MELBOURNE, Oct 1 (Reuters) - The Australian state of Queensland has agreed to defer royalty payments for Adani Enterprise’s Carmichael thermal coal mine, the state’s treasurer said on Thursday.
The royalty deferment comes ahead of a Queensland state election set for Oct. 31 and with the current Labor state government set to enter a so-called caretaker period on Oct. 5, when no major decisions are typically announced prior to the vote.
State Treasurer Cameron Dick did not say when Adani would start to pay royalties or how much revenue the state would collect, citing commercial-in-confidence agreements.
“I can assure you that Adani will pay every dollar in royalties that they have to pay to the people of Queensland... with interest,” Dick said in a news conference. “That’s absolutely locked in now.”
Carmichael’s development became a key issue during Australia’s 2019 parliamentary election and part of the reason for the Labor party’s shock defeat, after it failed to endorse the mine and suffered a swing against it from voters in coal heartlands near the mine in central Queensland.
The royalty deferral is the second by the Queensland government in a policy to support new mines, after a similar arrangement was brokered for New Century Zinc last year.
Carmichael has provoked controversy in Australia because it would open up a new thermal coal basin at a time of growing concerns over global warming, in a region that is in need of jobs.
Analysts have questioned the mine’s viability, given a steep fall in coal prices in the past two years, and increasing pressure on banks and insurers not to lend to thermal coal companies because of climate change.
Adani has begun construction at Carmichael, which will start by producing 10 million tonnes per year of coal, and an associated rail project and expects first production in 2021.
Reporting by Melanie Burton; Editing by Christian Schmollinger