billionaire behind the controversial Carmichael coal mine in Australia is hitting back
at criticism the endeavor will be both unprofitable and too dirty and his firm
and final observation is “The need of the hour is to get started.”
In an interview in New Delhi, Gautam Adani took
aim at two major faults opponents have flung at the development: that the
mine’s low-quality coal won’t earn enough money to justify his $2 billion
investment, and that the world must abandon the fuel in favor of renewable
energy to avoid catastrophic climate change.
If the project was not viable, we wouldn’t have
pursued it and renewable energy can’t meet baseload power needs says Adani
project wasn’t viable, we wouldn’t have pursued it,” said Adani,
whose net worth of $9.6 billion makes him India’s sixth-richest person,
according to the Bloomberg Billionaires Index. “Renewable energy is good for
the nation, but it can’t meet our baseload power needs.”
Adani bought Galilee Basin in 2010 amid forecasts of
bought the resource in Australia’s Galilee Basin in 2010 as Indian companies
rushed for overseas energy supplies amid forecasts of booming demand. But as
coal prices fizzled through the first half of the decade, Carmichael’s output
-- closer to lower-quality Indonesian coal than the high-value varieties
Australia is known for -- is seen unable to fetch a price strong enough to be
“The commerciality of Adani’s Carmichael
challenging given the significant capital spend and low-quality thermal coal
product expected from the mine,” said Brent Spalding, a principal analyst at
Wood Mackenzie Ltd.
Adani Enterprises lost 15% stock this year
Enterprises Ltd. shares were down 1.3% to 137.15 rupees, falling for a third
day in Mumbai. The stock has lost 15% this year, compared to a 6.8% gain the
benchmark S&P BSE Sensex.
Newcastle coal, a benchmark in Asia, would need to rise above $100 a metric
ton, from about $78 now, for Carmichael to break even, according to Spalding.
Adani finds a relatively friendly host country in
which cleared final state approvals last month, will open up a new mining basin
in the Australian outback amid increasingly dire warnings of the need to cut
carbon emissions to avoid the ecological and economic havoc of climate change.
Though coal is the most carbon-intensive fossil fuel, Adani has found a
relatively friendly host country in Australia, where the economic heft of the
resource industry helped re-elect a pro-coal federal government and overcome
staunch opposition from environmentalists.
Two goals of Adani: contributing to
energy security in India and jobs for the locals in Australia
Australia with two overarching goals; contributing to energy security in India
and creating job opportunities for the locals,” said Adani, 57, who started as
a diamond trader in Mumbai before setting up Adani Group in 1988. His
conglomerate -- spanning ports, energy and mining -- has become one of India’s
key infrastructure service providers, while also venturing overseas.
Coal’s use has been on the decline in Europe and the U.S. amid cheaper
alternatives and pressure to ditch the most-polluting fossil fuel. Yet it
dominates power production in much of Asia, a position it’s expected to sustain
despite a boom in cleaner sources, such as wind and solar, as energy demand
continues to grow.
Adani said the board approved 10 million metric tons of annual output from
Carmichael’s first phase, which will head to his power plants in India,
including Mundra and Godda. Adani Group is headquartered in Gujarat the state
where current Prime Minister Narendra Modi served as the chief minister for
little over a decade before he swept national elections in 2014.
Coal to play a big role as a baseload supplier
per-capita consumption of electricity “is way below the global average,” Adani
said. “India’s development is linked to the availability of more power. And
coal will play a big role in this as a baseload supplier.”
India’s challenges supplying reliable power to every home have been more about
distribution than whether it has enough power plants or coal. The nation
already has a surplus of generation capacity, but its money-losing,
debt-saddled state utilities struggle to purchase and distribute enough power,
leaving some power stations shuttered and homes in the dark.
Construction has already begun
company decides to raise the capacity of Carmichael -- peak annual capacity is
now seen at 27 million tons, down from an original 60 million -- it will
explore selling washed coal to buyers in Japan and Korea, according to Adani. Construction
has already begun, he said, reiterating the company’s two-year timeline for
“The need of the hour,” Adani said, “is to get started.”