The immediate denial of any issues with approvals by the Queensland government raises questions as to what Adani is trying to accomplish
Is India's Adani Mining preparing to walk away from its A$10 billion ($7.7 billion) coal project in Australia's Queensland state, or upping the ante in trying to speed up approvals for the huge project?
Adani surprised industry observers by confirming on Wednesday it had halted engineering work on its Carmichael coal project in the frontier Galilee basin in central Queensland.
The planned 40-million tonne per annum mine is supposed to start producing in 2017, with Adani intending to ship to India to meet the growing demand for power generation.
The explanation from Adani on why it stopped independent contractors from working on the mine, rail and port infrastructure was that it was rejigging the budget on the project as it faces delays in obtaining all the necessary government approvals.
Delays in getting approvals from the Queensland government meant that the previous project timelines were no longer achievable, Adani said in a statement.
"As a result of changes to a range of approvals over that time, it's necessary to synchronise our budget, project timelines and spending to meet those changes," Adani said.
However, the Queensland government shot straight back, telling the Australian website of the Guardian newspaper that "to date, all state regulatory processes have been completed to schedule".
These include approvals for environmental impact statements for the mine and rail line, applications for a power plant to run the mine, an airport, quarries and camps for workers, the website reported.
The immediate denial of any issues with approvals by the Queensland government raises questions as to what Adani is trying to accomplish.
The approval process may have become slightly more complicated by the change of government in Queensland, from the pro-mining Liberal Party that was ousted earlier this year by the Labor Party, which has amended some of the requirements of where the materiel from dredging for the expansion of Abbott Point port can be placed.
But while the new Labor administration may be somewhat more concerned about environmental issues than its Liberal predecessor, it will also be painfully aware that thousands of skilled workers in Queensland are going to be out of work in the next few years.
This will happen as the three liquefied natural gas projects currently being built reach completion, and currently there is precious little in the way of new ventures in the pipeline.
Adani's Carmichael mine, and another in the Galilee basin by fellow Indian conglomerate GVK and local partner Hancock, controlled by iron ore billionaire Gina Rinehart, are about the only major projects with a realistic chance of going ahead.
OUTLOOK GETTING BLEAKER
The major issue facing both these projects is the deteriorating economics caused by the freefall in thermal coal prices in recent years, with spot prices at Australia's Newcastle port ending last week at $61.24 a tonne, or less than half of the $136.30 in January 2011, which was the post-2008 global recession peak.
While a new mine in the Galilee might be cash positive at the current price, it will certainly take longer to pay off the capital investment needed to build the mine, some 500 kilometres (300 miles) of railway lines and port expansions.
The two companies are also facing an increasingly well funded and coordinated campaign against the mines by environmental and rural groups, who claim port dredging endangers the Great Barrier Reef, while the mine and rail infrastructure threatens some animal species and the region's water table.
So far Adani and GVK have tried to head off environmental concerns by using an evidence and fact-based approach, but as has been shown elsewhere in Australia, this doesn't necessarily win over a public more easily swayed by emotional appeals.
The ultimate aim of the environmental lobby is stop the coal mines being developed, and if they could, they would also shut down existing mines.
They appear unconcerned about the potential economic and job losses, which may end up putting them at odds with the Labor government in Queensland, which will fear the electoral pain that rising unemployment generally brings to ruling parties.
Adani's actions in halting engineering works on its Carmichael mine and pointing the finger at the state government may be a somewhat unsubtle reminder that the politicians need these mines to go ahead for the sake of economic growth.
It could also be that Adani is taking a moment to assess all its options and work out if the project is now in the 'too hard' basket, given the deteriorating economics, the rising environmental opposition and its feeling the state government isn't doing all it can to support the project.
Either way, the future of the Galilee basin coal mines has just become considerably more uncertain.
Clyde Russell is a Reuters columnist. The views expressed are his own.