Tag: Carmichael coal mine

Vinod Adani Steps Down From 3 Companies Connected to Adani’s Australian Coal Mine: Report

Bloomberg News reports that Vinod Adani, the powerful elder brother of Gautam Adani whose role was also questioned by short-seller Hindenburg, may be far more important in shoring up Adani’s mining project in Australia than has been known so far. He resigned from three key companies days before the Supreme Court set up a committee.

New Delhi: Vinod Adani, the controversial brother of billionaire Gautam Adani, has stepped down as director of three companies connected to Adani’s coal mine in Australia, which involves billions of dollars of Adani money, reports Bloomberg.

These resignations “happened just days before India’s Supreme Court ordered a committee to probe if regulators had failed to oversee Adani Group”. It has been reported earlier that The Securities and Exchange Board of India is examining whether some transactions between the group and Vinod were properly disclosed.

Vinod stepped down as director of Carmichael Rail and Port Singapore, the company that acquired assets from the Adani Enterprises unit, on February 27. He also resigned as director of two subsidiaries, Carmichael Rail Singapore Pte. and Abbot Point Terminal Expansion Pte., filings show.

Also read: Questions SEBI Needs to Ask Adani Group, Now That It Is Owning Up to Brother Vinod

These companies that Vinod resigned from were responsible for bailing out the Adani Carmichael mining project in Australia through a complex set of financial flows, around 2013 and then after 2018, through jurisdictions where public disclosure is hard to come by, Mauritius, Cayman Islands and UAE, reports Bloomberg News. It says it has found that the money from Vinod’s companies has likely covered a significant share of Gautam’s mining project in Australia.

As Adani’s dealings come under renewed scrutiny, more so after the Hindenburg Report by a short-seller in January led to a situation where almost $120 billion in market value was wiped out, there have also been questions raised about the extent of Gautam’s elder brother Vinod’s involvement in the group. There are “questions over governance, disclosures and whether the conglomerate has been benefitting from its closeness to Prime Minister Narendra Modi’s government and importance in carrying out its agenda”, writes the news agency.

The Hindenburg report says that Vinod has played a crucial role in executing what it alleged is “the largest con in corporate history”. Adani Group, which hasn’t been charged with any crimes, has denied the accusations.

Adani & Adani in Australia: troubling questions

Documents related to the Carmichael mining project in Australia are cited by Bloomberg to “illustrate why some call Vinod the quiet power behind his brother’s ascent”. But an Adani Group representative said Vinod was a shareholder but with “no management role in the development of the Carmichael mine or its related infrastructure. Vinod didn’t respond to emailed questions”.

Bloomberg News says it reviewed hundreds of pages of filings related to the Carmichael project, which is one of the group’s biggest undertakings. It finds that “the paper trail leads back to Vinod Adani”.

Also read: Hindenburg Spotlights an Offshore Adani-Related Entity That ED Had Linked to AgustaWestland Scam

The modus appears to be “using a maze of entities under his purview in at least four jurisdictions, Adani Group offloaded debt and received more than $1 billion of his money to help fund the project” as per the filings Bloomberg reviewed.

Bloomberg reports that the Carmichael project turned to Vinod in 2018 for financing when the environmental uproar and uncertainty about the made lender money hard to come by. It says that “hundreds of millions of dollars started to flow from two investment companies: Kommerce Trade & Service DMCC and Adani Global Investment DMCC. Both are based in the United Arab Emirates, and both are controlled by Vinod”.

The Hindenburg report had made this the central charge while highlighting Vinod Adani’s alleged role, that Vinod Adani “had moved billions of dollars in and out of Adani Group companies, seemingly to embellish share prices and financial results.” But at the time, the Adani Group only said that Vinod is part of the family shareholder group or the promoter group. It did not go any further, saying he’s not a manager at the group’s public companies or their closely held subsidiaries.

