Adani’s coal mine obtains cover despite backlashJune 24 2019 by Andrew Tjaardstra
The controversial Adani Carmichael coal mine project has been approved in Queensland, Australia following the election win of prime minister Scott Morrison’s coalition government in May and after two years of environmental studies.
Adani had to self-finance the US$1.5 billion project after more than 37 global financial institutions, including all of Australia’s major banks, publicly rejected any involvement with the mine; the project was downsized from an original US$11.5 billion undertaking as a result of the lack of finance.
It is possible Adani is self-insuring the project too as it has confirmed the mine has cover in place but hasn’t revealed where the cover is placed.
IAG, Liberty Mutual, QBE and Suncorp have confirmed they aren’t insuring the mine while around 10 insurers and reinsurers have confirmed in the past they wouldn’t be involved.
After coming under intense pressure from activists and some shareholders in March this year QBE stated: “Due to the thermal coal industry’s high emissions intensity, potential substitution by renewable energy and gas, and in the absence to date of large‑scale deployment of economically viable carbon capture and storage technology, QBE will target zero direct investment in the thermal coal industry by July 1 2019.”
The global attention and press coverage generated by the mine suggests any insurer or reinsurance group associated with the project is likely to generate negative publicity and targeted activism; environmental protestors have understood in recent years that without sufficient insurance in place such projects will never be able to go ahead.
The environmental damage that could be caused by the mine is potentially huge as the mine is in an area where there are ancestral lands, will increase ship traffic through the Great Barrier Reef World Heritage Area, risks damage to aquifers and will increase carbon pollution.
However, Adani said the approval of the mine states that the plan complies with all regulatory conditions set by the Australian and state governments, bringing to a close a two-year process of scientific inquiry, review and approvals. This includes relevant reviews by Australia’s scientific organisations, the Commonwealth Scientific and Industrial Research Organisation and Geoscience Australia.
The Indian conglomerate has begun construction on the mine this week and the level of construction activity will steadily increase. Adani said the project will deliver 1,500 direct and 6,750 indirect jobs during ramp up and construction, with Rockhampton and Townsville the primary hubs for employment.
It added that the Whitsunday Islands, Isaac, Central Highlands, Mackay, Charters Towers and Gladstone regions will also benefit from opportunities.
Meanwhile, environmental groups are considering a legal challenge to the approval of the mine by Queensland’s Department of Environment and Science.
In another blow to campaigners, the Carmichael coal mine could lead to the creation of a further eight coal mines in the area.
And across the world in Canada, the Canadian government is being criticised for the approval (once again) of the expansion of the Trans Mountain tar sands pipeline from the Alberta oil sands to British Columbia; the extension will run through some historic Canadian landscape.
One of the major differences regarding obtaining insurance is that the project is now government-owned — however there has already been several large insurers and reinsurers on the record saying they will not insure tar sand projects.
InsuranceAsia News has reached out to Adani for comment.
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