Adani, GVK win Australian state backing to expand coal port

By Sonali Paul

MELBOURNE (Reuters) - The new government in Australia's Queensland state unexpectedly smoothed the way for two Indian companies to expand a port for two coal projects opposed by green groups, in an attempt to boost the struggling mining industry, the state's lifeblood.

Indian conglomerates Adani Enterprises and GVK, with separate projects worth at least A$17 billion ($13 billion), had feared the new Labor government would hold back development of the coal-rich Galilee Basin amid concerns about carbon emissions and damage to the Great Barrier Reef.

The new government was eager on Wednesday to make clear it wanted to promote jobs in the mining industry, after toppling a conservative government in January that was promising to spend taxpayers' money to help fund the port and rail for Adani's Carmichael project.

"We're no fools. We realise that jobs have to come from economic development, and economic development in this state has a lot to do with mining," state development minister Anthony Lynham told Reuters in an interview.

"So we encourage mining, especially in the Galilee Basin, because we know that if the area is opened up, others will follow."

The government rejected requests from Greenpeace and community group GetUp to revoke approvals for Adani to operate in Queensland based on its environmental track record in India.

"I realise their track record in India, but this is a different ballpark. Australia has strong standards. If we slip in those standards, there are a whole heap of organisations that will come down on us like a ton of bricks," Lynham said.

Green groups were disappointed with the approval of plans to expand Abbot Point, though they were relieved that 3 million cubic metres of dredged soil will now be dumped at the port, instead of at sea in the Great Barrier Reef Marine Park or near wetlands, as previously proposed.

With many Queensland coal mines running at a loss now due to an oversupplied market and uncertain demand growth, campaigners questioned the need for a bigger coal port.

"Obviously there's no point in damaging the reef, dredging in the waters, if all we end up with is a white elephant or a stranded asset," said Wendy Tubman, coordinator with the North Queensland Conservation Council.

Adani and GVK welcomed the dredging agreement. GVK said dumping the dredged soil on land would increase the port construction cost, but declined to say by how much.

Lynham said he would push the government for environmental approval of the dredging plan within four months.

($1 = 1.3146 Australian dollars)

(Editing by Tom Hogue and Muralikumar Anantharaman)