Anthropic taps a deep well of distrust as it eyes its Australian AI debut

KESQ

Source published: 26 Oct 2026, 08:51 · TehranSite published: 26 Oct 2026, 10:33 · Tehran

Story by Hilary Whiteman, Photos by Dan Peled

Dalby, Australia (CNN) — After months without rain, the first drops of rain hit the windshield as Western Downs Mayor Andrew Smith drives to the site of a planned AI data center. The site is behind a cattle feedlot in rural Queensland, Australia.

It is feeding time, and 16,000 cattle stand under shade covers, waiting for a truck to spray grain into their feeding troughs.

Farming provides more jobs than any other industry in this area, which is 260 kilometers (131 miles) west of Brisbane. But deep under the rich soil, which supports crops throughout the year, is a huge natural gas field. It has also turned the region into an important energy center.

Now, the AI data center industry wants to move into the area. Singaporean developer Zerra DC has proposed spending $22 billion to build the Western Downs Digital Park, one of Australia's largest AI data centers. It would have four buildings, each as large as five football fields. During construction, temporary housing would be provided for 1,500 workers.

The project has not received formal approval. But its first major customer, the US tech giant Anthropic, has already signed a lease, preparing the way for the company to enter the Australian market. Smith says the state government, which strongly supports the project, has assured him that the local council will make the decision.

This is a major responsibility at a time when more Australians are speaking out against AI. The country is still debating what role it should play in the fast-growing AI industry. Major US AI companies have been praising Australia's wide-open spaces, support for renewable energy and trusted role in the Five Eyes intelligence-sharing partnership.

"We are working towards having significant capacity hosted in Australia," David Masters, Anthropic's head of policy for Australia and New Zealand, told CNN.

But Australia's government is moving carefully. It is calling for the AI industry to grow responsibly, with rules and protections in place. There are several reasons for this, including a recent breach involving the country's healthcare data. People inside technology companies, including Anthropic, have also warned that AI is advancing faster than the systems meant to control it.

Standing beside the proposed data center site in the Western Downs, Smith says the project could help the local economy grow in new ways, create jobs for future generations and give young people a reason to return home.

Although he insists that no decision has been made about the data center, the mayor says: "Our role is to look ahead, and if we want to maintain our communities 20 or 30 years ahead, we need to be progressive. And sometimes you do need to be brave."

AI centers run on fossil fuels

In July, Australia's prime minister promised to require technology companies to power AI data centers with renewable energy, along with other conditions. Within a month, he had backed away from that promise.

Queensland negotiated an exception. This means that, if approved, the Western Downs Digital Park will connect directly to the electricity grid and use a mix of energy sources, including coal and natural gas. Some of that gas comes from one of Australia's largest gas fields, which lies directly beneath the proposed site.

More than 6,000 unconventional gas wells have been drilled across the surrounding region. They extract gas that is mostly sold to other countries. To get gas from coal seams, companies use a process called "de-watering." They pump out groundwater to lower the pressure and release the gas.

This is at the heart of local opposition to AI: the region does not have much water.

Months without meaningful rainfall have turned the grass and trees brown. Rainwater tanks were running low until heavy rain fell the previous week. Many farmers depend on water pumped from underground wells. Some say the gas industry has pumped their wells dry, and that developers are now being offered this water to help build the AI data center.

"That's stolen water," said grain farmer Bev Newton angrily. She has been in a long-running dispute with a gas company. She believes the case will end up in court as she seeks payment to replace the water from her bore well.

Bev and Wayne Newton depend on heavy rainfall, when it comes, to fill the water collection system on their family property. They say parts of their farmland are sinking because of land subsidence linked to coal seam gas production. This makes it harder to predict where water will flow in the future.

Zerra DC says it will collect and recycle rainwater to supply workers during the data center's operation. But Bev Newton points to a basic problem: "No amount of surface water catchment, be it shed roofs into tanks, works if you don't have rain that falls from the sky."

Zerra DC says it will cool the data center using air-cooling technology. This uses much less water than cooling systems that evaporate water, which have caused protests in countries from the US to India and Indonesia.

However, air cooling uses more electricity. Residents already worry that the data center will put pressure on the electricity network, push up power bills and encourage more gas extraction. That could mean more groundwater being pumped out and more land sinking, adding to their existing worries about water.

Zerra DC says building the project in stages will give the company time to work with customers such as Anthropic to develop new sources of electricity. The project will increase demand for power, but the company says its battery system will help protect the grid from sudden jumps in demand and "stabilise power prices."

Anthropic says it plans to sign virtual power purchase agreements. These are deals with energy providers to arrange for more electricity to be supplied to the grid, with a preference for renewable sources. "The source for this generation will be new build projects – but precisely which projects is an ongoing discussion," Masters, from Anthropic, said.

Rogue AI agents

In late September, as Prime Minister Anthony Albanese prepared to speak at the United Nations General Assembly, an unexpected event gave him a reason to call for stronger rules to control AI.

An AI agent from OpenAI, Anthropic's main rival, had hacked into Australia's healthcare data. It accessed statistics but not personal information, so the attack caused little direct harm. Still, it raised a serious warning about the risks. After Albanese called him, OpenAI chief Sam Altman apologized and promised to work to regain Australians' trust.

