The Adani Group of India is in the process of building Australia’s largest coalmine at Carmichael in the Galilee basin. The venture has drawn flack from across the world for its potential impact on the ecology and rights of indigenous people in the region.
Not only is the project being investigated for grossly overstating the jobs and revenue it would create, but is also being protested against the disastrous impact it would have on natural treasures like the Great Barrier Reef of Australia.
Moreover, the land rights of indigenous citizens would face severe threat if the proposed plan continues.
Although this seems like a concern for the Australian people and its government, it is not. It’s the Indian government’s problem too.
The Indian government’s public sector bank, the State Bank of India has not only a memorandum of understanding, but provided up to a billion U.S. Dollars for the project so far. However, it is unlikely that the SBI will uphold the financing plan.
With reports that SBI was shelving the financing plan, SBI Chairperson Arundhati Bhattacharya strongly denied these rumors. However, last month, Livemint reported that the financing agreement between the Adani Group and SBI had died a natural death, with neither party willing to follow up on the same.
In light of the controversy surrounding the project, eleven international lenders have refused to finance the ‘carbon bomb’ as the Carmichael mine is being called. These include Barclays, Goldman Sachs, Citigroup, Deutsche Bank AG, Morgan Stanley and J.P. Morgan. Standard Chartered is being put under tremendous pressure to sever ties with the Carmichael project. Local and international NGO’s are trying to convince banks not to support the project’s finances, and it is clear that the financiers are succumbing to the public pressure; a victory for local communities.
Apart from public pressure, it makes little financial sense to extend credit to a coal project at a time when the coal industry has been facing a global downturn, and analysts expect the project to be profitable only if coal prices trade about $100/tonne as opposed to the current $60.
The Carmichael mine is going ahead on the assumption that its market in India would remain intact and it intends on supplying to India, China, Korea and other Asian nations. However, China’s coal imports decreased by 10. 19% last year and the Indian government have expressed strong commitment towards investing in renewable energy sources. Just last week, the Union Power Minister, Piyush Goyal that the government is going to push hard to make India the largest producer of renewable energy in the world.
There has also been a general trend of high profile investors replacing their interests in fossil fuel companies to those of renewable energy companies. Therefore, investing in coal does not seem like a financially viable and advisable decision at all. It is in India’s interest that its public sector institutions, especially do not finance the detrimental coal industry.
As India tries to shift its focus towards renewable energy, and divests from fossil fuels, it is also important that our public sector banks do not contribute to the destruction of the environment in other nations. Not only is it indicative of crony capitalism, but also will be a foreign policy disaster.
Moreover, such catastrophic mining is being perpetrated only because of India’s market for coal. It is time that we, as Indian consumers changed the script, and as a country reduce our consumption of coal as much as possible. It will not only be in accordance to India’s larger climate goals in light of the Paris climate talks this December, but it will also ensure that communities and species are not destroyed on foreign shores to feed our own hunger for coal.