Bloomberg News said that while it had reported that Vinod Adani had a cabin in the office and spent time regularly, the Group’s statements about his role “obfuscate the true breadth of his involvement”. A report out on March 21 by S&P Global Ratings analysts said “any transactions with the brother and entities where he is a beneficiary should be disclosed as related-party transactions”. It added that Adani Group’s ratings could be cut if investigations uncover “serious wrongdoing” like previously undisclosed related-party loans or misreporting.

Adani Group said it “strongly rejects” the charges that it has not followed regulations and accounting standards.

But Bloomberg cites four legal experts it spoke to as saying that “siblings like Gautam and Vinod by definition are related parties, which warrants disclosure of all business deals”.

Who is Vinod Adani

Vinod Adani (74) is reported to be worth at least $1.2 billion, according to the Bloomberg Billionaires Index. He runs a family investment office in Dubai.

Over the years, he’s been involved in some of Adani Group’s most ambitious projects, “Carmichael is one of the longest-running examples,” says Bloomberg.

As more reports alleged that Vinod played a key role in the Adani Group’s foreign deals, the conglomerate maintained that Vinod did not hold “any managerial position in any Adani listed entities or their subsidiaries and has no role in their day to day affairs”, but on March 16, the Group said in a statement that the Adani Group and Vinod Adani should be seen as one.

When ‘Stop Adani’ Protests Reached the Sydney Cricket Ground

The pitch invaders had a specific demand: that the SBI shouldn’t provide the Adani group with a loan that they believe the SBI might be considering.

New Delhi: The first one-day international match between the Indian men’s and Australian men’s cricket teams saw crowds return to international cricket for the first time since March, when governments around the world banned mass gatherings in response to the coronavirus pandemic.

And almost immediately, the crowd made its presence felt.

At the beginning of the seventh over of Australia’s innings, two young men dressed in shorts and black t-shirts walked towards the fence between the Victor Trumper stand and the ground, climbed over and jogged onto the ground. The fronts of their t-shirts read “Stop Adani” and the back, “Stop Coal #StopAdani Take Action”.

One of the men ran around the boundary, holding up a white placard. The other ran towards the pitch with a placard of his own, as a rather puzzled David Warner looked on. The men’s posters had the same design: the logo of India’s largest bank, the State Bank of India, and below it the words “No $1BN ADANI LOAN”.

The pitch invaders had a specific demand: that the SBI shouldn’t provide the Adani conglomerate with a loan that they believe the SBI might be considering, and which would enable the Gujarat-based company to finance its financially troubled coal-mine in Australia.

“Millions of Indian taxpayers who are watching the first game of the Indian cricket tour have a right to know that the State Bank of India is considering handing their taxes to a billionaire’s climate wrecking coal mine,” Ben Burdett, identified as one of the protestors, was quoted as saying in a media release sent to journalists by the activist group Galilee Blockade – one of several groups in Australia that have been protesting the proposed development of the Carmichael coal mine.

Over the last few days, people have organised several protest actions around Australia, New Zealand and the US urging the SBI to not provide the Rs 5,000 crore loan that it is mulling for the Adani group, according to IANS. (The report only mentions “media reports” as the source of its information. The Wire has requested more details from IANS and will update this article if/when they become available.)

Tim Buckley, director of energy finance studies, South Asia, at the Institute for Energy Economics and Financial Analysis (IEEFA), argues that if the story was false, the SBI would have denied it, which it so far hasn’t done. Both SBI and the Adani group are yet to respond to The Wire‘s requests for comment.

The loan is vital for the project, which Buckely has called a “climate bomb” and a “stranded asset”.

The project has drawn considerably public opposition since 2016. It has the Australian government’s approval to haul 60 million tonnes of coal a year, which would make it among the biggest coal mines in a world that’s also facing an acute climate crisis. Critics have contended that the mine would emit carbon dioxide in quantities the world can’t afford, and in fact doesn’t need given renewable energy is rapidly becoming cheaper than coal.

The Wangan and Jagalingou people – are the traditional owners of the land on which the mine is to be built – have also stood up against the proposed mine. They have argued that the mine would hamper their ability to “preserve” and “practice” their culture.

