Australia's Largest Mining Project Moves Forward, Despite Weak Demand for Coal

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When scientists from Australia's Coral Bleaching Task Force conducted a series of aerial surveys of the Great Barrier Reef last month, they expected to find some damage from the world's warming oceans around Lizard Island, north of Cooktown on Queensland's northeast coast.

Instead they found a disaster of epic proportion.

Ninety-five percent of more than 500 reefs stretching between Cairns and Papua New Guinea showed signs of bleaching — and some reefs appeared close to death.

The Great Barrier Reef had seen coral bleaching before, but this was the worst on record.

Task force leader Terry Hughes, a professor of marine biology at James Cook University, described the group's journey as the "saddest research trip of my life."

So when the Queensland government approved three mining leases for Australia's largest coal mine — which will require dredging of waters around the reef to make way for coal ships — many scientists and conservationists expressed further dismay.

Emissions from the $17 billion Carmichael coal mine, which includes a 100-mile-long rail line and one of the world's largest coal ports, Abbot Point, are projected to be huge.

An estimated 4.7 billion metric tons of carbon will be released into the atmosphere over the mine's lifetime. Annual emissions from the mine — 79 million metric tons — will be 20 percent more than the annual average emissions of New York City, according to calculations by the Australia Institute.

The three leases at the mine site, which is in the Galilee Basin in Central Queensland, are estimated to contain 11 billion metric tons of coal. The mine is expect to operate for 60 years with the coal exported primarily to India.

Queensland Premier Annastacia Palaszczuk said the approvals were a "major step forward" and would create thousands of jobs. But the project future remains in jeopardy due to legal challenges, falling coal prices, and funding shortfalls.

Tim Buckley, the director of energy finance studies at the Institute of Energy Economics and Financial Analysis, described the project as "totally commercially unviable, unbankable, and highly unlikely to proceed."

He said the collapse in coal prices and slowing demand for imports in China and India meant the mine had no future.

"The two largest coal import markets in the world are China and India and now both are in decline," he said. "It's because they are producing domestic coal, they are diversifying as rapidly as the can into nuclear, gas, hydro, wind, and solar. They're driving energy efficiency and grid efficiency with a huge amount of vigour. And it's a combination of those three strategies which are driving the collapse in the coal import market."

Australian coal prices have slumped to levels not seen since 2006 and there's little evidence that they will rebound any time soon.

But low coal prices aren't the only hurdle facing Adani. The company faces two court challenges lodged by the Australian Conservation Foundation and the Wangan and Jagalingou traditional owners.

The Australian Conservation Foundation is challenging the Carmichael project on the basis that the approval of the mine is inconsistent with Australia's international obligations under the United Nations World Heritage Convention to protect the Great Barrier Reef. It is arguing that climate change, which will result from burning the mine's coal, will irrevocably damage the reef.

Adani has dimsmissed the challenges, saying they've been brought by "politically-motivated activists."

At least fifteen of the world's largest financial institutions have declared they won't back the mine. The list includes most of Australia's largest banks, the State Bank of India, and international lenders like Standard Chartered, Citigroup, JP Morgan Chase, Goldman Sachs, and Deutsche Bank.

Buckley said Adani had little capacity to finance the mine given current coal prices and the company's debt obligations. "It can't be financed because any bank that has lent to a coal company in the last five years is having to write the whole loan off," he said.

Adani has not yet revealed where it plans to get money from, but the Queensland government says the company must show "financial closure" before dredging at Abbot Point can go ahead.

Adani did not respond to VICE News request for comment.

Follow Harry Pearl on Twitter: @Harry_Pearl