May 7, 2018 Read More →

Economic Reality May Finally Kill Proposed Carmichael Coal Project

The Guardian:

Adani’s coal-fired power business has reported more heavy losses, prompting the Indian conglomerate to announce it would shift away from using expensive imported coal.

Analysts say the fourth-quarter financial results for Adani Power, a subsidiary of the Adani group, showed the proposed Carmichael mega-mine in Queensland was no longer a viable proposition.

Remarkably in the context of the Carmichael project, the billionaire Adani Group boss, Gautam Adani, acknowledged in a statement that the cost of importing coal to India had contributed to Adani Power’s struggles.

“We expect to receive [domestic coal] for the Tiroda and Kawai plants in the near future, which will help reduce fuel costs and improve profitability of these projects,” he said. “Under-recovery of fuel costs for Mundra project have impacted its financial viability, and we are in dialogue with key stakeholders for an early solution.”

The Mundra power plant, which operates on imported coal, was the planned destination for the spoils from the Carmichael project. After Mundra fell into financial trouble, Adani attempted unsuccessfully to sell the plant. It has not operated since February. The Indian financial services company Edelweiss said Adani Power was “on thin ice” and doubted whether Mundra would reopen.

Tim Buckley, an analyst for the pro-renewables Institute for Energy Economics and Financial Analysis, said Gautam Adani “didn’t become one of the wealthiest man in India by throwing good money after bad on bad projects. The result reconfirms the point IEEFA has made repeatedly. [Adani Power] is unable to provide a viable nor bankable coal offtake agreement for…the Carmichael proposal.”

Adani told Guardian Australia the company was “100% committed to the Carmichael project”.

“There has been no change to our marketing strategy. India will remain the key market for Carmichael coal,” the company said in a statement.

More: Adani Losses Prompt Mining Company To Shift Away From Imported Coal

Comments are closed.