Adani might not be able to sue over mine cancellation: Queensland Law Society
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Adani might not be able to sue over mine cancellation: Queensland Law Society

There are fears Adani might be barred from seeking financial compensation if mining leases for its Galilee Basin are ripped up under a Greens proposal.

Greens MP Michael Berkman has introduced a private member's bill to ban all coal mining in the Galilee Basin, including Adani's Carmichael mine, and rip up existing leases, with no compensation to be paid.

Adani Australia Mining CEO Lucas Dow says the company would be entitled to "sizeable" compensation if its mining leases were ripped up.

Adani Australia Mining CEO Lucas Dow says the company would be entitled to "sizeable" compensation if its mining leases were ripped up.Credit:Louise Kennerley

Queensland Law Society mining and resources law committee chair James Plumb said the bill meant "it is certainly open for the possibility that there is no [legal] action" for companies which already had agreements in the Galilee Basin.

Mr Plumb said he was "fearful" that there may be no cause of action to be brought for damages against the state government but was uncertain about whether that was the case.

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"The bill does expressly contemplate the cancellation of these existing rights without compensation," he told a committee hearing examining the bill.

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"I don't know personally whether that is capable of challenge at a further date.

"The possibility that they [leases] are extinguished without compensation and the implications of that is concerning to the Law Society."

Mr Plumb said subcontractors would likely not have a claim against the state government.

However, Adani Australia Mining chief executive Lucas Dow the company had already invested more than $1.4 billion in road and rail projects and he expected there would be "sizeable" compensation if the bill was to go ahead.

"Clearly there'd be a legal recourse to this, not only for costs incurred but obviously for the future profits that would have been foregone as well," he said.

Queensland Resources Commission chief executive Ian Macfarlane said scrapping existing mining leases without compensation would harm international confidence in the state.

"The impact on sovereign risk would be not only on potential future investments in mines but, in fact, potential future investments in Queensland per se," he said.

"If you take back a resource lease, you're entitled to compensation."

Department of Natural Resources, Mines and Energy Claire Cooper said the Queensland government had cancelled mining tenures in 2003, 2004 and 2008 and only offered compensation once.

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Committee member Jim Madden questioned whether the Queensland government would have to pay compensation of $660 million, using calculations from a case in which the NSW government bought back BHP Billiton's Caroona coal lease for $220 million, and extrapolating it to the three accepted exploration permits.

Speaking to journalists, LNP leader Deb Frecklington agreed the Queensland budget could not afford to pay compensation to Adani.

"This is an economically-reckless bill based on a Green member of Parliament's ideology rather than actually worrying about people's jobs," she said.

"Let's remember, we have got an $80 billion debt in Queensland ... so it'll be interesting to see how this Treasurer will even be able to balance the next budget let alone pay compensation for a project that was unable to get up."

The State Development, Natural Resources and Agricultural Industry and Development Committee is next due to hold a hearing on the bill on Tuesday night at the Moranbah Community Workers Club.

It is unlikely the bill will succeed as it would need the support of the Palaszczuk Labor government.

Felicity Caldwell is state political reporter at the Brisbane Times

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