The Adani group and protestors in Australia have had a vicious relationship. The Wangan and Jagalingou people have also accused the company of interfering with and subverting the public consultation process to acquire the land. The company also faced allegations of hiring a private investigator to spy on the activist Ben Pennings and his family.

Lately, many protestors have organised under a ‘Stop Adani Alliance’, and have been organising more and more intense protests. ‘Stop Adani’ earrings, t-shirts and placards are a common sight in most Australian cities. It’s possible the company recently rechristened its Australian operations as Bravus Mining and Resources owing to a toxic flavour that’s become synonymous with Adani’s ambitions in the island nation.

Also read: The Adani Juggernaut Is Expanding on All Fronts, Australian Coal Need Not Be One of Them

The opposition efforts have already met with some success, having significantly delayed production. The Adani group had bought the coal tenements in 2010, planned for production to begin in 2014 and predicted peak production of 60 million tonnes of coal per year by 2022.

Production is yet to begin. The mine has missed several self-imposed deadlines. And according to the Adani group’s latest update, it expects production will commence in 2021. The group has also downsized the mine to a sixth of its original size and is now looking to produce 10 million tonnes of coal a year. However, it’s possible the company can expand operations to their intended and original size once the coal dust settles.

On the flip side, even the drastic downsizing hasn’t ameliorated financing woes. Key insurers have dropped out and as many as 49 banks and financial institutions seem to have deemed the project unbankable. This is where SBI is important.

“It would allow Adani to complete the project,” Buckley, who has tracked the project from the beginning, told The Wire. “Adani has been entirely unsuccessful getting any financial institution to finance it. This [loan] would provide the capital Adani Australia needs to build the mine and railway.”

And Buckley thinks it might be an imprudent deal for the bank to make. “The Australian subsidiaries [of the Adani group] are geared beyond their ability to fund the interest, there is zero collateral if the mine fails, and SBI would most likely be unable to find any financial house willing to refinance the loan,” he said.

In a report last year about the Carmichael mine, Buckley and IEEFA concluded that “the project would not open nor survive without billions of dollars in subsidies.” Today Buckley is of the view that the SBI loan, if it works out, could be one form of that subsidy. “Funding a coal mine in Australia that no other bank would touch is not sensible risk management. One would presume this is another example of cronyism.”

International sentiment has also shifted since the Adani group acquired the Carmichael mine ten years ago. Citizens have less demonstrated lesser appetite every year for new coal projects. So international financial institutions are also shying away from funding new coal. “Global capital is fleeing coal and coal power,” as Buckley said.

SBI recently raised $100 million through green bonds just to promote renewable energy projects. The French asset management company Amundi, one of the major investors in these bonds, has threatened to disinvest “immediately” if SBI were to finance the Carmichael coal mine.

“We consider SBI should not finance this project. It’s their decision, ultimately, but we’ve been extremely clear on the fact that if they decide to do it, we would immediately disinvest,” Jean Jacques Barberis, director of Amundi’s institutional and corporate clients division told Reuters.

The German state-owned development bank KfW, which has partnered with SBI to fund renewable-energy projects, has also tried to distance itself from the prospective loan. “KfW Development Bank cooperates with SBI exclusively with regard to the promotion of renewable energies and energy-efficient housing within India. The Carmichael mine project mentioned is not part of this cooperation,” it said in a press release.

Both SBI and the Adani group are yet to comment on media reports and the protests against the prospective loan.

Australia: Adani Wins One of Last Two Permits Needed to Begin Work on Mining Project

Adani has faced difficulties obtaining finance for the mine and accompanying rail project as climate change concerns have discouraged lenders from backing new thermal coal developments.

Melbourne: The Australian state of Queensland on Friday approved Adani Enterprise’s management plan for an endangered bird at the site for a controversial coal mine, leaving only one more permit before construction can start on the project.

India’s Adani has been working for a decade to obtain approvals to develop the Carmichael mine in the remote Galilee Basin, but the process has been slow as the project has become a touchstone for concerns about climate change.

