Australia’s Great Barrier Reef, the world’s largest coral reef, is home to more than 1,600 species of fish. If two mining companies from India have their way, the region will soon also host one of the world’s largest coal shipping ports.
Adani Enterprises is behind a $5.5 billion project that will connect Australia’s largest coal mine, which it’s planning in the Galilee Basin in Queensland, to a new terminal at Abbot Point, about 50 miles from the reef, along the state’s northeast coast. Adani already owns one terminal there that exports a small percentage of coal from other mines in Queensland. The Indian conglomerate GVK and Australian mining company Hancock Prospecting want to build a third terminal to export coal to Asia.
The mining companies say new infrastructure will boost exports. Environmentalists argue that a rise in coal shipments from the area will release more carbon into the atmosphere and damage coral that’s already at risk from climate change. Australia exports about a million tons of coal a day.
The terminals would be disastrous for the reef, says David Booth, director of the Centre for Environmental Sustainability at the University of Technology, Sydney, and president of the Australian Coral Reef Society. In March, ACRS issued a report warning that dredging the seabed to enlarge the port would release underwater sediment that would damage the reef. The Society is also concerned about increases in shipping traffic and coal dust. GVK Hancock Coal, the Indian-Australian joint venture, has denounced what it calls “a campaign of misinformation about nonexistent impacts to the Great Barrier Reef.”
During a visit to Brisbane for the Group of 20 summit last November, President Obama got a lesson in the politics of the reef. His comments about threats to the ecosystem from climate change prompted a rebuke from Australia’s minister for trade and investment, Andrew Robb, who called them “misinformed” and “unnecessary.”
Australia is trying to avert the embarrassment of the United Nations declaring the reef an endangered site. Unesco will meet in June to consider a change in status. Prime Minister Tony Abbott, who as recently as October said coal “is good for humanity,” has scrambled to prevent the reputational damage that would come with an endangered designation—the Great Barrier Reef is a prime tourist destination for its snorkeling and diving. “We are all conservationists,” Abbott told reporters on March 21 on an island near the reef, where he announced a long-term sustainability plan and acknowledged the threat of climate change to the reef.
The opposition Labor Party, which took control of the Queensland government in February, is allowing the projects to go forward, but it quickly moved to scrap port expansion proposals that called for developers to dump dredging waste in a nearby wetland or directly into the ocean. On March 11 the new state government announced that all dumping must go to an onshore site next to the Abbot Point terminal, which is designed to keep sediment away from the reef. The plan also calls for industry, not taxpayers, to foot the bill for the dredging. The proposal is “environmentally sustainable and fiscally responsible,” the Queensland government said in its announcement.
Still, the projects’ future is unclear. Critics have launched legal challenges. With coal prices worldwide down by more than half in recent years, Daniel Morgan, a UBS analyst in Sydney, says prices would need to jump more than 40 percent for the projects to be viable. New supply “is not needed by the market in the next 10 years,” he says.
Adani wants to start producing coal in 2017. GVK won’t give a start date but says it will create 7,500 construction jobs and $30.5 billion in royalties and tax revenue. Adani says 10,000 jobs and $16.8 billion in royalties and tax revenue will come from its project.
While global demand for coal may be slowing, India is still forecast to pass the U.S. as the world’s second-biggest user by 2019, with annual growth of 4.8 percent in its demand, according to an International Energy Agency report in December. The slide in coal prices won’t hurt the business case for extracting coal from the Galilee Basin, says Josh Euler, general manager for external affairs with GVK Hancock Coal, since the project will use cutting-edge methods that make mining less expensive. “It will be one of the lowest-cost coal-producing operations in Australia,” he says. When it comes to cyclical swings in prices, he adds, “we are relatively immune.”
The bottom line: Two Indian mining companies say infrastructure improvements at Abbot Point will boost Australia’s coal exports.