Indian coal giant Adani may junk $16b Australian project.
The Adani Group is likely to withdraw from the $16-billion (Rs 1,00,000-crore) Australian coal mining project, touted as the world’s largest, due to concerns over softening international coal prices, relentless attacks by environmentalists and delay in regulatory clearances, risking India’s largest FDI in Australia.
The $10-billion infrastructure conglomerate, according to sources, is concerned about the slow pace of clearances and, to begin with, has decided to halt engineering work in the Carmichael mines in Queensland as well as on its rail line and expansion of Abbot Point port. This has led to speculation that the group is about to walk out of the project.
An Adani group spokesperson on Wednesday said the group is rejigging the budget and cost of the $7.7-billion Carmichael coal mine project. “We are now into the fifth year of development and approvals, and therefore, the need to finalize those approvals and timelines is critical,” said a group statement, adding that Adani has maintained a level of investment, jobs and subcontractor engagement for its mine, rail and port projects in anticipation of finalizing approvals and decisions.
“The project budget was based, understandably, on these anticipated approval timelines and milestones. As a result of changes to a range of approvals over that time, it’s necessary to synchronize our budget, project timelines and spending to meet those changes,” the statement added.
Adani’s Australian ambitions ran into a new dispensation following an election in coal-rich Queensland, leading to a policy reversal and heightened pressure to protect the Great Barrier Reef. However, sources also say that softening international coal prices has made the going tough. “The management is wary of relentless attacks by Greenpeace, which has been opposing the project due to environmental issues,” said a source aware of the development.
The project’s success depends on environmental approval to deepen a port on the fringe of the Great Barrier Reef in order to ship the coal. The Australian authorities had rejected a plan to dump soil dredged at the port of Abbot Point into the sea, about 25 km from the reef.
With pressure from the green brigade increasing, 11 of the world’s biggest banks, including Citigroup, Morgan Stanley, Goldman Sachs, and JPMorgan Chase, had publicly ruled out providing financing to Adani, citing environmental concerns.
When asked about delays in government approvals, Patrick Suckling, Australian high commissioner to India, had told TOI in a recent interview, ” Lots of regulatory approvals are needed for such a massive project. The project is capable of providing power to over 100 million households in India for 90 years. They (Adani) have got all approvals except one from the federal government and the Queensland government due to change in plan of their dumping site. We wouldn’t would have had got $500 billion of investment in the last decade, if we had delayed approvals.”
The $10-billion infrastructure conglomerate, according to sources, is concerned about the slow pace of clearances and, to begin with, has decided to halt engineering work in the Carmichael mines in Queensland as well as on its rail line and expansion of Abbot Point port. This has led to speculation that the group is about to walk out of the project.
An Adani group spokesperson on Wednesday said the group is rejigging the budget and cost of the $7.7-billion Carmichael coal mine project. “We are now into the fifth year of development and approvals, and therefore, the need to finalize those approvals and timelines is critical,” said a group statement, adding that Adani has maintained a level of investment, jobs and subcontractor engagement for its mine, rail and port projects in anticipation of finalizing approvals and decisions.
“The project budget was based, understandably, on these anticipated approval timelines and milestones. As a result of changes to a range of approvals over that time, it’s necessary to synchronize our budget, project timelines and spending to meet those changes,” the statement added.
Adani’s Australian ambitions ran into a new dispensation following an election in coal-rich Queensland, leading to a policy reversal and heightened pressure to protect the Great Barrier Reef. However, sources also say that softening international coal prices has made the going tough. “The management is wary of relentless attacks by Greenpeace, which has been opposing the project due to environmental issues,” said a source aware of the development.
The project’s success depends on environmental approval to deepen a port on the fringe of the Great Barrier Reef in order to ship the coal. The Australian authorities had rejected a plan to dump soil dredged at the port of Abbot Point into the sea, about 25 km from the reef.
With pressure from the green brigade increasing, 11 of the world’s biggest banks, including Citigroup, Morgan Stanley, Goldman Sachs, and JPMorgan Chase, had publicly ruled out providing financing to Adani, citing environmental concerns.
When asked about delays in government approvals, Patrick Suckling, Australian high commissioner to India, had told TOI in a recent interview, ” Lots of regulatory approvals are needed for such a massive project. The project is capable of providing power to over 100 million households in India for 90 years. They (Adani) have got all approvals except one from the federal government and the Queensland government due to change in plan of their dumping site. We wouldn’t would have had got $500 billion of investment in the last decade, if we had delayed approvals.”
You can return to the main Market News page, or press the Back button on your browser.