“The Department of Environment and Science (DES) approved Adani‘s black-throated finch management plan,” the Queensland regulator said.

“DES has met regularly with Adani to ensure that the plan is robust and is well-placed to deliver the best outcomes for the protection of the black-throated finch.”

Also read: Adani’s Australia Story: How a Massive Coal Mine is Sparking a New Wave of Environmental Concerns

Adani said it had received notice that its plan had been approved.

The approval leaves just one permit outstanding, which relates to management of a sensitive groundwater source. That is expected to be issued by June 13.

Adani has faced difficulties obtaining finance for the mine and accompanying rail project as climate change concerns have discouraged lenders from backing new thermal coal developments, while falling prices have also raised doubts about the mine‘s economics.

But voters worried about jobs in the downtrodden region returned the ruling Liberal-National coalition to power in an Australian election this month, renewing momentum for the project.

A local conservation group condemned Friday’s approval, saying in a statement that “Australians should be alarmed by this decision”.

Adani’s Australian Coal Mine Wins Approval for Groundwater Management Plan

The project, which has faced opposition due to its environmental repercussions, still needs further approvals from both the federal and Queensland governments before mining can start.

Melbourne: India’s Adani Enterprises has taken a step closer to the construction of a controversial thermal coal mine in Australia after winning federal government approval for its groundwater management plan.

Adani wants to develop the Carmichael coal deposit in Queensland state, but has faced fierce environmental resistance that has turned the project into a political hot potato ahead of a federal election due next month.

Environment Minister Melissa Price said on Tuesday the project still needed nine further approvals from the Federal and Queensland state governments before mining can start.

“This decision does not comprise the final approval for this project,” she said.

Also Read: In Chhattishgarh, Adani’s Coal Mine Leaves a Village Parched This Monsoon

The groundwater management plan also requires approval from the state government, the state’s environmental department told Reuters last week, which is also assessing a management plan for an endangered bird.

While the Carmichael project would create jobs and has strong support in the region, both the ruling conservative Liberal-National coalition and opposition Labor parties fear losing votes in major cities where voters are worried about climate change.

A Queensland government official told Reuters in February that Adani may have to wait up to two years for some environmental approvals.

Adani said last year it would fully fund the coal mine and rail project itself, but did not give an updated estimate of the cost of the mine, previously estimated at about A$4 billion ($2.9 billion).

Adani was not immediately available on Tuesday to comment.
(Reuters)

Adani’s Jharkhand Plant an Attempt to Prop up Struggling Australia Project: Report

The project will likely lock Bangladesh into an expensive, long-term and emissions-intensive source of electricity for decades to come.

New Delhi: The Adani Group’s Godda power project in Jharkhand may be a “financially unviable prop” due to the high price of Australian coal that it plans to use and the fact that its electricity will be too expensive for Bangladesh – which intends to buy power from the project under a long-term contract – according to a new report by the Institute for Energy Economics and Financial Analysis (IEEFA), a well-known US-based energy research body.

The initial pact signed by the two sides apparently allows project developer Adani Power to pass on the full fuel cost to the electricity buyer (Bangladesh).

Significantly, Adani’s mega power plant in Mundra, Gujarat too has become unviable due to the high cost of imported coal. After the Supreme Court rejected compensatory tariff for the project last year, the plant’s enterprise value has fallen drastically, rendering the investment dud.

The Adani group plans to ship coal from its Australian mine to fire the 1,600 MW Godda project in Jharkhand, which is currently under implementation. According to the IEEFA report, the delivered cost of coal supply for the project is estimated at $90-100 a tonne, which is on the higher side for the Indian power market.

More crucially, the Godda power proposal appears to be an attempt by the Adani Group to prop up its struggling Carmichael coal project in Australia, while locking Bangladesh into an expensive, long-term and emissions-intensive source of electricity for decades to come, says the report.

