MUMBAI (NewsRise) -- India's Adani Group has cancelled a A$2-billion ($1.54 billion) contract with a mining services company to run its controversial Carmichael thermal coal mine in Australia after it failed to get funds, raising questions about the future of the project.
Adani said Monday it was "committed" to the mine, despite ending the contract with Downer EDI, an Australian firm that was to build and operate the mine.
The development comes just a week after Annastacia Palaszczuk, the new premier of Australia's Queensland state, stuck to an election promise and vetoed a A$900-million loan for the project.
Although the Carmichael mine has been hailed by many for its economic benefits, including creating jobs in the region, it has also galvanized environmental activists and highlighted the resistance to coal.
Concerns about carbon pollution and climate change and calls to review government approvals have delayed the project and scuttled Adani's efforts to secure funds, with several international banks refusing to lend money.
Earlier this month, Industrial and Commercial Bank of China and China Construction Bank said they don't plan to finance the mine after media reports suggested the two lenders may tie up with the Indian company.
The Adani group has so far invested more than A$3.3 billion in Queensland state, which last year gave it permission to mine coal reserves, estimated at 11 billion tons, in Carmichael. The A$16-billion project includes the construction of a railway line of some 389 kilometers to transport coal and the building of a port near Australia's Great Barrier Reef for overseas shipments.
The loan from the Queensland government was meant to help the company build a rail line connecting the proposed mine with a Pacific Ocean port in the state.
In August, Adani said it needed less than A$2 billion to get the mine off the ground. The Indian company was set to begin work on the mine in October, with the goal of starting production in March 2020.
Last Tuesday, soon after the Queensland government denied it the loan, Adani said it would not have invested time, money and energy if its projects were not viable and if it was not serious about delivering them.
On Monday, the company said it has "decided to develop and operate the mine on an owner-operator basis."
The contract cancellation would lead only to a change in management structure and the mine would ultimately be run out of Adani Australia offices in Townsville, with Downer providing transitional assistance until March, Adani added.
--Dhanya Ann Thoppil