May 8, 2014 12:58:03 pm
Adani Enterprises Ltd won approval on Thursday from the Australian state of Queensland for an A$16.5 billion ($15.4 billion) coal and rail project in the untapped Galilee Basin.
The mine, designed to eventually produce 60 million tonnes a year of thermal coal used in power stations, has been the focus of opposition by green groups fighting new coal mines and the rail and ports needed to ship the coal.
“This project has the potential to be the largest coal mine in Australia and one of the largest in the world,” Queensland deputy premier Jeff Seeny said in a statement.
The state’s report, which set 190 conditions for Adani to meet, including compensating landholders affected by any harm to water supplies, now goes to Australia’s environment minister for a final decision.
Adani welcomed the approval and said it could now move to the next stage of the project.
“We remain committed to delivering the multi-billion dollar project,” Adani Chairman Gautam Adani said in a statement.
Adani still faces challenges stalling progress on the project, not the least of which is raising the money needed to build the mine, rail and port for the coal.
The port that Adani plans to use, Abbot Point, is facing a legal challenge from green groups fighting a port expansion that will dredge up 3 million cubic metres of sand to be dumped near the Great Barrier Reef.
Green groups have been attacking the economics of the project too, highlighting that getting coal out of the Galilee Basin, which is nearly 500 kilometres (310 miles) from any port, will be a loss-making prospect if thermal coal prices stay where they are, below $75 a tonne.
“Carmichael coal is low energy content and high ash, such that the mine proposal will continue to be challenged by permanently low thermal coal market prices,” said Tim Buckley, a former head of equity research at Citigroup who is now a director of the U.S.-based Institute of Energy Economics and Financial Analysis, which is campaigning against fossil fuels.
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