An endangered lizard is only the latest threat to Australia’s largest coal project.
The Federal Court of Australia rejected the approval of Adani Enterprises Ltd’s Carmichael mine and rail project after environmental groups claimed the decision had not properly considered the impact on two vulnerable species. It should take six to eight weeks for the environment minister to reconsider the clearance, the government said yesterday.
While the original approval last year had conditions to protect species, including a lizard known as the yakka skink, the environment department failed to present certain documents, creating “a technical legal vulnerability,” Adani wrote in a separate statement.
“It’s another setback for the project,” said Matthew Boyle, an industry consultant at CRU Group in Sydney, who expects the mine’s start to be delayed to 2019, from the company’s estimate of 2017 given last year. “Carmichael will be developed, but probably not in the original time frame.”
Adani is seeking to develop the project and open up a new coal province in Queensland, even after coal prices fell by more than half in the past four years. Environmentalists concerned about the health of the Great Barrier Reef are also fighting the development.
“Adani is confident the conditions imposed on the existing approval are robust and appropriate once the technicality is addressed,” the company wrote.
Although coal is under threat globally as nations from China to Brazil make commitments to curb emissions and the administration of US President Barack Obama moves ahead with plans to cut US coal use, Boyle said demand in nations such as India for power-station coal is projected to increase.
“Indian thermal coal demand is still expected to be significant and Adani is a large player in the power-utility market,” he said. “India will require the coal.”
Still, for developers, including Adani, seeking to build new coal mines in Australia, the economic hurdles may be bigger than the environmental or political ones.
Australia’s Newcastle coal, an Asian benchmark that surged to US$136.30 a tonne in 2011, has since slumped to less than US$60.
Newcastle coal prices are forecast to average US$61 this year, US$59 next year and US$62 in 2017, Natalie Biggs, a US analyst at consulting firm Wood Mackenzie Ltd, wrote in an e-mail on Tuesday.
Power-station coal prices of more than A$100 (US$74) would be needed to make those Australian coal projects viable, about 25 percent higher than current levels, Daniel Morgan, a commodity analyst at UBS Group AG in Sydney, said by telephone.
“Prices that reflect a very well supplied coal market aren’t anywhere near where they need to be if I’m a decisionmaker trying to bring on that project,” Morgan said.
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