
With no existing rail infrastructure in the region, train lines will be part of the necessary infrastructure if the Galilee mines proceed.
The Galilee Basin is a coal resource that is yet to be exploited due to its remote location and the lack of existing infrastructure.
According to analysts, the large up-front cost of constructing greenfield coal mines, combined with the low coal price makes the financial viability of the Galilee Basin coal mine proposals questionable.
We believe that thermal coal demand is in structural decline as a result of both increasing environmental pressure and declining cost competitiveness compared to alternatives for power generation. Citibank report cited in The Saturday Paper.
Further barriers to finance for the Galilee Basin projects spring from concerns around environmental threats that the project pose, especially threats that coal export facilities pose to the World Heritage listed Great Barrier Reef. Several major banks including Citigroup, Goldman Sachs, Deutsch Bank, and HSBC have ruled out funding various parts of the projects.
In November 2014 the Queensland Government announced it would take a short-term financial stake in the rail infrastructure needed to open up the Galilee Basin in a bid to “get it happening more quickly”.
So far, none of the proposed projects has achieved financial close.
Reading and references:
- Galilee Mines Face Dim Future: IEEFA Analysts Highlight Major Investment Risk
- Stranded Down Under: China’s changing demand for coal, what it means for Australia
- Alpha Coal Project in Australia’s Galilee Basin
- The Adani Group: Remote Prospects
Media coverage
- “The bust is already here” Can Rinehart make Galilee Coal profitable? Crikey, 7 August 2014
- The end of coal, The Saturday Paper, 26 April 2014
- Doubts about Galilee Basin, Lateline, 25 November 2013
- Coal project “a monument to short sightedness” ABC The World Today, 19 June 2013