November 30, 2017 Read More →

Adani’s Aussie Coal Mine Could Fuel China’s BRI

Asia Times:

The Indian-owned Adani Group’s bid to seek funds from a Chinese state-owned-enterprise for its controversial project in Australia – to build the world’s largest coal mine – could spark further problems, according to a US think tank. There are fears that coal from the mine could be headed to China’s ambitious Belt and Road Initiative (BRI), which has been vigorously opposed by India.

A subsidiary of the Adani Group is seeking finance for the contentious Carmichael coal mine and rail project from the Chinese Machinery Engineering Corporation (CMEC), according to a research brief released earlier this month by the  Institute for Energy Economics and Financial Analysis (IEEFA), a pro-renewable energy US think tank. According to an ABC report, the Adani Group is close to securing funding from China.

Financing by CMEC might bring the Carmichael coal project into China’s ambitious infrastructure project, according to the IEFFA brief. The chance that the Adani project might become part of the Belt and Road project would clash with the Indian government’s opposition to the scheme.

This is not the first time Adani has done business with Chinese firms. Earlier this year, the group signed a deal with East Hope Group, one of China’s largest companies, which plans to invest over $300 million in solar power generation at the Mundra Special Economic Zone in their home state of Gujarat. Adani had earlier placed engineering, procurement and construction orders with Chinese companies for its Mundra power facility.

The Carmichael coal mine has been beset with financial difficulties as Adani has struggled to find A$16 billion to fund the project. Major Australian banks have refused to back the mine, while a decision by the Northern Australian Infrastructure Facility (NAIF) to loan A$1 billion to build a rail line to a coal terminal on the coast is pending. Protests have been staged all around Australia amid anger that the national government would provide huge support to a project likely to cause huge damage to the environment.

IEEFA researchers have cited a January 2017 press release by CMEC stating that its “president Zhang Chun met with Adani Mining CFO Praveen Khandelwal and Downer EDI”. The latter is involved in the construction and operation of the Carmichael project and a ‘strategic partner’ of CMEC. The press release does not mention the Carmichael project but states that CMEC hopes to cooperate with Adani and Downer EDI in financing, construction and operation of relevant coal mines and railway projects.

One of the authors of the IEEFA report Tim Buckley told Asia Times in an interview: “Negotiations between CMEC and Adani on the Carmichael project are ongoing for engineering, procurement and construction contracts for CMEC. If the negotiations come through, CMEC might acquire a minority equity stake in the project – which it is known to have done in previous projects – and bring in Chinese financing through the Export Import Bank of China or China Construction Bank. Progress in talks may be subject to NAIF’s billion dollar loan coming through.”

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