October 15, 2015 Read More →

Adani Project in Australia: Many Rivers to Cross

Dev Chatterjee for the Business Standard:

Despite getting the Australian government’s go-ahead for its Carmichael coal mine and rail project in that country, the Adani Group is likely to exercise caution before starting more work on the project.

According to Tim Buckley, Director of Energy Finance Studies at the Institute for Energy Economics and Financial Analysis, the Australian federal government had previously issued environmental approval, but made a material procedural error in the process which environment minister Greg Hunt rectified today.

However, he said, the government’s approval is still being challenged in a case currently before the Queensland Land Court, and a decision is expected in the next 3-6 months.

Further, he said, Adani is yet to reach an agreement with the traditional owners of land, the W&J people.

Once these issues are resolved, there remains the inability of Adani Enterprises, which has a market capitalisation of $1.6 billion, to raise funding for the greenfield mine, rail and port project.

“With 15 of the largest global financial institutions ruling out this project or walking away from advisory roles, I would suggest the project is unbankable. The 6% year-on-year decline in Indian utility companies’ thermal coal imports in the six months to September 2015 likewise shows coal and power minister Piyush Goyal’s aim to cease Indian thermal imports is happening far faster than anyone expected. This also removes any long term strategic logic that was originally behind the proposal,” Buckley said.

Not an easy road ahead for Adani in Australia

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