Adani’s plans to get started quickly on a scaled-down version of its Queensland mega-mine still face numerous obstacles

This article is more than 1 year old

This article is more than 1 year old

The Indian mining giant Adani could be left in limbo until September – well after the federal election – before learning whether its controversial Carmichael coal project will be allowed to access the Queensland freight rail network.

Adani announced on Thursday it would self-finance the Carmichael mine and that construction would begin “imminently”. But the company still has to gain several regulatory approvals and negotiate access for its coal trains to use the Aurizon network.

The Queensland premier, Annastacia Palaszczuk, reacted to Adani’s announcement with scepticism.

“We will believe it when we see it,” she told the ABC on Friday.

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Relations between Adani and the Queensland government have become uneasy in recent months. The parties have not yet signed a royalty agreement and Guardian Australia understands talks about royalties have not resumed since the first half of the year.

Adani is understood to be nervous about the prospect of Labor winning next year’s federal election and subsequently imposing roadblocks or winding back approvals, and the company is eager to get the construction of Carmichael past a point of no return before that occurs.

Labor’s federal deputy leader, Tanya Plibersek, criticised the project but said it would be difficult to act if Carmichael was already being built.

“We have to be very careful, if you’re asking us, do we tear up contracts that are signed and stop work that’s started, that’s a very difficult thing to do,” Plibersek told ABC radio on Friday.

“But there’s a very good reason that banks and businesses are not interested in investing in this project.”

Pushing ahead with construction before the federal election could leave Adani, and the contractors it employs, building a mine that is yet to finalise key agreements.

Palaszczuk said Adani had to have “agreements with Aurizon [and] we haven’t seen any of that evidence as of yet”.

Aurizon is required by law to enter into negotiations with Adani but has 12 months from September, when the company first applied for network access, to make a decision. Aurizon is also required to consult its existing users as part of the assessment process.

Guardian Australia has confirmed that established Queensland mining companies, including some of the industry’s biggest players, have already raised “firm objections” to Adani being granted access. Many of those miners have been in a long-running dispute with Aurizon about capacity.

Carmichael rail lines Adani needs access to the Queensland rail freight network to press ahead with the Carmichael mine.

Negotiations are also likely to be complex due to upgrades required to the Aurizon Goonyella railway. Adani has said it plans to increase production to more than 27m tonnes a year.

The Goonyella line, which runs to the Abbot Point port, does not have enough capacity based on existing volumes and would need to be upgraded. Negotiations would need to settle who pays for the upgrades.

“This is the standard process that all other Queensland mining companies that rail coal routinely work through to access the network,” Adani said in a statement.

Native title rights at the Carmichael site also remain unclear. Sources have told Guardian Australia the Queensland government will not act to extinguish the native title rights of the Wangan and Jagalingou people until after an appeal by traditional owners is heard by the full bench of the federal court.

Adani can conduct some preliminary construction works before native title is extinguished, but would require freehold ownership of the land in order to build critical infrastructure.

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Tim Buckley, the director of energy finance studies at the Institute of Energy, Economics and Financial Analysis, said Adani’s announcement it would proceed without external finance made him more sceptical about the Carmichael project.

“I’m actually more sceptical today than I was three months ago ... that this is a straight out wedge to create a situation where they have notionally started construction prior to the federal election knowing that some of the approvals will be reassessed once we have a new federal government,” Buckley said.

“This is about trying to force through a dramatically slimmed down mine, internally funded.”

Adani had planned to build a $16bn coalmine that would export up to 60m tonnes a year. The company had been seeking an investor, but missed several self-imposed deadlines.

Earlier this year, it changed tack and lodged a series of slimmed-down plans. These included building a rail spur line to join the Aurizon network, rather than a railway direct to Abbot Point, a smaller port expansion and a smaller mine.

In the first phase, Adani plans to export about 10m to 15m tonnes a year from Carmichael, rising to about 27m at peak production.