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The future of Adani’s proposed Carmichael mine in the Galilee Basin has become intertwined with the Queensland state elections called for November 25, with the mega coalmine confronting serious problems in obtaining finance for the project.

Over the past year, Adani has been increasingly unable to secure the $5 billion it needs from private sources, as various financial institutions have begun shifting investments away from coal and towards renewables.

Under pressure from grassroots campaigns, Australia’s Big Four banks have ruled out financing the project.

On the other hand, governments at the local, state and federal level have remained steadfast in their support for the project, pledging $31 million, $320 million and $1 billion in financing, respectively. 

Key to the future of the project is the proposed $1 billion loan application to the federal government’s Northern Australia Infrastructure Facility (NAIF), which Adani needs to build the rail link between the mine and its port facility at Abbott’s Point. The Queensland state government had said it would not exercise a veto on the NAIF loan. 

However, on November 2 Labor Premier Annastacia Palaszczuk announced that, if re-elected, she would veto the NAIF loan application.

While maintaining Labor’s support for the Adani project, Palaszczuk justified her about face as wanting to head off any smear campaign about a possible conflict of interest, due to her partner acting as an advisor to Adani during the application process.

Almost certainly also weighing on her mind was the price Labor has paid for its largely unpopular pro-Adani stance, with her party at risk of losing two inner Brisbane seats to the Greens.

For any veto to be effective during the caretaker period of an election campaign, it would require the support of the leader of the Liberal National Party (LNP) opposition, Tim Nicholls.

However, Nicholls has refused to do so, meaning a veto now hinges on Labor’s re-election.   

Meanwhile, Adani has been working on securing funds from China, primarily via the Chinese state-owned enterprise China Machinery Engineering Corporation (CMEC).

A briefing paper published by the Institute for Energy Economics & Financial Analysis (IEEFA) on November 2 said negotiations are in progress that could award CMEC with engineering, procurement and construction contracts in exchange for Adani gaining access to funds from the China Export-Import Bank and/or the China Construction Bank.

said China’s involvement would benefit China at the expense of Australia.

“The creation of economic benefit for the home country is the essential role of export credit agencies (ECA) like the Export-Import Bank of China, which would only be involved if there is benefit to China,” Buckley said.

“A Chinese state-owned enterprise investment would secure jobs for equipment and manufacturing in China.”

Buckley said the existence of such negotiations speaks to the fundamental frailties in the Adani project and should serve as a red flag to Australian policy makers.

“This further weakens the Adani pitch for Australian political support for the Carmichael coal and rail projects, which is based on the assumption of new local jobs being created in Queensland,” Buckley said, noting that an agreement like the one under discussion may well create problems for China as well.

“It is a huge investment and reputational risk for the Chinese government, which would be joining Australian taxpayers in bailing out a stranded asset of a tax-haven-based billionaire family that is under Indian government investigation for fraud, tax evasion, bribery and corruption.”

“With the forward price of thermal coal at around US$75/tonne, Carmichael is both unviable and, absent the Australian development loan, unbankable.”

While the decision on the NAIF loan is due to be made at the end of the year, Adani still has one final legal barrier to overcome before it can begin its operation.

The High Court is due to hand down a decision in March next year on an appeal by the Traditional Owners of the land.

In the meantime, protesters are making their presence felt in the area as preliminary ground works are undertaken.

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