annum.
By Heath Aston
Published by the Sydney Morning Herald on 6 June 2017