Adani Group's ambitious Australian coal mine plans land in the soup. Here's why

Indian mining giant Adani Group's ambitious project to build one of the world's biggest coal mines has stumbled at a decision made by Australian federal court. The court has revoked the Australian government's order which allowed the group to exploit the scrubland facing the Great Barrier Reef for mining purposes.

What is the project ?

The Carmichael mining project which has an estimated cost of a whooping $16 billion, proposes for a open cut and underground coal mine about 160 kilometres (100 miles) northwest of Clermont in central Queensland along with a 189-kilometre rail link. The proposal was approved by the Australian Federal Government in July 2014.

Construction in progress during the Carmichael project.

This is the same project which got a new lease of life during Prime Minister Narendra Modi's tour of Australia last year. There were even talks about India's largest lender State Bank of India (SBI) providing $1 billion (Rs 6,100 crore), for the project, making it one of the largest extended facility by an Indian bank for an overseas project.

According to the company, the mine is estimated to provide electricity for up to 100 million people in India and generate thousands of Australian jobs.

Potential environmental damage

The project is expected to produce 60 million tonnes of thermal coal a year for export, which environment groups say would create vast amounts of carbon emissions adding to global warming.

The project may threaten the Great Barrier Reef. Photo: DigitalGlobe/ Getty Images

The government's approval of the mine has also been challenged citing the adverse effect of the project primarily on the vulnerable species - the yakka skink (a lizard) and the ornamental snake in the Galilee basin in Western Queensland. The activists say that the Great Barrier Reef, one of the world's most biodiverse marine areas, will be largely impacted because the coal would have to be shipped out of a nearby port.

Adani's "poor environmental record" while mining in Australia is also been cited as one of the reasons for protest.

Legal trouble for Adani

The Federal court ruled that the approval of the project was invalid because environment minister of Australia Greg Hunt had not fully assessed its impact on the threatened species.

The latest decision was announced by the court following the case filed by Mackay Conservation Group which launched the challenge earlier this year in January.

Ellen Roberts of the Mackay Conservation Group which challenged the environmental clearance in January, said- "Essentially, the decision now goes back to Greg Hunt."

In a statement, the Federal Department of the Environment said the ruling was taken at the request of "all of the parties to the court proceedings". It said the entire approval process would not have to be reconsidered.

"Without pre-empting a final decision about the project, the department expects that it will take six to eight weeks to prepare its advice and the supporting documentation, and for the Minister to reconsider his final decision," the statement said.

However, Sue Higginson, the principal solicitor at the Environmental Defenders Office NSW which ran the case for the conservation group, said: "This kind of error in the decision-making process is legally fatal to the minister's decision."

Yakka Skink.Photo: Dan Lynch

"The law requires that the minister consider these conservation advices so that he understands the impacts of the decision that he is making on matters of national environmental significance, in this case the threatened species," she said.

A major setback

The decision leaves Adani, which is yet to secure sufficient financial backing for Carmichael and recently slashed its workforce on the project, without legal authority to begin construction.

In recent months Adani has halted engineering work on preparations for the mine and dissolved a 50-member strong project management team, leading to speculation it was preparing to abandon its plans.

Adani's reaction

After the ruling Adani released a statement saying that it was "regrettable that a technical legal error from the federal environment department" had exposed the approval to an adverse decision.

It said the company would await the minister's "timely reconsideration" of its approval application.

The company, expressing its commitment towards environmental concerns, said that the project will be executed in accordance with the Australian laws.

The statement also hinted the decision might further delay work on the mine.

A similar ruling to protect the Tasmanian devil

The federal court's decision echoes a ruling by the same court in 2013 that Tony Burke, the then environment minister, had erred by failing to properly consult his department's advice on the impact of the Shree Minerals mine on the Tasmanian devil- a carnivorous marsupial found in the Tasmanian State of Australia.

Following a case lodged by activists, the mine in north-west Tasmania was blocked, only for Mark Butler, Burke's successor, to reassess the development and allow it to go ahead with additional safeguards for the Tasmanian devil.