Matt Canavan, the Minister for Resources and Northern Australia, talks about the Adani mine and whether they will get a one billion dollar loan from the government.
Introduction – Adani gives the green light for its Carmichael mine
Ross Greenwood: Another big story that’s been going on for quite some time is in Queensland. This is in regards to the Adani Coal Mine. Now what’s happened is that Adani is today given a green light for the 16 and a half billion dollar Carmichael coal mine in central Queensland. Notwithstanding significant protests against it. The Adani Chairman, Gautham Adani from India has said it was an historic day for Indian investment in Australia. It has also been passed through the Queensland Government, the Federal Government. Although the Queensland Government does need to pass changes to the Native Title Act and to make a decision about whether to provide a billion dollar concessional loan to that project. It will help to pay for a 189-kilometer rail link that will take the mine to the coal terminal at Abbott Point. Now, as I say, the protest remain. They are significant. We can’t underestimate them. Let’s now just hear today from the Queensland Premier Annastacia Palaszczuk as Adani opened the new office based in Townsville.
Interview with Matt Canavan
Annastacia Palaszczuk: Townsville is the headquarters but also we are seeing the flow and impacts of Adani right across regional Queensland. This is a vote of confidence. It’s a vote of confidence in the people and what Adani has been doing out working with the government over the past two and a half years.
Ross Greenwood: That today is the Queensland Premier. Let’s now go to the Minister for Resources in Northern Australia Matt Canavan who is on the line right now. Matt, many thanks for your time.
Matt Canavan: Thanks, Ross. How are you?
Ross Greenwood: This has been up hill and down hill. It’s almost as long as a 180-kilometer rail link between the mine and the coal terminal. Many people say the coal should not be mined in this country, that it’s not good for the nation, not good for the environment, and it doesn’t matter where it’s been. Whether it’s here or in India, it still should not be burnt. What’s the government’s response to that?
Matt Canavan: A couple of things, Ross. First of all, it has been a long time. It’s been 2,392 days since Adani submitted their or a third the project to the Federal Department of Environment. They’ve gone through all the approvals by the Federal and State level. It’s probably been the most analyzed project in our nation’s history. In that regard, that’s gone through twice at the Federal level. The mistake was made by bureaucrats first time around. It’s been a lot of time for people to wait in North Queensland for this project who needs jobs and we desperately need them. Other questions you raised. India, where this coal will be primarily going, is going to increase its coal demand in the next five years to until the next decade by 300 million tons a year. Now, that we only produce in Australia 250 million tons per year so that’s the size of India’s growth. That’s on their government’s projections. The government there has a big agenda to extend electricity for all Indians. Around 250 million Indians don’t have any electricity right now. Many others may have it intermittently. They’re going to spend a lot more coal. Through that, they’re going to build renewables as well but they’ll need everything just like every other major country in the world. India has a lot of its own coal but it’s poor quality. We’ve got a huge opportunity in our country, not to meet all of their needs, but to meet a niche market with a high-quality product that we have in North Queensland.
Ross Greenwood: The question is whether the government, both the State Government the Federal Government, have basically in order to get the 16.5 billion dollar Carmichael coal mine up and going have really provided concessions that are too great in regards to the return that Australia has an economy and as taxpayers will receive. In terms of both the State Government grants and also concessions, plus the Federal Government grants and concessions, have we really dropped their pants and effectively let little ourselves be taken by Adani?
Matt Canavan: I reject that. I mean, to take up the talk to there. The royalty arrangements they’ve come to although what the State Government says they’re not providing a holiday on royalties. It’s a ramp up and Adani will repay the royalties that they don’t pay in the first five years over the life of the project. That’s just to try and help them with their cash flow as a project costs more early on of course. In terms of the Federal Government’s still considering or Adani has put forward a plan for a loan to build a rail line, I’d just make the point that the rail line near where you are at the moment, Ross, the Hunter Valley Coal Rail Line network is owned by the Federal Government built by the New South Wales Government but owned by the Federal Governor now. In 2008, Kevin Rudd announced investments of more than a billion dollars to expand the Hunter Valley Railcar network. It’s been hugely successful. Very great project and a good job. But up here in North Queensland, we then wonder well, “Why shouldn’t government consider investing in North Queensland? Its structures will do exactly the same thing. Those exports for our country boost opportunities and provide jobs. It’s something we shouldn’t reject out of hand, given the success of the Hunter Valley and they’ll be based in Queensland. This would be the first coal basin opened up in Australia for nearly 50 years. It’s a huge opportunity, not just about this one project. There are five other mines. All together, they could provide 16,000 direct jobs in the mining sector. It’s a big, big deal for our country.
