The Adani Group’s Carmichael coal and rail project in Queensland has taken another hit.
The Indian conglomerate had partnered with experienced mine operator Downer Group in a $2.6 billion contract, but decided to cancel the partnership as part of a cost-cutting drive after a decision by the Queensland Government to veto a $1-billion loan, ABC News reported on Monday. However according to Adani the decision was mutual, due to Downer being targeted by activists for its involvement in the controversial USD$12-billion project.
It adds that Downer is one of only two companies – the other being Thiess – that could handle the operation expected to produce 60 million tonnes of coal a year.
The hits just keep on coming for Adani, which has 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 fuel power generation for 100 million Indians. Coal from Carmichael is also expected to be sold in Vietnam, Bangladesh, China, Philippines and Pakistan.
However whether the project ever gets online is largely down to financing.
Along with the rejection of the $1-billion Commonwealth loan from Queensland, Adani’s application for a Northern Australia Infrastructure Facility (NAIF) loan worth AUD$900 million was also vetoed last week. That followed a decision by two major Chinese banks to back away from funding the new coal and rail facility.
However Adani isn’t giving up, describing the split with Downer as “simply a change in management structure”. The company earlier said it plans to have financing in place by March 2018.