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One of Australia's leading rail freight companies says it is willing to service Adani's Carmichael mine, despite an intense campaign by environmentalists aimed at dissuading companies from dealing with Adani.
One of Australia's leading rail freight companies has publicly disclosed that it is willing to service Adani's Carmichael mine, despite an intense campaign by environmentalists aimed at dissuading companies from dealing with Adani.
Pacific National, the major rail freight company in NSW and the fastest growing in Queensland, told the ABC: "We haul coal, that's what we do."
"We wouldn't rule out dealing with Adani or any other mining company that had the necessary approvals," the company said.
But the company may be Adani's only option — other than hauling the coal itself — with Queensland's dominant rail freight company, Aurizon, under shareholder pressure not to freight coal from Adani's mine site.
Another rail freight business, Genesee & Wyoming Australia (GWA), has already confirmed it will not deal with Adani.
Tantalisingly, Adani may also be thinking of going it alone.
Documents from the Queensland Office of State Development show it has applied for accreditation as a licensed Rail Infrastructure Manager and Rolling Stock Operator — raising the prospect that it could be looking to bypass existing operators and freight its own coal from the mine.
It's also apparently yet to put out a tender for rail haulage from the mine site, despite the fact its self-imposed deadline for exporting coal from the Carmichael venture is only 20 months away.
Aurizon under pressure from investorsAurizon, which operates the state's monopoly Central Queensland Rail Network, will certainly displease some of its shareholders if it takes on the job.
'Collapse waiting to happen'
The ABC has learned that one of Australia's biggest investors is threatening to sell its stake in Aurizon if the rail freight business enters contracts to move coal from Adani's Carmichael mine site.
The giant fund manager Perpetual Investments has met company board members and expressed its concerns.
In an email shown to the ABC, Perpetual said that dealing with Adani would involve "a material reputational risk to [Aurizon] that should be of concern to shareholders".
"The company itself is certainly very alert to the issue," it said.
"Should this risk grow, further company engagement, or even divestment of our holding in [Aurizon], could be considered. In short we are very aware of this risk and continue to monitor it."
The email was sent last month to Market Forces, a division of Friends of the Earth, which campaigns against investment in fossil fuels and environmentally-damaging projects.
The executive director of Market Forces, Julien Vincent, told the ABC there's no convincing required of Aurizon's investors that Adani brings major financial and reputational risk.
"The question now is whether Aurizon listens to its owners, or decides to, in the chairman's own words, become 'public enemy number one'," Mr Vincent said.
Perpetual said it had nothing further to add.
Adani said that it was "confident that arrangements will be in place to allow our coal to be exported" but declined to discuss the issue further, saying details of arrangements and negotiations with third parties were commercial in confidence.
Other shareholders also express concernAdani has already felt the heat from other shareholders.
Stop Adani movement 'infiltrated'
UniSuper — which was then Aurizon's number one shareholder — previously engaged in "top-level talks" with Aurizon's board to discourage it from dealing with Adani, arguing that Adani's project raised significant environmental concerns and "does not represent a viable commercial proposition".
Adani flatly rejects this, maintaining that the Carmichael project is already delivering "jobs and opportunities to regional Australia", with construction of the mine underway and that the Adani Group is fully committed to developing the mine and railway.
The shareholder critiques may have lost some of the sting because some of the lead critics have sold down their stakes in Aurizon.
UniSuper went from more than 11 per cent of the shares on issue to less than 5 per cent, and Perpetual to just 0.7 per cent.
In any event, Aurizon reckons the question of whether it will haul coal from Adani's mine is moot — because the job hasn't even been put to tender.
"We are not aware Adani has commenced any commercial process with regard the tender of above-rail haulage contracts or indeed whether they intend to; and Aurizon currently has no arrangements in place for the provision of other services to Adani," the company said.
So, is Adani really looking to go it alone?
Observers we spoke to doubt it, because the upfront capital costs would add to the already huge costs of developing the project.
"You're talking $100 million plus for locomotives and wagons, plus maintenance costs and staffing — maybe up to $200 million," one analyst said.
He argued that the threat of going it alone was most likely "a bargaining chip to use in negotiations" with an outsourced provider.
Rail is critical to the Carmichael mineWhatever way it plays out, rail haulage is critical for Adani's Carmichael mine.
Adani's tax haven ties
The Indian-owned conglomerate originally planned to build its own rail network spanning nearly 400 kilometres from the remote Carmichael mine to Adani's Abbott Point Coal Terminal near Mackay, but the costs were prohibitive without public subsidies and it has ruled out this option.
Instead, it now plans a narrow-gauge spur line less than half that length to link to Aurizon's Central Queensland Coal Network.
Adani needs to reach an agreement with Aurizon to access the network, a monopoly asset that links mines to Queensland's major coal ports, if its project is to proceed.
Aurizon, which is obliged to consider and assess Adani's access request for the network, can't say much.
It is legally required to treat all access applications confidentially.
But the ABC understands there is enough capacity on the network to accommodate phase one of Adani's coal mine, which is slated to produce just 10 million tonnes of coal a year for the foreseeable future.
A far cry from the 60 million tonne per annum mega mine it has approval to develop.
Despite the scaled-back size, Adani's mine has become a lightning rod for a protest movement that sees new thermal coal mines and the opening up of an entire new coal region as a disaster for a planet where burning fossil fuels has created a climate crisis.
A slew of businesses has declined to work on the Adani coal project, angering the federal Resources Minister Matt Canavan, who's called for companies that shun the Indian conglomerate to be "blackballed" from the mining industry.
Yet the number of firms keeps growing.
About 60 companies, including banks, insurers and engineering firms have either cut ties with Adani or declined to engage with it for various reasons, including customer and staff opposition to the coal mine, sustainability and environment policies or doubts about the project's commercial viability.
Infrastructure firm Cardno became the latest, announcing this month that it would shortly cease working for a subcontractor to Adani and would not seek any future tenders with the Indian mining company.
Pacific National willing to work with AdaniPacific National has no such qualms, noting that Australia is the world's largest exporter of coal, including thermal coal for baseload electricity generation in developing countries.
"We are proud of our contribution to the Australian economy and the jobs we provide in regional Australia," the company said.
"Being in the business of minerals haulage, we would not rule out providing rail haulage services to get exports to market."
The stance puts Pacific National at loggerheads with the mass movement of environmentalists fighting to stop Adani.
"Pacific National's investors need to be made aware of the myriad risks attached to the Carmichael coal project before their company walks into the biggest environmental campaign in Australia's history," Mr Vincent said
Foreign investment funds and pension funds own Pacific National, including the British Columbia Investment Management Corporation, the Canada Pension Plan Investment Board, the China Investment Corporation Capital (CIC Capital), the US-owned Global Infrastructure Partners (GIP), and a Singaporean sovereign wealth fund.
Market Forces has begun lobbying the company's overseas owners — so far without success.
Adani Australia CEO Lucas Dow has set a deadline of mid-2021 for the first coal exports from the Carmichael mine, already pushed back from an earlier deadline of March 2020.
Whoever hauls the coal, that deadline looks very ambitious, assuming the mine goes ahead.
Whether your view is "Stop Adani" or "Start Adani", it's a long time coming.
This article first appeared on www.abc.net.au
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