A $5 billion slush fund. Our new Resources and Energy Minister, Josh Frydenberg, has made an early entry into the dud decision stakes of 2015 (and probably 2016 and 2017 if he gets his way) for telling The Australian Financial Review this week that the $5 billion northern Australia infrastructure will help fund new coal mining projects, such as the multibillion-dollar Adani Carmichael mine in central Queensland. Of course he wants state governments (Queensland in this case) to help.
This is a very odd attitude for a supposedly free enterprise, market-leaning government and new Prime Minister. Some 14 Australian and global banks have signalled they are not interested in funding this project for various reason — the weak outlook for coal and climate change being two of the most obvious. That is a very clear market signal. And we have yet to see any sign of finance from Indian banks (they should really finance the lot if they want the coal, so long as all the environmental rules are followed). And that includes infrastructure — like BHP has funded rail lines in central Queensland. Of course, Frydenberg is (as the Abbott government did) ignoring evidence from Adani’s own consultant that the “10,000 jobs” claim is a crock of rubbish — only some 1400 jobs at most will be created by the mine. And like so many in the Abbott government, Frydenberg is ignoring what is happening among big global investors and their attitude to coal. This week the Financial Times reported that investors managing US$2.6 trillion of global investments had gone right off coal and were dumping existing investments. — Glenn Dyer
Coal is on the nose, even in India. The bottom line that no one associated with the project, especially the minister or the Queensland government, can explain is: why haven’t they asked Adani why they can’t build this mine at home? After all, India has one of the largest coal reserves in the world — more than 293 billion tonnes as of a 2012 estimate. According to a statement on Adani’s own website, some 87% of that reserve is non-coking coal (not suitable for the steel industry), but thermal coal, the stuff it wants to mine in central Queensland. India, in fact, has the fourth-largest coal reserves in the world, two spots ahead of Australia. India should also have a lower cost base, but it doesn’t. Geography, cultural and political reasons, dumb company managements and weak governments have sterilised much of India’s reserves. Rampant greed and corruption at the highest levels caused previous coal licences to be abandoned. Rather than try to lower those restrictions, the Indian government encourages companies like Adani to come to Australia, where it is supposed to be easier to develop a mine and export the coal back to India, but not at current prices without any government help. So up steps Frydenberg, offering Australian taxpayer money for subsidising to this dodgy scheme. — Glenn Dyer
Febrile, volatile, very shaky. No matter what adjective you draw out from the hat to describe them, sharemarkets, indeed all financial markets, are wobbly, especially since the Fed’s decision to sit on its hands nearly a week ago. Fears about China continue (sort of supporting the Fed’s non-decision), and commodity prices continue to slide (adding to the Fed fears about the lack of inflation). Fed chair Janet Yellen will make her first public appearance since the post-meeting press conference a week ago at 7pm Thursday, US time (around 5am Friday morning), meaning it will be a tremulous start to the day for Australian and Asian markets, again. Swoon-time anyone? Yellen will be speaking on the gripping subject of “Inflation Dynamics and Monetary Policy“, which will be taken as reflecting current Fed thinking. The Fed has an inflation target of 2% — despite continuing fears inside and outside the central bank about cost pressures and asset bubbles. The Fed now believes that won’t happen until 2018 — three months ago it was 2017. So what Yellen says about that in her speech and the influence of offshore factors, such as the sluggish Chinese economy and pressures in emerging markets (recessions in Brazil and Russia, for example) and low commodity prices, will be “new” news for markets on Friday and Friday night. Strap yourselves in. — Glenn Dyer
“This is a very odd attitude for a supposedly free enterprise, market-leaning government ”
Is not political influence a market-based process?
The annual income from Carmichael coal of $3.8 billion from $63 /t coal applied to 60 Mt Coal exported annually (most of which may vanish overseas) will be hugely exceeded: (a) by a factor of about 10 times by the resultant $34.8 billion Carbon Debt from applying an expertly-determined $200/t CO2 damage-related Carbon Price to the 174 Mt CO2 estimated at $2.9/t coal from burning the exported 60 Mt thermal coal, and (b) by a factor of about 25 times by the $94 billion hidden mortality-related cost from applying the $7 million per person risk-avoidance–based Valued Of a Statistical Life (VOSL) to the 13,400 annual deaths from pollutants deriving from the burning of the annual export of 60 Mt thermal coal (see “Stop air pollution deaths”: https://sites.google.com/site/300orgsite/stop-air-pollution-deaths and scroll down to “Australia”).
The massive intergenerational injustice and intergenerational inequity being proposed for the young and future generations by the Carmichael project underscores the utter unacceptability of the proposed Turnbull COALition Government’s suggestion via the Minister for Resources, Energy and Northern Australia, Josh Frydenberg, of using the Federal Government’s $5 billion infrastructure fund to subsidize Galilee Basin coal mining (e.g. via the building a rail line to the coast for coal transhipment to Asia via Australia’s endangered and iconic Great Barrier Reef) (see Lisa Cox, “Josh Frydenberg says $5 billion northern Australia fund could be used to fund coal”, Sydney Morning Herald, 23 September 2015: http://www.smh.com.au/federal-politics/political-news/josh-frydenberg-says-5-billion-northern-australia-fund-could-be-used-to-finance-coal-20150922-gjstnp.html ).
One notes that (a) the Coalition policies of 26-28% off 2005 greenhouse gas (GHG) pollution by 2030 and unlimited GHG exports mean that Australia’s Domestic plus Exported GHG pollution will increase, not decrease (climate change inaction); (b) assuming a damage-related Carbon Price of US$200 per tonne CO2-equivalent, the inescapable Carbon Debt for Australia is $11 trillion and increasing at $600 billion per year and at $60,000 per head per year for under-30 year old Australians; and (c) 83,000 Australians die preventably each year and of these 10,000 die from carbon fuel burning pollutants. Globally, 7 million people die from air pollution each year (WHO) and 75,000 of these die from burning of exported Australian coal (see “2015-9-17 Open Letter to PM Malcolm Turnbull re GHG pollution”, Gideon Polya Writing: https://sites.google.com/site/gideonpolyawriting/2015-9-17 ).
Josh Frydenberg should be immediately replaced in the unacceptably pro-coal Turnbull Ministry. Sensible, science-informed Australians will utterly reject the science-ignoring COALition, vote 1 Green and put the COALition last.
A journalist needs to ask Turnbull about the 10000 Adani jobs claim..and whether coal is good for humanity.. the answer would be illuminating in light of his current reversagility..
Josh Frydenburg, allegedly part a new hopeful generation for the LNP… Just as anti-free market and pro-crony capitalism as the old guard.
Whenever I read of ‘a future Lib PM’ –viz Dunnuttin, bRough and now Frydenberg it alers me to be aware of another no-hoper.