Adani group's Australia woes continue

Sources said Adani had not been able to tie up any financing for the coal project

For the Ahmedabad-headquartered Adani group, the fate of its ambitious coal mine-to-rail project in Australia could hinge on a court case, filed by native owners of the land in question, near the Carmichael mine in the province of Queensland.

The verdict will be coming soon. However, that is not where the problems of the group’s first international project ends. It has not been able to do any mining since acquiring the mine in 2010.

The Carmichael project involves constructing a thermal coal mine in the North Galilee Basin and a 388-km rail line linking the mine site with Abbot Point Port.

The mine is to be developed at a cost of at least $16 billion. Adani Group has till now spent A$1.1 bn on the mine, A$0.2 bn on the rail line and A$1.8 bn on the commissioned port facility of 50 million tonnes.

Environment groups and others in opposition have alleged the current ruling party in that country has helped Adani in getting  regulations and clearances for the project.

Adani had signed a land agreement with the local authorities, being contested in court by the native Wangan and Jagalingou land claimants.

Adani Group says it remains committed to the project and is confident on the legal front.

“We have obtained 112 approvals for the project and been successful in multiple court challenges to reach this stage. We have also been successful in three court challenges related to the port (to be developed as part of the project),” a group spokesperson said in an e-mailed response.

The Wangan and Jagalingou (W&J) Traditional Owners in the area did not consent to the Carmichael mine. Since 2012, their claim is that group meetings rejected a Land Use Agreement with Adani four times, the latest in December 2017.

Five members of the W&J Native Title filed case in the high court on behalf of the claim group in August 2017.

If Adani wins, the next problem will be arranging the financing.

“It is a 10-year project and I do not think anyone, including the company, is at present excited about it,” said an analyst on  condition of anonymity.

Sources said Adani had not been able to tie up any financing for the coal project.

Jeyakumar Janakraj, chief executive and country head, Adani Group Australia, told this publication last year that the company was in talks with leading global financers and export credit funds from China and Korea in this regard.

“Two leading banks in Japan - Nippon Life and Dai Ichi Life - refused to fund the project. The company had earlier claimed it would get a line of credit from China but four leading Chinese financers have refused to be associated with the project,” said an Australian executive.

Also, he said, the South Korean government under the new president had adopted a low emission and low carbon strategy.

This prevents their leading bank from funding a coal project of this size and alleged environment implications.

“Adani continues to work to secure finance for the project. This process is progressing well. Finance for the mine is contingent on securing finance for the rail component of the project, as both are inter-dependent,” the spokesperson said in his response.

Last month, the ruling Liberal Party of Australia lost all five seats at stake in by-elections.

A general election is due around the same time as in India next year.

It could be a game changer. Environment groups globally have condemned the government for granting clearances to Adani’s project.

If the Liberal party loses the election next year, it will be a big bolt to the firm’s plans. Some crucial clearances are pending.

For that matter, the future of the project heavily depends on any change of government,” said an industry watcher in Australia.

The project is expected to be made a big political issue by the opposition Australian Labor Party.

Though the Adani spokesperson said the company had been granted licences by the government of Queensland to use groundwater for the coal mine, sources claimed at least $20 billion would be needed to meet the annual requirement of 12 bn litres.

The New South Wales area in the country is under drought, something the opposition party has highlighted several times.

The price of coal in the global market has touched a record high of $110 a tonne but market demand is expected to taper.

As more countries move towards more environment-friendly alternatives to coal, projects like Carmichael are seen as facing an uncertain future.

Photograph: Amit Dave/Reuters