December 18, 2017 Read More →

Adani Cancels $1.5 Billion Contract on Australian Mine Project

Financial Times:

Adani Group has cancelled a A$2bn (US$1.5bn) contract with a mining services company for work on its proposed Carmichael coal mine in Australia due to its failure to raise funds for the controversial project.

The cancellation of the contract with Downer, an Australian company, on Monday is the latest challenge to hit the Indian conglomerate’s project, which has become a focal point for protesters over the role played by coal in causing climate change.

It also follows a decision last week by the Queensland state government to veto a A$900m low-cost loan to Adani and the failure of Chinese investors to back the Carmichael mine.

Adani said it remained committed to the A$16.5bn Carmichael project but planned to develop and run the mine on an owner-operator basis to achieve the “lowest quartile cost of production”.

The Carmichael project has become a symbol of the global battle between environmentalists and the fossil fuel industry, attracting a series of legal challenges that have caused lengthy delays. The proposed mine sits in Queensland’s Galilee Basin, one of the world’s largest untapped coal resources.

Adani’s board gave final approval for the mine in June. But raising money for the venture has so far proved an insurmountable challenge due to the decline in global coal markets and a vocal protest movement led by international environmental groups such as 350.org and Greenpeace.

The project has become a litmus test on the future of coal, amid growing investor fears about whether increasingly onerous regulations on the emissions will create stranded assets.

On Monday the world’s biggest coal terminal, Port of Newcastle, warned it needed to diversify and prepare for a future without coal.

“It looks like another wheel has fallen off the Adani project,” said Tim Buckley, a director at the Institute for Energy Economics and Financial Analysis, an opponent of the Adani project. “With all of the Chinese banks ruling out involvement in the Carmichael proposal, deal funding has fallen over.”

More: Adani cancels A$2bn Australia coal mine contract amid cash crunch

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