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World’s largest proposed Greenfield Coal Project allegedly ‘indebted’ and ‘opaque’

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Coal by Alexandre G via FLickr

Ambiguity and opaque disclosures continue to dog the world’s largest proposed new thermal coal project – the Carmichael Coal proposal of India’s Adani Enterprises in the Galilee Basin of central Queensland.

“Excessive financial leverage combines with complex offshore corporate structures, tax havens, government investigations into alleged multi-billion dollar over-invoicing plus new requests for government subsidies all suggest the path to financial close on Carmichael remains a long and difficult one,” said Tim Buckley, Director of Energy Finance Studies at the Institute for Energy Economics and Financial Analysis (IEEFA).

“IEEFA notes that ownership of the US$2bn Adani Abbot Point Coal Terminal remains opaque more than three years after the original purchaser – Adani Ports & SEZ Ltd of India announced it had sold the port to a private Adani family company.[i]

“We note that Adani Ports 2015/16 annual report (released this month) continues to clearly state the Abbot Point Port is not a subsidiary of the group. In contrast, latest records we have accessed from the ASIC[ii] states that the Abbot Point facility remains a wholly-owned subsidiary of Adani Ports.

“Aside from the obvious serious questions about continuous shareholders disclosure and ownership of a nationally significant facility there is the fact of the port having more than A$2.2bn of off-balance sheet debt secured against it,” said Buckley.

“IEEFA has also reviewed the latest financial profile lodged with ASIC for Adani Mining Pty Ltd (Australia), the proponent of the Carmichael proposal. IEEFA would suggest that with net debt of A$1.42bn as at 31 March 2016 against shareholders’ funds of negative $227m, the mine proponent is far from robust.

“Adani Mining Pty Ltd has reported combined losses of a net A$182m over the last two years. How the Australian government can ascertain how such an entity can fund a $10bn greenfield development is far from clear, particularly given the financial leverage of the listed parent entity of Adani Enterprises,” he said.

On the positive side for the Adani project, the global traded thermal coal price has lifted 20% year to date in 2016 to over US$60/t, reflective of significantly curtailed Indonesian supply and rising Chinese imports near term in the face of accelerating and unexpectedly swift domestic coal curtailments across China.

The National Bureau of Statistics reports that China’s total coal production was down 9.7% yoy YTD, and down a staggering 16.6% yoy in the month of June 2016. The result of this collapse has provided a near term recovery in China’s total coal imports, up 8.2% yoy in the six months to June 2016.

“It is confounding that the Australian government is pushing this ‘exciting project’ two years after Indian Energy Minister Piyush Goyal announced the target for India to cease thermal coal imports. Tellingly, Indian coal imports peaked in FY2015, with Platts reporting this week that imports fell 8% yoy to 200Mt in FY2016. Goyal forecasts an accelerating decline in FY2017 of down 20% yoy to 160Mt.

“Given India was the main destination for Carmichael, this data raises questions over any remaining strategic logic of why Australian taxpayers should open up the Galilee to expand global supply for a low quality export product where the global market in terminal, structural decline and stranded assets are prevalent,” said Buckley.

Six months after the global climate accord agreed at the COP21 in Paris, it would be financially reckless for the newly re-elected Australian government to contemplate any taxpayer subsidy for any aspect of, or related infrastructure associated with, the world’s largest greenfield thermal export coal mine proposal.

Despite the Australian government signing the COP21 agreement, the new Resources Minister, Matthew Canavan has questioned the impact of carbon emissions on global warming while peculiarly describing the Carmichael project as“incredibly exciting”.

IEEFA questions how the North Australia Infrastructure Fund (NAIF) could undertake full due diligence on the private family structures that appear to be involved in this project, particularly with offshore entities spanning Singaporean, Cayman Islands and Mauritius tax havens and while reports of Indian government investigations claiming alleged coal import fraud against the Indian people are open. There are conflicting reports regarding if there is any Adani associate making any application to the NAIF.

Yesterday, the Queensland State Government again reiterated its pre-election pledge to not offer any taxpayer subsidy to the company saying “as promised, the government will not contribute taxpayer money to Adani’s project,” again raising serious concerns about how the proposal could proceed.

The financial risk of stranded coal related infrastructure assets was illustrated bluntly this week with China’s Qinhuangdao Port Co (the world’s largest coal port, one that moved 230Mt of coal in 2015 alone) releasing a stock exchange announcement of a“80-90% yoy profit warning” for 1HCY2016 due to the “weakened supply and demand in the coal market.”

“All of this further raises real questions of why Australian taxpayers would support funding the construction of even more stranded coal infrastructure at a time when Australian coal ports are running at an average utilisation rate of less than 70% of existing capacity,” concluded Buckley.

 

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Environment

How To Make The Shipping Industry Greener

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green shipping industry

Each and every year more damage is done to our planet. When businesses are arranging pallet delivery or any other kind of shipping, the environment usually isn’t their number one concern. However, there’s an increasing pressure for the shipping industry to go greener, particularly as our oceans are filling with plastic and climate change is occurring. Fortunately, there’s plenty of technology out there to help with this. Here’s how the freight industry is going greener.