It further states, “With Adani Power’s Mundra import coal-fired power plant financially unviable, Adani sees the Godda project as a way to provide an alternative destination for coal from the proposed Carmichael mine which has so far failed to secure any funding.”

As The Wire has extensively reported and documented, the company’s Carmichael coal mine has run into a number of controversies over the last two years and currently stands at risk of becoming a stranded asset as fierce debate over coal-based energy has limited the project’s financing options.

According to the report, the power purchase agreement signed by Adani Power for the Jharkhand plant in late 2017 is geared to assist Adani companies while locking Bangladesh into an expensive, long-term and emissions-intensive source of electricity for decades to come.

Bangladesh is a member of the ‘Vulnerable Twenty Group’ – a forum of nations most vulnerable to climate change.

Poor deal for Bangladesh

Tim Buckley, co-author of the report, said that the proposal to import coal from Australia and then rail it 700 km into the state with the largest coal reserves in India simply makes any potential electricity being produced too expensive for Bangladeshi consumers.

“The logistics of the proposal can only work because the power purchase agreement allows Adani Power to pass the full cost of importing the coal onto Bangladesh” Buckley said. “The estimated Godda tariff of Rs 6.65/kWh (A$0.13/kWh) is far higher than Indian state-owned utility NTPC’s thermal power tariff of Rs 3.21/kWh (A$0.06/kWh).”

“It follows that the PPA is necessarily unfavourable for Bangladesh. The risk of high prices for imported coal and rail charges will not be borne be Adani, rather they will be passed through to Bangladesh.”

The report also points out that state-run NTPC recently won the bid to supply electricity to Bangladesh at a much lower price without specifying generation fuel, and that this is exactly the model that Bangladesh should follow.

Indeed, the Godda power project was first supposed to draw upon fuel from the nearby Jitpur coal block (which the Adani Group was allocated in early 2015). However, as the report points out, this proposal was later changed in 2016 to say that it would use imported coal brought in through Odisha’s Dhamra port, which is owned by the Adani Group’s port subsidiary.

Financial troubles

 The IEEFA report also highlights Adani Power’s financial woes.

“Adani Power is in clear financial distress with net debt of over $7 billion and its share price has fallen almost 80% to a near ten-year low – the company has given no indication of how they will secure funding for this proposal” Buckley said.

“Adani Power is not in any financial position to undertake a major new $2.1 billion greenfield project; the most likely outcome is that this power plant will never get off the ground,” the report has warned.

Now that the dire financial status of the Mundra coal-fired power plant has unraveled Adani’s “pit-to-plug” strategy, Adani is obviously keen to try and convince potential Carmichael investors that there are alternative destinations for Carmichael’s coal, says the report, noting that the Indian Association of Power Producers has stated that, at prices above $70/tonne, imported coal is unviable in India.

The Wire sent a questionnaire to the Adani Group seeking its views on the report. This was the response received from the Adani Group spokesperson:

“The electricity supply agreement and proposed power project have been envisaged after due diligence and prudent planning in the large interest of our neighbours – the people of Bangladesh. The said report is based on certain assumptions and inferences, which are inconsistent with the factual aspects of this initiative between the two nations. Its authors/activists have not consulted us to check the facts.”

Note: This article was updated with the Adani Group’s response.

How a Local Australian Election Will Impact Adani’s $4-Billion Mine

The victory of the Australian Labour Party – which has promised to veto a prospective Federal government to the Adani group – is bad news for the company.

The victory of the Australian Labour Party – which has promised to veto a prospective Federal government body loan to the Adani group – is bad news for the company.

A protester holds a sign as he participates in a national Day of Action against the Indian mining company Adani’s planned coal mine project in north-east Australia, at Sydney’s Bondi Beach in Australia, October 7, 2017. Credit: Reuters/David Gray

The Adani group’s chances of getting a $900 million (AUD) concessional government loan — crucial to its Carmichael coal mine project — are approximating close to zero as the Australian Labour Party (ALP) is set to form the government in Queensland — the north-eastern Australian state home to the proposed Adani coal mine.

