Who needs the Great Barrier Reef when we have coal pits? Credit:Jason South Some other niggling environmental risks investors might want to consider is the drainage of 12 billion litres per year of water from the Great Artesian Basin and the impacts of coal dust on people's health along the transport corridor, along with particulate matter from the power stations as the coal is burned. We'd also want to be content with supporting a mine that has not received free, prior and informed consent from traditional owners, potentially making this a major human rights issue. But enough of the existential threats posed to culture, people, sites of natural World Heritage and the climate. Let's look at the numbers. Last week's proposal by the Australian government of a $1 billion loan from the Northern Australia Infrastructure Fund means as investors we need to understand the business case.

Adani plans to build Australia's largest coal project in the Galilee Basin. Credit:Michael Mucci First of all, don't be put off by Adani's corporate debt, which is two-and-a-half times the size of the company. Or the fact that Adani's share price is down 20 per cent this year. This loan would actually be going to Adani's private family company, based in Singapore and ultimately owned by Atulya Resources in the Cayman Islands, where we can be sure the money will be totally secure. The mine will supply new coal power stations in India, whose power minister said yesterday would not be required until 2022, and who wants to get India off imported coal within the next few years. The power will only cost twice that of new renewable energy, and so an exciting market has been identified among those living in energy poverty. Adani Should the India option fail, the coal could be sold onto the seaborne market, which has declined by 10 per cent in recent years, Goldman Sachs, Deutsche Bank, Bernstein and others declaring it in structural decline.

Conditions like these have frightened off a few more faint-hearted commentators, such as the Queensland Treasury under the Newman government, which described the project as unbankable. Or Wood Mackenzie, which still considers the project as having a negative net present value. Queensland Premier Annastacia Palaszczuk with Indian billionaire Gautam Adani. Credit:AAP But if these critiques have put off investors, it certainly isn't showing. Of the dozen banks that have ruled out funding to Galilee Basin coal export projects, the environment and reputation risk are a more common concern. Or, for several other banks, simply that their sustainability policies no longer allow for new coal mines to receive credit. It's clear that our investment is going to make a major difference. But will it be enough? $1 billion is a huge lifeline but depending on what assumptions you make about the scale of the project or who you're prepared to believe, this project is going to cost anywhere from $7 billion to $21 billion. The only other line of credit available is the State Bank of India's agreement to provide another $US1 billion, but with much of that already tied up in funding the private Adani family's purchase of the existing coal export terminal at Abbot Point, it doesn't get them that much further down the track.

In the absence of any substantial finance, it's now all down to partnerships, where Adani has been working hard. Downer EDI is in, with a non-binding letter of intent to build the mine, but another partner will be needed for the rail and port. Aurizon, an obvious choice for the rail, wasn't doing any work on the project as of its AGM in October. It might not be happy about the fact that Queensland's Minister for Natural Resources and Mines Anthony Lynham has said Adani is pursuing a greenfield 389-kilometre standard gauge line, incompatible with the existing narrow gauge system in place across Queensland. And after Korean steelmaker POSCO left town last year, it would be interesting to see if it is prepared to deal with Adani a second time. So, with all that in mind, hopefully Australians are better able to appreciate the value and risks of the investment our government is preparing to make on our behalf. Any questions? Julien Vincent is executive director of Market Forces