Less than two weeks later, at a hearing of an Australian parliamentary committee on AI, Anthropic's international special envoy, Jeff Bleich, urged the country's leaders to take a leading role in deciding how AI should be used. "If Australia takes this opportunity and gets the balance right, it will not simply participate in the AI era; it will shape it," he said.

Anthropic says the planned Western Downs center will not be used to train large language models because Australia's strict copyright laws currently prohibit that. However, the center will answer questions sent to Anthropic's Claude AI model.

So CNN asked Claude whether the data center application should be approved. The question was based on publicly available information, local news reports and a petition to Queensland's parliament opposing the project, which has been signed by more than 23,000 people. CNN also tried to remove any possible bias linked to Anthropic's involvement in the project.

Claude's response was: "Don't decide before public notification and independent technical assessment of water, power, noise, and workforce. Hold the public meeting residents asked for. Be clear about who actually holds the decision if the state steps in."

AI proposal troubles town

Inside a brightly lit pub in Dalby, the nearest major town to the proposed data center, diners enjoy a Friday-night meal as cutlery clinks around them. A few residents have agreed to meet in a private room to talk about their concerns. These include water supplies, electricity and what they call the "dumbification of humanity."

"Just because big companies over in the US are advocating for AI usage doesn't mean that we should follow," said Corey Cora, who works in retail. "Most people in the community won't even know about this until it's too late," said Joel Holtham, who works in telecommunications.

In recent weeks, Zerra DC has held temporary information sessions in Dalby, a town of 12,000 people, to answer questions from residents. Before retiree Beris Furner visited one of these sessions, he supported the expansion of AI.

"I thought this is fantastic for Dalby. A great opportunity for future generations coming along for the kids, if they're that way inclined, to train and work in a place like that," Furner said.

But after asking Zerra staff questions, he changed his mind. He now believes the council is moving forward with a project that may or may not happen without enough support from the community.

"We need a public meeting. It's such a massive deal for the town," he said.

Mayor Smith said the council would not hold public meetings about the project. "We always stay away from town hall meetings. It generally doesn't end up well," he said.

When asked whether the council should give residents another source of information, Smith said: "We need to stay in our lane. We aren't the experts on data centers. So, for us to be in the public talking about data centers would, I think, be wrong."

"We will stay out of the larger data center AI discussion."

Calls for a pause

The lack of public discussion frustrates some residents. They feel their home is being pulled into the AI race between the US and China, forcing them to face a future they may not want.

"It feels like we're in a weird sci-fi movie and everything's just spiraling out of control really quickly," said Ahri Tallon, from the Darling Downs Environment Council.

"We're really calling on the government, as many people are around the world, to put a moratorium on AI and data centers and really take the time to work with the community to go through the deep ethical conversations that we need to think about in terms of how much can this technology be potentially for good, but how much could it be for bad?" she said.

Other residents focus on the practical problems of sharing their home with an industry that needs large amounts of water and electricity. They wonder whether the project will create jobs that bring their children home, or whether it will create new problems that eventually drive them away again.

Twenty years ago, Shay Dougall took a job in workplace health and safety while a coal seam gas processing plant was being built. She later married a farmer and now works as a postdoctoral research associate at the University of Sydney, studying how industrial development affects rural communities.

She has seen the stress experienced by farmers as the gas industry expanded, followed by the growth of renewable energy projects. Now she fears that data centers will bring the same problems.

"Those people not only are hosting this industrialization, but they've been impacted by the changes to the climate as a result of it. So, it's just a double whammy," she said.

The Queensland government has not ruled out approving new coal-fired power stations to support the state's growing AI industry, as long as technology companies pay for them. The area's federal member of parliament has praised the possibility of increasing coal production.

"The proposed Western Downs data centre alone has a peak capacity of 2.16 gigawatts, more than a quarter of Queensland's daily electricity consumption. You cannot run that on renewables alone. The coal is here…" he said in a Facebook post.

The state government told CNN it is developing rules for approving data centers that "puts community support at the forefront of decision making."

Anthropic is preparing for a possible initial public offering (IPO), which could value the company at $1.5 trillion. It has promised to spend tens of millions of dollars in the communities where it operates. As part of that effort, it is hiring a "community engagement manager" in Australia. The job is intended to "make Anthropic a trusted, visible, and valued neighbour."

But in Dalby, trust has dried up along with the groundwater. Some residents do not see the opportunities promised by AI companies, the council and the government. Instead, they see the possibility of more problems.

Mayor Smith, however, sees the interest from AI companies as a way to bring more water to the region rather than simply use up its resources. He wants billions of dollars invested in new water infrastructure and is looking to state and federal governments, as well as developers, to provide the money.

Smith says he is having conversations with other data center developers "almost daily" about moving to the area. This reflects a wider national trend: more companies are applying to build larger data centers farther away from major cities, according to energy intelligence platform RenewMap.

"We know that the one guarantee we have is that data centers are a part of our nation's future," Smith said. "The question here on the Western Downs is do we want them here?"

"Do we want to take the opportunity that is there, or do we want to give that opportunity to somebody else?"