Adani’s Corrupt History is No Obstacle for New "Monster Mine"

Photo: Lock the Gate Alliance

A new Australian mega mine is attracting attention from environmental protection groups, not only because of its predicted damage to the global climate, but also due to the revelation of corruption within the Adani Group, the company that is proposing the mine. Additionally, plans by the U.S. Export Import Bank to underwrite construction of the mine have taxpayers up in arms, and have put the Obama Administration’s commitment to tackle climate change in question.

The Adani Group was founded in 1988 by its current Chairman, Gautam Adani, and is headquartered in Ahmedebad, Gujarat, India. In 2002, the Adani Group imported 1.47 million metric tons (MT) of coal; by 2020, the Group predicts that number will reach 200 billion MT. The private corporation’s revenue has increased from $772 million in 2002 to over $6 billion in 2011.

Adani has mining interests in India, Indonesia and Australia, and coal extracted from these sources is transferred to India to fuel the nation’s coal power stations. According to their website, the Adani Group’s success lies in the growth of India’s middle class. The inability of the Indian government to keep pace with the ever growing demand on the nation’s infrastructure and power supply forced them to open the national energy market to the private sector.

The Adani Group’s proposed mine, Carmichael, nicknamed “Monster Mine Madness” by Greenpeace Australia, would be the biggest coal mine in Australia and one of the largest in the world. Carmichael is to be constructed in Queensland’s unexploited Galilee Basin.


If completed, the Carmichael mine:
•would double the size of Australia’s biggest existing coal mine, producing 60 million tons of coal per year at full capacity
•is planned to operate for 90 years, several decades longer than an average coal mine
•will cover 44,700 hectares (ha) and destroy 10,000ha of bushland
•will draw out 10 billion liters of water from the surrounding environment
•will emit 128 million tons of carbon annually. This is more than the combined fossil fuel emission of Sweden, Norway and Denmark combined
•plans for the mine also include construction of hundreds of kilometers of new railway tracks and new coal port terminals that would assist shipment of coal through the Great Barrier Reef

Australia has committed to keep global warming below two degrees above pre-industrial temperatures; however, the construction of Carmichael would create the fastest and biggest possible growth in Australia’s coal exports, making this promise nearly impossible.

According to the Adani Corporation website:

“There has been a 50 percent jump in local employment by us. We are committed to our project in Australia, which is a joint collaboration with top Australian consultants, and is expected to create up to 5,000 jobs during construction and 4,000 jobs once we begin operations. We will train and employ locals, Queenslanders and Australians,” said Mr Adani.


Allegations of Corruption

Adani’s website boasts that the Group “completed Australia’s largest coal mining exploration programme at the Carmichael mine in record time.”

Adani announced that “[it has] recently submitted a statement to state and federal authorities about the potential environmental, social and economic impacts of its proposed mine and rail projects, including its commitment to protect the environment.”

Greenpeace has discovered, however, that the Environmental Impact Statement (EIS) written by consultants for the Adani Group, contains many basic errors, including mapping of the land and estimates of the clearing areas. It also fails to mention the predicted carbon emissions, and did not assess the effects of the drawdown of groundwater, which will destroy endemic and threatened plant species.

On February 11, Greenpeace published a special briefing paper uncovering Adani’s corrupt history, starting with the company’s flagship project, Mundra, the largest private port in India. The briefing documents a large number of scandals in which the company has been involved, specifically, ignoring environmental regulations and consequently causing significant environmental damage.

According to the briefing, Adani “deliberately concealed and falsified material facts” when applying for part of the development. Construction of Mundra began illegally, and officials found multiple violations of the development approval, which have been the subject of multiple court cases.

In 2011 Adani was investigated by the anti-corruption organization Lokayukta, from Karnataka, a state in south western India. Former Supreme Court Justice Santosh Hedge, a Lokayukta official, discovered evidence of bribery and theft in the export of iron ore that cost the Indian government $3 billion in royalties. The investigation’s report detailed how Adani received trucks overloaded with iron ore, and also received illegal iron ore at its plot at Belekeri from a number of suppliers that lacked selling permits. Documents apprehended from Adani’s office indicated that the company had been paying cash bribes to officials in a variety of departments, including customs, the police, the State Pollution Control Board, forest and mine officials, and various local politicians. In the conclusion of their report, Lokayukta recommended to blacklist the Adani Group and ban it from participating in any future contract, grant or lease by the government.

