NEW REPORT: ADANI’S US$7bn AUSTRALIAN COAL PROJECT UNVIABLE
SYDNEY, 26 November 2013: A new report released today by US-based Institute for Energy Economics and Financial Analysis (IEEFA) — Remote Prospects: A financial analysis of Adani’s coal gamble in Australia’s Galilee Basin — warns investors the controversial 60 million tonne per annum Carmichael coal mine and infrastructure project is uncommercial.
Report co-author, IEEFA’s Tom Sanzillo, former first deputy comptroller of New York said, “Our conclusion is that Carmichael presents a picture of unacceptable risk. It’s a high cost coal product in a low cost market in structural decline. The project is uneconomic by any measure,” said Mr Sanzillo.
“This project is on the wrong side of the coal boom. It might have been viable 5 years ago but the market has moved on. Adani bought in at the peak of the coal cycle but failed to predict the structural decline of coal,” Mr Sanzillo said.
“Adani is now overextended with unrealistically ambitious expansion plans, has no successful history of coal mining, has lost share value in critical segments, and is over-leveraged, with $US12bn of debt against external market capitalization of $US5.17bn. It is in not in a strong position to complete this project.”
Adani Enterprises is proposing to develop the 60 million tonne per annum thermal coal mine complex in the remote Galilee Coal Basin, central Queensland, Australia; construct 500km of rail infrastructure across agricultural land and floodplains to the coast; and develop a highly contentious coal export terminal through the iconic, UNESCO World Heritage listed Great Barrier Reef.
Key findings of the report include:
Report co-author Tim Buckley, independent financial analyst said, “Our analysis shows a systemic problem with the financial viability of coal mining in the Galilee Basin. Adani may have thought they were buying a coal mine, but it is increasingly likely that they have inadvertently bought themselves the world’s most expensive cattle station.”
“The Queensland government’s recent announcement of a royalty holiday for the first movers in the exploitation of Galilee coal signals to the market that these high-cost greenfield projects in Queensland are unviable from an investment perspective.”
Erland Howden, Energy Campaigner Greenpeace Australia Pacific, which commissioned the report, said, “It is clear that the Carmichael project, if developed, will be an environmental and climate disaster. This report shows that the project is also uneconomic.”
REPORT EMBARGOED TO 12:01 AM TUESDAY 26 NOV 2013 (8:00 AM MONDAY 25 Nov 2013 Eastern Standard Time)
Report authors Tom Sanzillo and Tim Buckley (IEEFA), and Greenpeace’s Erland Howden, are available for interview.
Julie Macken: 0400 925 217