What is the Cost Benefit Analysis For Project Appraisal ?

Question:

Adani Mine Case Study

Case description

The Indian conglomerate, the Adani Group, proposed to build an integrated coal mind, rail and port project in Queensland (hereinafter referred to as The Project). The company stated that it intends to ship the coal to India for the use of its power stations. The three main components of The Project are:

  • The Charmichael Coal Mine: the mine is proposed for the Galilee Basin in Queensland with six open cut pits and five underground mines over an area of 30km long. It would be the largest coal mind ever built in Australia and would be amongst the biggest in the world. Adani has initial approval to mine up to 60 million tonnes of coal per annum (Mtpa) from the site for 30 years. It plans to operate the mind for at least 60 years, extracting at least 2.3 billion tonnes of product coal in the process.
  • The Carmichael Railway: Adani proposed to build the North Galilee Basin rail to transport the coal to a port on the coast of Queensland.
  • The Abbot Point Port: Adani already owns and operates the existing 50Mtpa coal export terminal at Abbot Point (Terminal 1). The terminal is currently shared amongst multiple coal mines in the north of the Bowen Basin. Adani plans to continue to use this terminal to export coal from the Carmichael mine. In addition, it has received approval for a new coal mine terminal – Terminal 0 at Abbot Point. This terminal will have a capacity of up to 70Mtpa. It would be needed when the Carmichael mine is operating at full capacity. The new terminal and the continuing use of Terminal 1 will increase Adani’s coal export capacity to 120Mtpa. All the coals will be shipped through the Great Barrier Reef and the World Heritage Area. However, it is still unclear if Terminal 0 is fully needed should the Carmichael does not operate at full capacity, and whether or not the Take or Pay contracts with existing users of Terminal 1 would be renewed.

Extra information: The Adani Group owns large coal power stations and transmission infrastructure in India. It plans to own all aspects of the power infrastructure in India. Recently, the media has reported that the company has failed to provide sufficient environmental consideration in its business operation in India.

Task 1 : Provide critical analysis of Fahrer (2015)

Task 2: Suppose that you are requested to re-conduct the socio-economic cost and benefit analysis for the project, what would you do in order to improve the quality of the analysis. Few areas of focus: classification and quantification of impacts, monetary valuation of impacts, analysis of impacts, costs and benefits among stakeholders. Provide suggestions and justifications for your suggestions.

 

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