The backer of a massive coal proposal in the Galilee Basin, adjacent to Adani’s Carmichael mine site, has quietly abandoned its plans amid growing doubts about the long-term profitability of Australian thermal coal exports.

 

This morning that the proponents of the $7bn China Stone mine had withdrawn their application for a mining lease in March.

 

Owners MacMines Austasia, a subsidiary of China’s Meijin Energy Group, has confirmed the project’s future is “under internal discussion” but otherwise declined to comment.

 

China Stone would have exported 38m tonnes of thermal coal a year, and was among the largest of seven proposed coalmines in the Galilee Basin.

 

The collapse of a significant proposal in the Galilee will raise questions about the viability of the remote basin, which has been promoted in Queensland as a significant potential source of regional employment.

 

Six mining proposals in the Galilee have gained necessary approvals, while one other, the Clive Palmer-backed Alpha North proposal, is undergoing an environmental assessment. None has begun construction.

 

Analysts have questioned whether projects are viable in the Galilee, given the lack of existing infrastructure and the cost of transporting coal several hundred kilometres to export ports.

 

Australian thermal coal exports have taken a massive hit in global markets in recent months, down to US$87 a tonne from highs of US$120 late last year.

 

But the bigger long-term problem for exporters is uncertainty about demand, amid a quickening global transition away from coal-fired power.

 

In a statement on Tuesday, Australian mining giant BHP announced it would transform its portfolio to focus on oil, copper and nickel, and warned thermal coal could be “phased out sooner than expected”.

 

Tim Buckley, the director of energy finance studies at the Institute of Energy Economics and Financial Analysis, said the economics of thermal coal in the Galilee Basin “just don’t stack up” amid the shift away from thermal coal.

 

“You can’t dismiss BHP, who is one of the biggest suppliers to China in the world,” Buckley said.

 

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Buckley pointed to movements in global markets, particularly in the financial sector, that indicated a more rapid shift away from thermal coal than predictions used to justify new mining projects.

 

He said this highlighted the need for Australia to enact transition policies to protect workers.

 

“As those markets move, regardless of what Australia does, we are exposed,” Buckley said. “China is going hell for leather into hydro, wind and solar because it provides diversity of [energy] supply.

 

“China passed peak coal five years ago. Why, in that market, would you go and build a mine that will take you five to 10 years anyway?”