Analysis reveals possible financial motivation for Adani’s Carmichael coal mine


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A new report has shed light on Adani’s financial affairs and may reveal the real reason the company is so eager to build a coal mine.

New analysis has described Adani’s mega mine in Queensland as a “high-risk gamble” for Australian taxpayers.

The Institute for Energy Economics and Financial Analysis report sheds light on Adani’s Carmichael mine and the financial reasons why the company is so eager to push ahead with the project.

It seems Adani’s ownership of another asset: the Abbot Point Coal Terminal, could be influencing its decisions about the mega coal mine.

Adani plans to upgrade Abbot Port so it can handle increased coal shipments once the mine is up and running.

Australian taxpayers are being asked to provide a $1 billion concessional loan to build a railway line from the Carmichael mine to Abbot Port so coal can be shipped from the mine to India, where Adani says the coal will keep its power stations running.

But after investigating Adani’s financial arrangements, IEEFA found the port is due for a $1.5 billion debt refinancing next year and a cumulative debt refinancing of $2.11 billion by 2020.

What makes this difficult is the fact that Abbot Port is currently only operating at 50 per cent capacity.

“For the purposes of refinancing Abbot Point, Adani needs to demonstrate that Carmichael will progress in order to convince financiers that (Abbot Point) will be fully utilised into the future,” the report states.

IEEFA’s director of energy finance studies, Australasia, Tim Buckley said Adani would face losing up to $1.5 billion if it decided to walk away from the Carmichael proposal and this explained why the Adani Group remained focused on securing Australian taxpayer subsidies and royalty holidays.

“To the extent that can be gleaned from ASIC records, Adani’s entire mine, rail and port operation in Australia looks to be 100 per cent debt financed and shareholders funds now tally an unprecedented, negative $458 million combined,” Mr Buckley said.

“The value at stake for the Adani Group’s Carmichael mine proposal is far bigger than previously understood.”

Analysis reveals possible financial motivation for Adani’s Carmichael coal mine
The Abbot Point coal terminal is only operating at 50 per cent capacity. Picture: Australian Marine Conservation Society.Source:Supplied

The IEEFA also noted other factors that make Adani’s project a financial risk including that the import-coal power plant in India, which is expected to buy the coal, was in financial distress. Its equity is for sale for just 1 rupee.

In general, India’s thermal coal imports are also continuing to decline and electricity generated by solar projects is now 20 per cent cheaper in India than power being produced by many coal generators.

“Adani has painted itself into a corner financially and needs to refinance its only operational asset in Australia, Abbot Point,” Australia CEO Blair Palese said. “That’s why it’s so desperate to get NAIF (Northern Australia Infrastructure Facility) funding.”

Mr Palese said there was no way Adani should get $1 billion of taxpayer’s money after Four Corners highlighted Adani’s concerning environmental and financial track record in India, including claims of money laundering and unauthorised developments.

“Four Corners has laid bare Adani’s ravenous greed, duplicitous dealings and its utter contempt for the law, environment and people affected by its operations,” Mr Palese said.

“Adani should never be allowed to develop this mine, let alone get a generous handout from Australian taxpayers that will probably never be paid back.”

Queensland Premier Annastacia Palaszczuk on Monday reiterated that strict environmental controls were in place. Adani said it operated within the law and defended its environmental record, citing cases before India’s Supreme Court.

“We cannot be held to either ransom or blackmail by media organisations that indulge into sensationalism without any basis and contrary to facts,” a spokesman said.

Around Australia, more than 180 grassroots groups and 30 organisations, representing more than two million people have joined the #StopAdani movement since March.

A #StopAdani national day of action will be held on Saturday, October 7 with more than 30 events planned across Australia.

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