Ross Greenwood: Am I right to say there was some dispute at some stage about how the Federal Government money would ultimately get to Adani? It was obviously having to pass through the State Government of Queensland. Was the Federal Government always confident about using the State Government of Queensland to channel money through to Adani?
Matt Canavan: That’s the way infrastructure projects are funded not just under the Northern Australian infrastructures facility but roads and other things in New South Wales as well. We provide those through State Government. The Labour Party in Queensland has been at a civil war over the last fortnight fighting each other and it did risk scuttling the whole project and all of those jobs. Fortunately, they seem to have seen sense. They’ve since come out and said they support the project. But unfortunately, from my perspective, the Labour Party are split on these issues. They are split between supporting their traditional working-class, blue-collar base if you like and the more modern, radical green activists who prefer an acai for lunch. The Liberal National Party, we don’t have any problem supporting working people. I want to support people who want a job in this country. Coal mining provides thousands of jobs and heaps and heaps of money for Australia. It’s going to continue for many decades. This is a huge opportunity to boost those exports, to boost those job opportunities and give people who just want to have a go at an opportunity. In terms of Adani, they’ve been very good in terms of using Australian products. They’re going to use the steel in their rail line, Australian steel. The only mining region at the moment that’s using Australian steel is from Whyalla, trying to keep that steelworks going using concrete sleepers from Rockhampton. They’ve just signed a major rail in engineering contract today with an engineering firm in Townsville called AECOM. It’s got a huge opportunity not just for North Queensland right across the country because it’s using Australian products and Australian industry. They’re basing themselves in Townsville.
Ross Greenwood: If everything goes to plan, when will the first call come out so when will the first money roll back to the governments, as it were?
Matt Canavan: Their first call is plan for 2021. At the big project, they’re going to build a 400-kilometer railway and within 400 kilometers. They’ll start that later this year. Their first job is put a worksite in where camps are in and an airport, and they’re starting smelting works on the rail line as well. Ports are already built there. We operate the port. They’ve operated here for about six years so they’re not new to Australia. They bought Abbott Point Port about six years ago. They’ve been good corporate citizens in a little small town of Bowen. They did a great job. Their community loves them there and they just want to say this project to happen.
Ross Greenwood: Just another one for you, and I spotted this yesterday, a report coming out saying the world is about to go through a significant glut of liquefied natural gas and raise real questions about the significant investment that have been undertaken on Curtis Island off Gladstone. These are some of Australia’s biggest liquefied natural gas. Exporters cost many tens of billions of dollars to put in place. This report was indicating that the way in which the United States market, in particular, is ramping up, it could very well be that there is a significant oversupply and that these projects which have cost tens of billions of dollars in which have only just now started really in the past year or so, exporting in a significant way could really almost be unviable, uneconomic in a relatively short space of time. Have you seen or heard of any of these reports?
Matt Canavan: Yes, we’ll look at those reports that consist on the advice. I received rosters. No doubt, what’s happening in the US oil and gas markets, in particular, is a radical change to the global commodity markets and even global politics. The period we’ve all grown up in is OPEC. The oil producers of the Middle East have had enormous power both from both economically and politically. The gas boom and there’s some oil in those fields as well in the US is causing a massive revolution. OPEC is unable to control the world oil pricing in a way they probably used to. Those gas export terminals in Gladstone and Curtis Island you mentioned were all decided upon. The investment was decided upon when the oil price was more around $100 where it’s more around $50 in the last year or so. Certainly, I think if they had their druthers, if they had their choices again, some of those projects may not have proceeded. Of course, all that money’s being spent, the infrastructure is there, and they will continue to be used. The issue for us as a country now is we’ve got some of the highest gas prices in the world and higher at the moment than the price paid for gas in North Asia where we export to. Now, that’s not sustainable. That’s why the government is going to introduce a licensing model for gas. We’ll have that in place by July 1. Where we will ensure that prices here reflect an international price. We can protect jobs and energy security in Australia. As well as also, make money through exports.
Ross Greenwood: Tell you what, great to have you on the program. Matt Canavan, the Minister for Resources in Northern Australia. Just that subject of gas, Curtis Island and Gladstone. Do understand that that is a very significant issue. It’s been a bit of a sleeper. Not too much has come out about that. But, Matt Canavan, very forthcoming in regards to the economic challenges of some of the biggest infrastructure projects here in Australia. Matt, we appreciate your time here on Money News this evening.
Matt Canavan: Thanks Ross. Good bye.