As the Adani mine proposal becomes a central issue in Australian politics, Prof John Quiggin looks in detail at the economic (non)viability of the mine, which has driven the company’s appeals for subsidies and government support. Prof Quiggin also suggests three reasons the unviable project is still being pursued by its supporters:

• The project is being kept alive to avoid writing off the investment and to maintain an option value in the hope of a sustained increase in the coal price.
• Adani could construct the proposed rail line almost entirely with public funds provided on concessional terms, then hope that other coal mines would render it profitable.
• By making continuous demands on governments for concessions of various kinds, Adani will eventually be able to blame government policy for the failure of the project and extract compensation.

The Australia Institute is pleased to publish this paper by one of Australia’s most eminent economists on a project that is central to environmental, economic and policy debate.