Key Findings
Adani Mining Pty Ltd and Carmichael Rail Network Pty Ltd are the Australian entities listed as jointly responsible for the A$16.5 billion Carmichael thermal coal mine and rail proposal, according to the Queensland Government.
With negative tangible assets and zero income, Adani Australia does not have an ability to fund even the heavily downsized stage I mine and 200km rail proposal absent a significant equity injection from one of the parent entities.
With negative tangible assets and zero income, Adani Australia does not have an ability to fund even the heavily downsized stage I mine and 200km rail proposal absent a significant equity injection from one of the parent entities.
Executive Summary
- Adani Mining Pty Ltd has negative tangible assets, zero income, and two billion in existing liabilities.
- As of 31 March 2019, Adani Mining has negative shareholder funds of A$507m and appears to be insolvent were it not sustained by a 12-month parent entity guarantee from the ultimate parent entity, Adani Enterprises Ltd in India, but IEEFA notes even this is via taxhaven controlled entities based in Singapore and Mauritius.
- Adani Mining already has $1.8 billion dollars in debt in Australia, which means Australian contractors will need to ascertain carefully where their subordination sits should any future default occur.
- Engineering firm AECOM had to have a legal fight to get millions of dollars owed to it from Adani for works completed.
- In IEEFA’s view the ultimate parent company Adani Enterprises Ltd (AEL), as the financial backer, does not currently have the financial capacity to deliver on the Carmichael mine and rail infrastructure project absent a multi-billion-dollar equity and/or debt raising, particularly in light of a large number of competing major Indian project proposals being pursued by Adani Enterprises Ltd.
- In IEEFA’s view, Adani’s Carmichael thermal coal proposal is unviable and unbankable on any normal commercial evaluation, absent massive government subsidy support in both India and Australia. Adani’s suggestion it will self-fund this proposal is a clear acknowledgement of this.
- Adani Abbot Point Terminal (AAPT) has a gross liabilities of A$1.8bn, six times that of the book value of equity. Yet again in 2018/19, despite gross income of $326m, huge financial leverage meant that AAPT reported a pretax loss and booked a tax credit.
Please view full report PDF for references and sources.
Press release: IEEFA Australia: Contracting with Adani Australia entails counterparty risks
