ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintIcon Twitter
Economy

Adani scraps coal-mine contract with Australia's Downer

Funding challenges mount along with opposition to coal

A protester holds a sign as he participates in a national Day of Action against the Indian mining company Adani's planned coal mine project in north-east Australia at Sydney's Bondi Beach on Oct. 7.   © Reuters

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

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends July 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to Nikkei Asia has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more