(EnergyAsia, November 18 2014, Tuesday) — India’s Adani Group said it has secured agreements from the Indian government and Australia’s Queensland state to support its proposed US$7 billion investment to develop the Carmichael coal mine and rail and port infrastructure.
The six-month-old government of Prime Minister Narendra Modi views the project as helping to secure long-term coal supply for India’s fuel-starved power plants while Queensland state wants to stanch further job losses and mine closures amid the continuing slump in global coal demand and prices.
The Mumbai-listed energy and infrastructure company said it has signed a memorandum of understanding with the State Bank of India for a loan of up to US$1 billion to help its development and start-up of the Carmichael mine in Queensland by end-2017.
Adani also said the Queensland state government has agreed to make short-term, minority investments in rail and port infrastructure to support the development of massive coal reserves in the Galilee Basin. The largely untouched region holds one of the world’s largest untapped coal reserves.
The company’s founding chairman, Gautam Adani, a close ally of Indian Prime Minister Narendra Modi, was in Australia last week to meet with political and business leaders who attended the summit of G20 countries.
In bringing on board what Adani Mining CEO Jeyakumar Janakaraj has described as valued partners, the company is looking to shore up its financial and political support for what is shaping up as its most challenging project in memory.
Adani has delayed making a final investment decision on the long-delayed Carmichael project amid the prolonged downturn in coal prices and growing opposition from environmental and labour rights groups. There have been reports that the company, which has a net debt of US$13 billion, is unable to justify the high cost of this risky frontier project.
Adani is also facing criticism from scientists, green groups and even the UN that the project will cause serious long-term damage to the nearby Great Barrier Reef as coal ash and dredging to develop a coal port will kill off sensitive marine life in what is one of the world’s most important natural parks.
Adani expects to start construction early next year in time for the mine to begin production from the 60-million-tonne/year mine in 2017. To help speed up the project’s development, the company has appointed Morgan Stanley to help sell a minority stake in the port of Abbot Point located near the Great Barrier Reef.