India’s Adani Group has stunned the global industry by introducing the recent developments of their huge new coal mine, located in Australia. The Carmichael project, an anticipated development in the northern state of Queensland, has been in the planning phases for almost ten years.
It has been tormented by the hostility and criticism of government agencies and environmental activists. The banks and financial institutions who were earlier expected to willingly loan the money ended up dodging the representatives from the Adani group, hesitant to do business over its planned development project of the Carmichael mine.
The decade long fight has ended in a scaled down development, which now sprawls over less than half of the original size put forward in the first proposal. Construction is expected to start before the end of 2018, and Adani group has now chosen to fund the mine project from its own internal financial resources.
In light of these recent developments, the Adani group has bid farewell to its original plan of $16.5 billion, a project that was expected to produce 60 million tons of coal each year. The original plan is replaced by a new $2 billion project proposal, which is estimated to produce 10 million tons of coal in its earliest stages, and the potential is expected to rise up to 27.5 million tons a year.
Downsized Mine Proposal
Now that the mine proposal has been downsized from $16 billion to $2 billion, there is no need to support the project by constructing a project-specific railway line sprawling over 230 miles. This railway line was proposed in order to create a direct connection between the mine and a port located at Abbott Point. Now, this railway line is being replaced by a 120-mile railway line that will connect the mine to an existing heavy-haul railway. This change in the railway line proposal has reduced around $1.5 billion of the capital expenditure for the project.
The Carmichael project, situated in Galilee Basin, a little-known region of Queensland, could be one of the first coal mine projects amongst the several mining projects that were proposed for this area in order to meet the demand for superior quality thermal coal that has risen in India and across other Asian countries. Organizations are struggling to meet this increase in demand as coal-fired power stations have been shut down almost everywhere.
According to Lucas Dow, the Australian chief executive of Adani Group, revealed that the first coal shipment is expected to be shipped out before 2020 comes to an end. They have initiated the project and collected all the finances that are required to get started. He also said that any expansions undertaken on the Carmichael mine in the future will be funded by the profits made during the earliest stages after its completion.
The coal that emerges from the Carmichael mine is expected to fall in the first quartile of the global coal cost curve, and it will be largely shipped off to coal-powered stations across India.