The media has a seemingly endless story when it comes to the development of Adani’s Carmichael coal mine project in Queensland. Originally touted to be the world’s largest coal mine project worth approximately $21 billion, it has drawn immense controversy about its planned economic benefits, financial viability, requests for government subsidies and loans, and its expected environmental impacts. To make the story more interesting, the project includes a variety of stakeholders, including opposing political parties at both state and federal levels, as well as an Indian based multinational that will be mining Australian resources at a time when the topic of nationalism is globally significant.
While you’ve probably seen a mix of articles from the media ’bashing’ one (or multiple) of these stakeholders about the endless negotiations and backroom ‘deal making’; as a company that works with some of the largest companies in Australia on their major contracts, we thought it would be worthwhile shining some light on some of the influences that might be extending the negotiation process. This article touches on three factors that will be impacting the progress of the Carmichael negotiations:
- Differences in cultural values, communication, and negotiation styles between Australia and India
- Size and complexity of the project
- Complex stakeholder environment
The differences in negotiation styles between Australia and India, sourced from 25 Fascinating Charts Of Negotiation Styles Around The World
1. Differences in cultural values, communication, and negotiation styles between Australia and India
The way people and companies negotiate is ingrained in us through our socio-cultural values and our education. The Adani negotiation includes stakeholders from two very different cultures who will be communicating and negotiating in different ways.
Associate Professor Rajesh Kumar in his article, ‘Negotiating with the complex, imaginative Indian’, discusses the Indian cultural values and their impact on negotiation styles:
|Indian Cultural Values||Indian Negotiating Style|
Richard D. Lewis, in his book ‘When Cultures Collide: Leading Across Cultures’ discusses the two countries communication styles:
- Indian English: “excels in ambiguity, and such things as truth and appearances are often subject to negotiation.”
- Australians: “tend to have a loose and frank conversational style”.
2. Size and complexity
The Carmichael mine is set to be the world’s largest coal mine project worth $21 billion project – $16.5 billion excluding the railway and port expansion – and thought to have a 60-year life.
The variety of macro-economic assumptions over a 60-year life when coal consumption is set to slow due to improvements in renewables place a number of planned benefits at risk. Also, the billion-dollar infrastructure required to move the product to market requires an alliance of stakeholders and should be part of Queensland’s long-term strategy to develop the north. The mine is now looking increasingly less ambitious, with annual output likely to be much less than the “mega” 60-million tonne scale promoted, and a price tag closer to $4 billion required to start.
3. Complex stakeholder environment
In a time when our main political parties are seemingly centred on issues, a project that will support “Jobs and Growth” is generally considered a good idea (obviously with exception of the Greens). However, the combination of a Liberal federal government and a Labor state government makes it a political chessboard to demonstrate who is doing the wrong thing.
In addition, this project is key to the North Australia Infrastructure Facility (NAIF) in developing major long-term infrastructure in the region. And finally the Adani Group, who have recently hit the media in India for what appears be excessive debts owed to banks and who’s subsidiary Adani Green Energy last year unveiled the world’s largest solar power plant, raising questions about going concern and their long term strategy for resources and energy.
We hope that this article has given you a few more things to think about when you read the latest post on the Carmichael project. When working on large and complex contracts, it’s important to know who you’re negotiating with and how they operate. If you find your business is considering a large and complex commercial arrangement, please reach out to the team at Acquire to see how we can help.