Coal Inc: The carve-up of Queensland

More than 40 climate change activists on September 26 occupied the Newcastle Coal Terminal — the world’s largest coal export facility — in protest over the failure of state and federal governments to halt Australia’s contribution to the climate change crisis. Organised by Rising Tide, the protesters demanded an immediate moratorium on the expansion of the coal industry.

Australia is the world’s number one exporter of coal, much of it for use in the production of steel. Around two-thirds of annual world steel production uses Australian coal. Global steel production alone contributes a massive 2 billion tonnes of CO2 emissions per annum. Coal is also fuel for 86% of Australia’s electricity generation and is the primary reason Australia is the world’s biggest polluter per capita.

Despite the potential for future protests and campaigning around climate change on the back of the strong swing to the Greens in the recent federal election, the Julia Gillard Labor minority government remains solid in its commitment to keep Australia the leading global exporter of coal, as well as one of its major consumers. Coal mining and export are expected to increase significantly over the next decade: energy analysts Wood Mackenzie estimate an increase of as much as 60% on current levels by 2020. The key source of this expansion of coal exports is the exploration and development of the vast coal deposits found across Queensland.

Non-stop expansion

In 2008-09, Queensland exported about 160 million tonnes of coal, providing revenues totalling nearly 9% of the state’s income for that year. (According to Australian Bureau of Agriculture and Resource Economics figures, a total of 261 million tonnes of coal was exported from Australia in 2008-09). Coal exports from Queensland reached a record 183 million tonnes in 2009-10. The largest share of this coal was exported to the steel furnaces and power plants of Japan, China and India. The growing economies of China and India are set to demand more coal. India alone is expected to treble coal imports by 2013, from 50 million tonnes to 150 million tonnes.

The increased demand for coal has been a centrepiece of the state economic blueprint and a major factor in the $15 billion asset sale pushed by Anna Bligh’s Labor government. In 2008 the government was projecting nearly doubling export of coal by 2030, to 300 million tonnes per annum. Under the Coal Infrastructure Strategic Plan (CISP), the government has committed $25.5 billion over the next 20 years for coal-related infrastructure — around $9.7 billion of this in port expansion alone, in order to meet the expected volumes of coal exports. Around $5.6 billion will be provided for extra rail lines for coal transportation to the new and expanded ports.

The opening up to large local and multinational mining companies has been a long tradition under both Labor and Liberal-National state governments, from the union busting regime of Joh Bjelke-Petersen through to the present free-for-all offered by the Bligh administration. Some of the largest world players in mining and coal exports are set to make super-profits thanks to the craven pro-business attitude of the major parties.

On August 3, the largest investment of an Indian company ever made in Australia occurred when Adani Enterprises signed off on a $3 billion deal with Linc Energy for a tenement in the Galilee Basin in central Queensland. When production is at its peak, Adani plans to extract 50 million tonnes of coal per year for use in power plants that it owns in India. Along with other coal mining giants operating in Queensland (such as Anglo American Metallurgical Coal, BHP Billiton Mitusbishi Alliance, Peabody Energy and Xstrata Coal), Adani will benefit enormously from the state government’s CISP slush fund.

Adani is India’s largest coal importer and owns India’s largest private port in the combined special economic zone at Mundra in Gujarat state. The Adani-run industries and the Mundra special economic zone have been responsible for significant harmful environmental impacts (including the clearing of 3000 hectares of mangroves and oil and chemical spills) and have displaced traditional fishing communities and local industry. Despite this track record, Adani has been welcomed with open arms by the Queensland government and coal industry. The soon to be privatised North Queensland Bulk Ports Corporation (NQBP) confirmed on July 13 that Adani had been granted approval along with Dalrymple Bay Coal Terminal Pty Ltd to devise plans for a new port facility at Dudgeon Point, near the Dalrymple Bay-Hay Point coal export hub, just south of Mackay. NQBP owns or leases 1400 hectares of land at Dudgeon Point and makes the astonishing claim in its August 2010 newsletter that Adani has demonstrated “environmentally sustainable initiatives” because of one solar plant project it is involved with.

Harmful impacts

The existing Hay Point and Dalrymple Bay terminals and the proposed terminal at Dudgeon Point will be capable of a combined export of 239 million tonnes a year, making it by far the largest coal export complex in the world. Residents and conservationists in Mackay and other nearby towns are deeply concerned about the social and environmental impacts.

In response to the NQBP announcement of the Dudgeon Point terminal proposal, the Mackay Conservation Group issued a statement condemning it: “It is indefensible for the port authorities and State government to allow expansion of coal handling facilities so close to Mackay and communities such as Louisa Creek, Bakers Creek, McEwens Beach and Timberlands”. The statement noted that coal dust from Hay Point and Dalrymple Bay was already affecting communities over 25 kilometres away.

Spokesperson Patricia Julien also questioned the transparency of the process: “It is of concern when port authorities and the Coordinator-General, who are unelected, can select the type of development to occur within port lands and also be the main assessment manager and landlord of the development. The result is a closed system where the main pressure is to select the industry which will return the highest profit, and where the local community has no power in what happens and there is no requirement for accountability to them.”

An almost identical process is occurring in the port of Gladstone, with the proposed Wiggins Island expansion and the massive LNG/coal seam gas plant proposed on pristine Curtis Island. Gladstone harbour and surrounds have been polluted for decades by heavy industry, including coal dust from massive stockpiles. Locals have been shocked by recent allegations that the Department of Environment and Resource Management has been provided fabricated data on air quality tests. In the state’s south-west, farming communities and environmentalists have been struggling against the push by the Bligh government and exploration companies to develop prime agricultural and ecologically sensitive land for coal seam gas projects.

Rail freight sell-off

The jewel in the crown of the Queensland government’s asset sell-off is the rail freight haulage corporation, QR National, the largest freight company of its type in Australia. In 2009 QR National transported around two-thirds of the coal exported from Australian ports. On September 27, it signed a long-term haulage agreement with Peabody Energy, believed to be worth $500 million. Peabody Energy is the largest private sector coal company in the world, providing coal used to generate 10% of the electricity generated in the United States. Over the last year, QR National has signed long-term haulage contracts exceeding $5 billion.

The $7 billion float of the company (with the state retaining an interest of 25 to 40%) will benefit enormously the coal mining sector. Despite some to-and-fro, the Queensland Coal Industry Rail Group withdrew a formal $5 billion offer for the company in early September. With a key part of coal production infrastructure up for grabs, the leading members of the group — Rio Tinto, BHP Billiton and Xstrata — and other coal mining interests are likely to manoeuvre for control of QR National post-float.

With a failing health system, a public transport system straining to meet basic demand and an under-resourced education sector, the only path the Bligh government bean-counters can see out of the state’s debt mess is selling off major public assets. The great coal carve-up of Queensland is central to this and signifies another big handout and leg-up for the big end of town at the expense of working people’s standard of living and the environment.