Make Ship Scrapping Cleaner

There are approximately 51,400 merchant ships trading around the world at the moment. Although the act of transporting tonnes of cargo across the ocean every year is very damaging to the environment, the scrapping of container ships is also very harmful. Large container ships contain asbestos, heavy metals and oils which are toxic to both people and the environment during demolition. The EU has regulations in place which ensure that all European ships are disposed of in an appropriate manner at licenced yards and the International Maritime Organisation (IMO) introduced guidelines to make recycling of ships safe and environmentally friendly back in 2009, but since then only Norway, Congo and France have agreed to the policy. The IMO needs to ensure that more countries are on board with the scheme, especially India, Bangladesh and Pakistan, which are some of the worst culprits for scrapping, which may mean enforcing the regulations in the near future.

Reduce Emissions

A single large container ship can produce the same amount of emissions as 50 million cars, making international shipping one of the major contributors towards global warming. Stricter emissions regulations are needed to reduce the amount of emissions entering our atmosphere. The sulphur content within ship fuel is largely responsible for the amount of emissions being produced; studies have shown that a reduction in the sulphur content in fuel oil from 35,000 p.p.m to 1,000 p.p.m could reduce the SOx emissions by as much as 97%! The IMO has already begun to ensure that ships with the Emission Control Areas of the globe, such as the Baltic Sea, the North Sea and the English Channel, are using this lower sulphur content fuel, but it needs to be enforced around the world to make a significant difference.

As it’s not currently practical or possible to completely phase-out heavy, conventional fuels around the world, a sulphur scrubber system can be added to the exhaust system of ships to help reduce the amount of sulphur being emitted.

Better Port Management

As more and more ships are travelling around the world, congestion and large volumes of cargo can leave ports in developing countries overwhelmed. Rapidly expanding ports can be very damaging to the surrounding environment, take Shenzhen for example, it’s a collection of some of the busiest ports in China and there has been a 75% reduction in the number of mangroves along the coastline. Destroying valuable ecosystems has a knock-on effect on the rest of the country’s wildlife. Port authorities need to take responsibility for the environmental impact of construction and ensure that further expansion is carried out sustainably.

Some have suggested that instead of expansion, improved port management is needed. If port authorities can work with transport-planning bureaus, they will be able to establish more efficient ways of unloading cargo to reduce the impact on the environment caused by shipping congestion.

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Environment

Extra-Mile Water Conservation Efforts Amidst Shortage

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water conserving

While some states are literally flooding due to heavy rains and run-off, others are struggling to get the moisture they need. States like Arizona and California have faced water emergencies for the last few years; water conserving efforts from citizens help keep them out of trouble.

If your area is experiencing a water shortage, there are a few things you can do to go the extra mile.

Repair and Maintain Appliances

Leaks around the house – think showerheads, toilets, dishwashers, and more – lead to wasted water. Beyond that, the constant flow of water will cause water damage to your floors and walls. Have repairs done as soon as you spot any problems.

Sometimes, a leak won’t be evident until it gets bad. For that reason, make appointments to have your appliances inspected and maintained at least once per year. This will extend the life of each machine as well as nip water loss in the bud.

When your appliances are beyond repair, look into Energy Star rated replacements. They’re designed to use the least amount of water and energy possible, without compromising on effectiveness.

Only Run Dishwasher and Washer When Full

It might be easier to do a load of laundry a day rather than doing it once per week, but you’ll waste a lot more water this way. Save up your piles of clothes until you have enough to fully load the washing machine. You could also invest in a washing machine that senses the volume of water needed according to the volume of clothes.

The same thing goes with the dishwasher. Don’t push start until you’ve filled it to capacity. If you have to wash dishes, don’t run the water while you’re washing. Fill the sink or a small bowl a quarter of the way full and use this to wash your dishes.

Recycle Water in Your Yard

Growing a garden in your backyard is a great way to cut down on energy and water waste from food growers and manufacturers, but it will require a lot more water on your part. Gardens must be watered, and this often leads to waste.

You can reduce this waste by participating in water recycling. Using things like a rain barrel, pebble filtering system, and other tools, you can save thousands of gallons a year and still keep your landscaping and garden beautiful and healthy.

Landscape with Drought-Resistant Plants

Recycling water in your yard is a great way to reduce your usage, but you can do even more by reducing the amount of water required to keep your yard looking great. The best drought-resistant plants are those that are native to the area. In California, for example, succulents grow very well, and varieties of cactus do well in states like Arizona or Texas.

Install Water-Saving Features

The average American household uses between 80 and 100 gallons of water every single day. You obviously can’t cut out things like showering or using the toilet, but you can install a few water-saving tools to make your water use more efficient.

There are low-flow showerheads, toilets, and faucet aerators. You could also use automatic shut-off nozzles, shower timers, and grey water diverters. Any of these water saving devices can easily cut your water usage in half.

Research Laws and Ordinances for Your City

Dry states like California, Arizona, New Mexico, and Nevada must create certain laws to keep the water from running out. These laws are put into practice for the benefit of everyone, but they only work if you abide by the laws.

If you live in a state where drought is common, research your state and city’s laws. They might designate one day per week that you’re allowed to water your lawn or how full you can fill a pool. Many people are not well versed in the laws set by their states, and it would mean a lot to your community if you did your part.

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