The Indian mining giant Adani would pay no corporate tax on Australia’s largest proposed coalmine, the Carmichael mine in central Queensland, because it was certain to operate at a loss, the state land court has heard.

Energy industry analyst Tim Buckley told the court it was “categorically” his opinion that the Adani mine would not make a profit on the lower quality thermal coal it planned to export to Asia amid a long term decline in worldwide prices.



Adani, which has enjoyed bipartisan political support in Queensland for a venture that includes an expanded coal port shipping through Great Barrier Reef waters, is fighting a legal challenge to its plans by the conservation group Coast and Country.

Buckley was called as an expert witness on Friday by Coast and Country, which is seeking a land court recommendation that the Queensland government reject the proposed mine.



Buckley said his modelling using data in part from Adani to calculate the mine’s revenues, cost and profits found it was “going to lose money at … in fact the operating level, so therefore it actually won’t pay any tax”.

The court previously heard that modelling from Adani’s own independent expert witness, economics consultant Jerome Fahrer, showed the Carmichael project would generate corporate tax of $8.96bn over 30 years.



Fahrer forecast that tax, combined with coal royalties of $7.85bn before inflation, would put $16.8bn into state and federal coffers. He also said the project would generate 1,464 jobs, including indirect related employment.

Adani ran TV advertisements during the Queensland state election claiming the project would generate “10,000 jobs [and] $22bn in royalties and taxes invested back into Queensland communities”.

Buckley suggested the mine could become a “stranded asset” as the market for thermal coal had reached a “major tipping point” driven by change in the Chinese electricity market, with prices never again to recover after peaking in 2013.

Buckley said Chinese coal imports last year dropped by 9% while consumption dropped 3% as the Chinese government continued the “largest rollouts the world has seen” in hydro, wind and solar power in a move away from polluting coal.



The Carmichael coal compared unfavorably in quality with the Australian benchmark Newcastle coal, having less energy content and more ash.



If Adani were to put that 40megatonnes of coal a year into the Asian market, prices would be driven lower and consumption of coal in total would increase, Buckley said.

Buckley also claimed the mine would struggle to gain funding because a looming restructure of Indian based parent company Adani Enterprises – stripping out ports and power assets into separate new companies – would reduce its profits by 80%.



Adani Enterprises’ “ability to borrow will drop commensurately”, with Australian-based subsidiary Adani Mining already more than $1bn in debt against a “negative shareholders fund of $45m”.



The hearing continues, with the land court recommendation on the mining project not expected to be handed down for months.



The state government is not obliged to follow its advice when deciding to issue a mining lease or environmental approval.



Adani’s climate market expert witness, John Stanford, earlier told the court it was widely acknowledged that the Carmichael mine was a “very high risk” project.



Adani’s local financial controller, Rajesh Gupta, last week in court agreed the company would look to minimise its tax obligations within the law.

But he repeatedly declined to say whether it would take advantage of a common ploy used by mining companies, revealed in a recent senate inquiry, of using “marketing hubs” in lower tax jurisdictions like Singapore to sell coal to and reduce the profits realised and taxes paid in Australia.



Gupta, under cross-examination from barrister Saul Holt, acknowledged that Singapore-based Adani Global Private, the “parent entity” of Australia-based Adani Mining, was set up for “coal trading”.



But he said he couldn’t comment on whether Adani Mining in Australia, would sell all its coal to its Singapore parent.



“We can’t comment on that. We’ll not necessarily … be selling to them. We might sell to the customers directly as well,” Gupta said.



“It’s not illegal,” Holt said. “Are you planning to use Adani Global Private Limited in Singapore as a trading hub to reduce – optimise, lawfully and legitimately – the corporate tax you pay in Australia?”



Gupta replied: “What I can say is that we have done the calculation of taxes based on the, the profit we’ll be generating in Australia, and we’ll be paying the taxes on that basis.”



Holt: “You didn’t answer my question. Are you planning to use Adani Global Private Limited as a trading hub? Let’s break it down?”

Gupta: “I’m sorry, I can’t answer that question.”



Gupta, who is in charge of tax planning for Adani Mining, also said he did not know the concessional tax rate in Singapore was 12% compared to 30% in Australia.



He also said he had “no idea” what the purpose was of Adani Global Private’s related company, Adani Global Limited, in Mauritius, where the tax rate is 3%.

