Greenpeace-commissioned report slams plans to develop world's largest coal deposit
Last year, Indian conglomerate Adani Group announced its plans to develop the world's largest coal deposit. Located in Australia, the $10 billion Carmichael mine in the Galilee Basin holds 10 billion tonnes of the black rock.
But these lofty plans were dealt a blow on Monday as an investigation commissioned by Greenpeace found the project to be "uncommercial for investors," calling it a "weak partner for this expensive coal, rail and mine project."
"The project's economics don't stack up," authors from the Institute for Energy Economics and Financial Analysis wrote.
According to the study, both short and long-term coal prices don't support the mine's cost structure. Authors Tim Buckley and Tom Sanzillo also found that the Adani Group is "financially and operationally constrained and faces a series of logistical barriers in Australia."
Labelling the project "low quality, high cost," Buckely and Sanzillo estimate an erengy-adjusted cash cost of production of $84 per tonne, inclusive of royalties.
They also slam the company's ambitions to supply thermal coal to India, one of the world's largest coal consumers.
"India's power market is fatally flawed," the report reads. "It cannot absorb the high price of coal from the Carmichael project."
But the bashing doesn't end with the Australian mine. The report goes on to criticize Adani Power itself, calling the company "financially weak and operationally underperforming."
Adani Power's share price is down 46% year to date and 74% over the past three years. The company also doesn't have much experience in the coal mining sector, having had its first experience with a mine in Indonesia in 2010.
"Adani Enterprises is now proposing to build the biggest coal mine complex in Australian history," Buckley and Sanzillo write.
The Indian conglomerate responded with a statement, saying it had "complete confidence" in its project, and that the "motivation at the heart of these reports is short-sighted" and "vested in interests that ignore the long-term fundamentals that underpin Adani's projects."