Coal advocates have warned Queensland's Labor government could be next in the 2020 state election after its federal party lost what some have dubbed an "unlosable" May 18 federal election to a Liberal-National Coalition with less aggressive climate policies.
Queensland is home of Adani Enterprises Ltd.'s proposed A$2 billion Carmichael coal mine that one analyst said is the "flash point" of Australian climate politics.
The opposition Labor party was widely tipped to triumph over the incumbent Liberal-National Coalition during the country's elections over the weekend. But with the results still being finalized, the Coalition is now expected to form a majority government having secured 75 seats over Labor's 65, with four seats undecided at the time of publishing.
The Coal Council of Australia, or CCA — formed in February to lobby for the industry — noted in a May 20 statement that Labor members and candidates recorded strong swings against them, in some cases of over 13%, in both the coal mining states of Queensland and New South Wales.
In coal-dependent Hunter, New South Wales, one of the seats still undecided, incumbent Labor member Joel Fitzgibbon faces the prospect of losing against rival Stuart Bonds of the right-wing One Nation party. Bonds, who campaigned against the threat to mining jobs posed by the Labor party's policies, is currently enjoying a 20% swing vote and is narrowly trailing Fitzgibbon.
"If the Queensland government continues to resist projects such as Adani and the economic benefits they bring, including regional jobs, they will be judged harshly at the next state election."
While Labor's federal leader Bill Shorten was against increasing "sovereign risk" by opening up another review of Carmichael's permits if he won, Queensland's Labor state government has continued to stall its approvals.
Commonwealth Bank Mining and Energy Commodities Research Associate Director Vivek Dhar said in an interview that while other coal projects have been approved in Queensland, Carmichael is "where the battle lines are being drawn," and has become a "flash point" for climate change politics.
Liberal National party Senator Matt Canavan said the anti-Adani sentiment drummed up by Bob Brown, the former leader of the environmentally-focused Australian Greens party, helped galvanize support for his party. Canavan told local media he had "no doubt" Adani was the biggest issue in the state's central and northern regions.
"Queensland miners are sick of people telling them that they should be embarrassed and ashamed of what they do, when they should be heralded for working to the highest environmental standards and bringing prosperity to the state," Adani Australia CEO Lucas Dow said in a May 20 statement.
Dhar said the election result will be more positive for the mining sector given it reflected less substantial concerns over the environment than previously thought. "[Whether] that translates through to increased investment in the space is still hard to say," Dhar said.
EverBlu Capital General Manager of Research Russell Wright said more mining companies would be prepared to commit to capital expenditure in coming weeks for long-life projects with the certainty that a majority government brings.
In a May 19 statement, the Minerals Council of Australia called the election result a "win for regional jobs."
"There is now a clear mandate for resources projects that have lawful approvals to proceed," the MCA said, citing Carmichael in central Queensland and the Yeelirrie uranium mine in Western Australia, the latter of which received federal approval in April.
Dhar said the market is waiting on what happens with Carmichael, the progression of which would improve sentiment to allow other proposed coal mines like Alpha North and Kevin's Corner to be brought to market.
Too many changes
The S&P/ASX 200 share index closed at an almost 12-year high of 6,376.1 points on May 20 on the election results, which CommSec Chief Economist Craig James said reflected relief that the market did not have to "work through" the consequences of the Labor Party's proposed changes to negative gearing, franking credits and taxation scales.
One of its many dramatic proposed changes was to reduce national emissions to 45% below 2005 levels by 2030, far more aggressive than the government's current target of 26% to 28%.
Dhar said Labor wanted to make climate change a "key differentiator" to the Coalition's policies, but given the "fragility" in Australia's economy, there were fears that the party's many proposed changes would have been too many to accommodate.
Commonwealth Bank Senior Fixed Income Strategist Philip Brown said in an interview that Labor needed a dynamic leader to properly explain the "huge change program" it had proposed across several sectors.