The chief executive of the Adani group’s mining arm in Australia has suggested his company could seek a sizeable compensation in case the government there cancels its lease on a $16.5-billion coal mining project in Queensland’s Carmichael.

Adani Australia Mining chief executive Lucas Dow made the suggestion before a parliamentary committee reviewing a bill demanding a ban on all coal mining in the Galilee Basin where Carmichael is situated.

“This bill would create enormous regulatory uncertainty and sovereign risk for Queensland, which would extend well beyond simply the Galilee Basin,” Dow told the hearing in Brisbane on Monday. The Adani Australia mining chief executive told the committee the company had spent “$1.4bn to date” on the Carmichael project. “Clearly there would be a legal recourse to this.”

The project which has become a cornerstone for Adani’s investment plans abroad has already been delayed by eight years as it faced a number of legal and regulatory hurdles. Though analysts said there was little chance of the bill being turned into law, they added the Australian provincial mining department believed the licences could be cancelled without the payment of compensation.

Adani's Australian coal project has been at the centre of environmental protests. Earlier, there was a raging debate whether a low cost loan should be given by Northern Australia Investment Fund for a railway line dedicated to evacuate Adani coal from Carmichael.

The Adani project has turned into a politically sensitive issue in Australia, where environmentally conscious MPs want a ban on the mining project along with others in the regions. However right wing politicians and supporters of the mining lobby want the project to go ahead, especially as they wish to improve economic relations with India, now in a state of stalemate because of the lack of progress on a free trade deal.

A pre-deposition release by Adani Group said “In fact coal from the Galilee Basin is better quality than much of that coal sourced from other jurisdictions and consequently Galilee Basin coal will create fewer emissions when used to produce energy, which is a better outcome for the environment.” It also added: “By opening the Galilee Basin we can continue to be a part of that story. Coal from the Carmichael Mine will be sold to India where around 280 million people do not have access to electricity.”

Queensland Resources Council chief executive Ian McFarlane said the state government could not afford to ban coal mining. “Without the mining royalty payouts, the Queensland government would be in the red to the tune of $4.6 billion.”

Though the government of Australia and of the province of Queensland has been supportive of its bid to set up the mining project, environmental clearances have not been granted and a royalty agreement is still in the works. Analysts said the clearances needed could take up to two years to come by.

The Adani group has however been claiming it has environmental mitigation plans and its investment would create would create some 1500 direct jobs besides indirect jobs in the province.