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Thursday, 29 December 2016

Adani Carmichael Coal Mine Queensland

As a nation goes, how foolish is our government and our bureaucrats?

From a pure governance perspective, any reputable Australian business person, and risk aware financial institutions, would steer clear of an investment in the Adani Carmichael Coal Mine, and it has very little do to with climate change, although from that perspective, this is the craziest undertaking we currently have in this country.

I am looking at this purely from a governance and related risk perspective. The key issues are quite simple, namely:

  1. From a deal-making perspective, Adani has a questionable history in its home country
  2. Those that are at the helm of Adani, have themselves, a questionable reputation in governance execution in their home country
  3. The controlling entity is likely to be domiciled in an offshore tax haven that will be inaccessible to Australian regulatory authorities should there be a need to call upon that entity to rectify any breaches associated with the one development or functions, including those that may breach environmental conditions
  4. From a financial perspective, the mine does not appear to stack up. some of the largest and reputable banks in the world have pulled out of the deal, questioning the very fundamentals of financial governance
So here we have an investment proposal that does not stack up financially and has very questionable governance structures, and yet, the Australian government is willing to throw $1 billion of taxpayer funds into the venture, partnering with unknown invisibles, given the offshore structures. All this whilst the Queensland government wants to promise jobs into the future which will probably never actually arise, assuming the mine actually begins any operations. Whilst some jobs will be created during the apparent construction phase, it is well known that the mining sector is capital intensive, not labour intensive.

The other aspect to this of course is that India itself is seeking to expand renewable energy as an alternative to coal, based on their own view as to the long-term sustainability of fossil fuels in the medium to long-term. 

The simple facts of this debacle are these:
  1. Adani will not be the economic saviour of Australia. Sustainable jobs will not be created in Qld or anywhere else resulting from this development
  2. The Carmichael Coal Mine will jeopardise existing wealth-creating activities associated with the Great Barrier Reef, whose tourism opportunities have as yet, not been fully exploited
  3. Australian taxpayers will see little return for their $1 billion investment, socially or economically. 

It would appear that other than coal producers, Tony Abbott and certain members of the Coalition government are the only ones currently in the world who are of the mistaken belief that coal is the future. 

No, in fact, coal is not only the past, but actually jeopardises the future for our children, our grandchildren and generations to come.

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