October 2, 2017 Read More →

Adani’s Tax-Supported Mine and Port Expansion on Thin Ice

Australian National Herald:

An investigation by the ABC’s Four Corners programme has uncovered previously unknown tax haven ties for Adani Group’s Australian operations, with key assets ultimately owned in the British Virgin Islands.

“Adani Group has promised a $22 billion windfall in taxes and mining royalty payments for Australia over the life of the giant Carmichael coal mine it has been given approval to build in outback Queensland,” the report said and added, “but experts say an opaque web of companies and trusts behind its Australian assets gives it ample opportunity to minimise the tax it pays.”

“Adani has put in place multiple ways in which they can minimise the amount of tax they pay in Australia, and maximise the amount of profits if they choose in Caribbean tax havens,” the report quoted Adam Walters, research director at the consultancy Energy and Resource Insights.

In what counts for a double whammy, the Adani Group’s entire A$3.5 billion ( 178 billion) debt-funded ‘investment’ in Australia is gravely at risk, the US-based Institute for Energy Economics and Financial Analysis (IEEFA) said on Monday.

In a new report, it details how Adani’s Abbot Point Coal Terminal has excessive financial leverage, negative shareholders equity and runs the risk of becoming a stranded asset if Adani’s Carmichael mine does not get a $1 billion Australian subsidy.The Abbot Point Coal Terminal is due for a $1.5 billion debt refinancing next year and a cumulative debt refinancing of $2.11 billion by 2020.Currently, operating at just over 50 per cent capacity, the Abbot Point Coal

Terminal needs the Carmichael mine to fill the gap created as its current take-or-pay contracts progressively expire.”Securing this refinancing is going to be a real challenge, not the least because the port value has been tied to the success of the Carmichael coal mine proposal which is itself yet to secure funding and which the ‘big four’ Australian banks have refused to touch,” an official statement quoting report co-author Tim Buckley said.Buckley’s the IEEFA’s Director of Energy Finance Studies, Australasia.

“The potential for a loss of up to $1.5bn on any decision to walk away from Carmichael mine and rail proposal, explains why the Adani Group has been so focused on securing Australian tax payers money and royalty holidays to subsidise his loss making ventures,’ he said.“To the extent able to be analysed from Australian Securities and Investments Commission records, Adani’s entire mine, rail and port operation in Australia looks to be 100 per cent debt financed and shareholders funds now tally an unprecedented, negative $458 million combined. The value at stake for the Adani Group’s Carmichael mine proposal is far bigger than previously understood,” Buckley added.

Whilst Adani continues to search for overseas project funding, the report, “House of Cards: The Escalating Financial Risk of Adani’s Abbot Point Coal Terminal”, the report traces events that make the Carmichael project an even greater financial risk.The events include Adani’s major proposed off-take coal customer, Adani Power Ltd’s 4.6 GW power plant at Mundra in Gujarat, is financially distressed and its equity is for sale for just 1 but has no buyers so far.India’s thermal coal imports have continued the downward trend of the last two years and are down 13 per cent year-to-date in 2017 compared to the prior year.

And, in the light of new solar infrastructure projects delivering electricity at prices now 20 per cent below many Indian thermal power plant tariffs, financial analysts don’t see any imported coal demand to justify more expensive seaborne supplies.

More: Adani, uncovers unknown tax havens Australian media investigates Adani, uncovers unknown tax havens


Australian Associated Press:

India’s former environment minister says he’s appalled by Australia’s decision to approve Adani’s new coal mine in Queensland, and has questioned the Indian miner’s environmental track record.

Jairam Ramesh has told the ABC the mine will threaten the survival of the Great Barrier Reef, and Adani’s history in environmental management in India “leaves a lot to be desired”.

“There’s no reason for me to believe that Adani would be a responsible environmental player globally,” he’s told the broadcaster’s Four Corners program.

Mr Ramesh said the federal and Queensland governments had not properly looked at the Adani Group’s environmental and financial conduct in India before approving the thermal coal mine in the Galilee Basin.

However, Queensland Premier Annastacia Palaszczuk on Monday reiterated strict environmental controls were in place.

“We stopped the dumping of dredge spoil in the Great Barrier Reef,” she told reporters.

“We have made sure that strict environmental conditions are attached.”

The concerns over Adani’s track record come at the release of new analysis by The Institute for Energy Economics and Financial Analysis, which details extensive financial risks to the project.

The Abbot Point Coal Terminal, which is leased to Adani by the federal government, is due for a $1.5 billion debt refinancing next year and a cumulative debt refinancing of $2.11 billion by 2020.

“Securing this refinancing is going to be a real challenge … because the port value has been tied to the success of the Carmichael coal mine proposal which is itself yet to secure funding,” said Tim Buckley, IEEFA’s director of energy finance studies, Australasia.

Former Indian minister appalled by Adani


Economic Times of India:

Adani group’s Abbot Point Coal Terminal in Australia faces the risk of becoming a stranded asset if its proposed Carmichael mine fails to get 1 billion Australian dollar (AUD) subsidy, according to a report by US- based institute IEEFA.

The Institute for Energy Economics and Financial Analysis (IEEFA), which conducts research and analyses on financial and economic issues related to energy and environment, has found that Adanis’ Abbot Point Coal Terminal (AAPCT) is excessively leveraged and promises negative shareholders equity.

The Abbot Point terminal, IEEFA said, also “runs the risk of becoming a stranded asset if Adani’s proposed Carmichael mine does not get the AUD 1 billion Australian taxpayer subsidy it seeks.”

The IEEFA further said the analysis finds more broadly that “Adani’s entire AUD 3.5 billion debt-funded investment in Australia is at grave risk.”

More: Adanis’ Abbot Point Coal Terminal at risk of becoming stranded asset: Report

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