Who will fund Adani's Carmichael coal mine? Not China

ICBC and China Construction Bank - the world's two largest banks by assets - walk away from USD$12 billion coal and rail project

The shovels are in the ground at the Carmichael coal mine in Queensland but the bankers have yet to open their wallets.

Owned and pushed forward by Indian conglomerate Adani Corp, despite vocal opposition, the project hit another snag today when two of China's major banks refused to bankroll the mine. ABC News said on Monday in Australia that Industrial & Commercial Bank of China (ICBC) does not intend to fund the project, joining China Construction Bank which earlier rejected any financing links with Adani.

"This leaves their attempts to open up Australia's largest coal mine in tatters, and increasingly reliant on public funding": Market Forces executive director Julien Vincent 

ABC refers to a more green pipeline of projects as the reason for ICBC saying no to Adani.

"ICBC has not been, and does not intend to be, engaged in arranging financing for this project," the major bank said on its website. "ICBC attaches great importance to its social responsibilities and keenly promotes green financing."

The flow of potential dollars to the massive coal mine is drying up, having failed to garner financing from banks in Australia, Europe, and the U.S. China was seen as the last great hope, but ICBC and China Construction Bank – the world's two largest banks by assets – have now walked away from it. Global banks have balked at the project due to its colossal USD$12-billion pricetag (AUD$16 billion) and global shift away from coal towards renewable energy sources.

"This leaves their attempts to open up Australia's largest coal mine in tatters, and increasingly reliant on public funding," ABC quotes Julien Vincent, executive director of Market Forces, an environmental group that "exposes the institutions that are financing environmentally destructive projects and help Australians hold these institutions accountable" according to its website.

The Carmichael coal mine and rail project in Queensland is one of the world’s largest thermal coal mines approved in recent years.

The Indian conglomerate has agreed to pay the state hefty royalties on the coal produced there and follows years of opposition to the project by organizations ranging from the United Nations to green groups and locals.

As of last year, Adani had spent more than $120 million in legal fees and cutting its way through the environmental snags that delayed the first phase of the mine.

According to official estimations, the Carmichael mine will contribute $2.97bn each year to Queensland’s economy and has the potential to create 6,400 new jobs: around 2,500 construction positions and 3,900 operational posts.

The project, the largest single investment by an Indian corporation in Australia, is meant to produce 60 million tonnes of thermal coal a year for export, fuelling power generation for 100 million Indians. Coal from Carmichael is also expected to be sold in Vietnam, Bangladesh, China, Philippines and Pakistan.

But without key financial stakeholders yet in place, the mine would appear to be in trouble.

Adani has said it plans to have financing in place by March 2018, delaying an earlier end-of-year deadline by three months. Also in serious jeopardy is an AUD$900 million loan from Northern Australian Infrastructure Facility (NAIF) for its rail project – to move coal from the proposed mine site in the Galilee Basin 388km to the Abbot Point coal port.

While Queensland Premier Annastacia Palaszczuk originally supported Adani’s application for the federally funded loan, a month ago she said her government would veto the loan, Reuters reported six days ago as Queensland election results were pointing to the Labor Party holding power.

The decision could be nail-bitingly close, with the latest counts showing Palaszczuk one seat short of being able to govern. The Australian said on Saturday that with nearly 100,000 postal votes yet to be counted, the Labor leader needs 47 seats in order to form a razor-thin majority in the 93-seat parliament.