In 2012, India’s Gujarat High Court found that construction was occurring inside an Adani Special Economic Zone (SEZ) even though the Adani Group had yet to receive an environmental clearance from the central government.

In October 2012, the Indian Ministry of Commerce found that Adani had “deliberately concealed and falsified material facts” when applying for a new SEZ at Mundra. During its investigation, the Ministry found that theSEZ did not comply with various required conditions, and rejected permission for its construction.

A new committee has been formed by the Indian Ministry of Environment and Forests to investigate a number of allegations against Adani including construction without authority, destruction of mangroves, blocking of creeks and non-compliance with environmental approvals. The committee is scheduled to report its findings in April 2013.

The Role of the U.S. Export-Import Bank

It is not entirely unusual for companies to speak about upcoming partnerships with The U.S. Export-Import Bank (ExIm). ExIm promotes U.S. exports abroad and provides financing for the export of American goods and services. “Companies try to make their projects sound better to the public by saying that the U.S. Export-Import Bank is interested,” Nicole Ghio, responsible for domestic and international organizing at the Sierra Club, told Record.

“What’s really fascinating is that pretty much every other governmental agency has some degree of oversight; however, almost all of ExIm’s dealings are conducted in complete secrecy,” Ghio said.

Information revealing ExIm’s discussions with the Adani Group became public only because someone from the Adani Group spoke to The Hindu Business Line, an Indian newspaper based in Chennai, India.

According to Ghio, the Bank does the majority of its work before a project is made public, so it is very difficult for organizations or American citizens to work against ExIm. The first time the public hears about an ExIm project is an announcement on their website of the project name, but any additional details are considered “trade secrets” and kept confidential. By the time the project name is broadcast, ExIm has already done extensive work with the partner company. Details regarding the amount of funding needed, and for what, are publicized only after ExIm’s board of directors have given approval.

Despite President Obama’s promise to address and undertake the challenge of climate change, the Chairman of the U.S. Export-Import Bank, Fred Hochberg, has personally directed financing for massive coal projects in South Africa and India.

In April 2011, ExIm’s Board of Directors approved $805 million dollars in subsidized financing for one of the world’s largest coal fired power plants, the 4,000 Megawatt Kusile project, located in South Africa. This approval illustrated the growing trend of ExIm to focus U.S. exports and taxpayer dollars on fossil fuels instead of renewable energy alternatives. ExIm’s support of Kusile came despite knowledge that the project was opposed by South African and international civil society organizations as well as U.S. medical experts on the grounds that it was a heavily polluting project that would harm the health and well-being of South Africans.

Hochberg continues to be a loyal supporter of some of the world’s most destructive fossil fuel projects, including Carmichael. Last July, Hochberg met with Adani in India to discuss the role the U.S. could play in power and mining ventures in India and Australia. Any U.S. involvement in the mine would be financed by American taxpayer dollars.

“ExIm has a real affinity for these fossil fuel projects, and we keep asking why they continue to involve themselves in projects that consistently violate local environmental standards,” Ghio said.

ExIm receives re-authorization from Congress every 2 years; however there is no stand alone legislation to oversee the bank. The only degree of oversight comes after ExIm chooses to publicize their project. There is then a 30 day window for Congress to voice their opinion on the given project, but they lack the power to give or deny approval.

Hochberg and ExIm have ignored public outcry in petitions, twitter campaigns and media scrutiny from Australia, India and the U.S. against Carmichael. ExIm’s continued support for fossil fuel projects undermines the U.S. supposed commitment to tackling climate change, as coal releases greenhouse gases which contribute to the increasing global temperature.

Justin Guay, Sierra Club International Climate Program Representative says, “We are chaining our economy to a 19th century technology while countries worldwide are busy transitioning to the 21st century.”

Social Responsibility

On their website, the Adani Group draws attention to its efforts to reduce its impact on the environment. It mentions that Adani was the first power company in India to use “supercritical” technology to reduce CO2 emissions, an initiative that won Adani Clean Development Certification from the United Nations Framework Convention on Climate Change (UNFCCC). Additionally, Adani recently commissioned the largest solar power project in India.

However, Greenpeace Australia recommends that Federal Environment Minister Tony Burke should reject the Carmichael mine that will permanently alter a major river, destroy critical habitat for threatened species, and negatively affect climate change and international efforts to slow global warming.

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