Australia on Tuesday approved a controversial port expansion to support mining projects and the dredging of 1.1 million cubic metres (2.4 million cubic feet) of spoil despite conservationists' fears it threatens the Great Barrier Reef.

The decision, creating a huge port capable of handling up to 120 million tonnes of coal per annum, comes two months after the government approved an Indian-backed plan to build one of the world's biggest mines in the same area of Queensland state.

The Aus$16.5 billion (US$12.1 billion) Carmichael project by Adani Enterprises in the Galilee Basin, home to vast coal reserves, has attracted fierce criticism, requiring the fossil fuel to be shipped through the deepwater Abbot Point Coal Terminal which is currently at capacity.

Environmentalists have argued that any expansion at Abbot Point risked the World Heritage-listed reef's health and would destroy local habitats.

"The Queensland state Labor government's Abbot Point Growth Gateway project has been approved in accordance with national environment law subject to 30 strict conditions," a spokeswoman for Environment Minister Greg Hunt said, adding that further approvals were needed from the state government.

Earlier plans were for at least three million cubic metres of material to be dredged and dumped into waters around the Great Barrier Reef Marine Park, but this was later abandoned after an outcry.

The approval now permits 1.1 million cubic metres to be dredged, allowing more freighters to dock at Abbot Point, near the town of Bowen, but spoil must be disposed of on land.

"All dredge material will be placed onshore on existing industrial land. No dredge material will be placed in the World Heritage Area or the Caley Valley Wetlands," said Hunt's spokeswoman.

"The port area is at least 20 kilometres (12.4 miles) from any coral reef and no coral reef will be impacted."

Supporters say the mine and a bigger port would provide thousands of jobs and pump millions into the local economy.

- 'Illogical, irresponsible' -

Adani, which has previously accused environmental activists of exploiting legal loopholes to stall its massive open-cut and underground mine which is forecast to produce 60 million tonnes of thermal coal a year for export, welcomed the decision.

"The expansion of Abbot Point, the lifeblood of Bowen, is key to Adani's plans to deliver 10,000 direct and indirect jobs and Aus$22 billion in taxes and royalties to Queensland," it said in a statement.

"The approval given by Minister Hunt to the Queensland government mirrors the approvals given to Adani's mine at Carmichael and North Galilee Basin Rail projects, in that they reflect the strictest, world's best practice environmental safeguards."

Critics argue that plunging coal prices make the development financially unviable and Standard Chartered and the Commonwealth Bank have withdrawn as financial advisers, while major European and US banks have refused funding due to environmental concerns.

Greenpeace said the Abbot Point greenlight was "irresponsible for the reef, illogical and unnecessary".

"It's illogical to expand the port to make capacity for the proposed Carmichael mine, because it is a dead-end prospect," said Greenpeace reef campaigner Shani Tager.

"Adani hasn't got the Aus$16 billion, no-one's lending it to them, and coal prices are tanking. Even the International Energy Agency is questioning the project."

WWF-Australia said the waters around Abbot Point were home to dugongs, sea turtles and snubfin dolphins while the dredge spoil would be dumped on land adjacent to wetlands used by migratory birds.

"It's disappointing that the minister has approved this project within the Great Barrier Reef World Heritage Area, despite the damage it will do," spokeswoman Louise Matthiesson said.

"To expand the port, 61 hectares of seabed will be ripped up creating 1.1 million cubic metres of dredge spoil. Damaging dredge plumes will be created harming sea grass and potentially reaching nearby coral reefs."

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COMMONWEALTH BANK OF AUSTRALIA

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