The ALP went into polls with the promise that they will veto the prospective Federal government loan to the Adani group, and that became the critical point of difference between the Liberal National Party (LNP) and the ALP — the two major parties that went head-to-head in the elections held on November 25.

The $900 million (AUD) loan with an interest rate lower than commercial lending rates and a repayment period longer than commercial lending periods would have reached the Adani group through the Federal government body, the Northern Australia Infrastructure Facility (NAIF). The tax-payer subsidised loan was being seen as a lifeline for the project which has huffed, puffed, but struggled to raise any finance as banks and financial institutions across the world have decided to stay away from the project due to the uncertainty around the global coal market and due to the project’s controversial nature.

Three weeks prior to polling, on November 4, leader of the ALP in the state and the sitting Premier of Queensland, Annastacia Palaszczuk, announced that her government will veto the prospective NAIF loan to the Adani group. The announcement came as a surprise as Palaszczuk had previously stood steadfastly behind the project even as the project faced massive public opposition.

ALP’s definitive stand ensured that the Adani loan issue — which was already one of the top-most elections issues — became the most significant talking point leading up to polling day. “It had always been a very significant issue. But, with the Premier’s decision to veto the loan, it became the most significant issue going into the elections as it became the point of difference between the two parties,” said Joshua Robertson, correspondent with the Australian Broadcasting Corporation (ABC) and earlier with the Guardian Australia, and someone who has covered the Adani mine project since 2014.

Various social organisations and activist groups have been protesting and lobbying against the Adani coal mine for the last three years with the protests gathering momentum in the last few months as the organisations came together under the ‘Stop Adani’ alliance, which, like its name, used uncomplicated messaging to try and convince the Australian people that the Adani coal mine would do more harm than good.

Also read: Adani’s Australia Story: What’s the Fuss All About?

“It has been a very smart and effective campaign. People across the country have become more opposed to the mine and I don’t think anyone wants to see tax-payer’s money given to a billionaire,” said Paul Williams, senior lecturer in politics at Griffith University in Queensland.

On October 4, a month prior to ALP’s announcement that it would veto the NAIF loan, a survey of 2,194 residents across Australia was conducted and the results showed that 55.6% of those surveyed were opposed to the Adani coal mine. When asked if the Queensland government should veto the Federal government loan to Adani, 65.8% of the respondents said yes.

“The public opinion and the campaign against the mine caught up with the Labour party (ALP). We have been tirelessly campaigning against the mine for the last two-three years, and politicians sooner-or-later had to bow down to public opinion. That’s what happened with the ALP’s veto announcement,” Sam Regester, campaigns director at GetUp, an activist group part of the ‘Stop Adani’ alliance, told me in a phone conversation.

As growing public opinion against the Adani coal mine cajoled the ALP into saying no to the NAIF loan, the mine’s dependence on the subsidised loan grew. As many as 24 Australian and international banks either refused to fund the project or introduced rules that would make the Carmichael project out-of-bounds for them. The options that remained for Adani to finance the project such as Chinese state owned enterprises — which the Adani group had approached — also depended on the explicit endorsement of the project by the Australian government in the form of the NAIF loan. “I don’t think the Chinese state owned enterprise would even contemplate doing a project in Australia without an explicit endorsement of the project by the Australian government. And there is nothing more explicit than being a key funder. If the Chinese knew that the NAIF wasn’t available, I don’t think they would even give it a moment’s thought. It is too controversial a project,” Tim Buckley, Director of Energy Finance Studies, Australasia, within the Institute for Energy Economics and Financial Analysis (IEEFA), a pro-renewables energy research firm, told me in October.

Chinese exodus

After losing out on the NAIF loan, there was more bad news for the Adani group as Buckley’s words turned prophetic, and Chinese banks started distancing themselves from the project, almost on cue, as results of the Queensland elections started trickling in and it appeared certain that the ALP would form the government in Queensland meaning that there would be no Federal government NAIF loan for the Adani project.

Between December 1 and December 5, three Chinese banks publicly stated that they will not be financing the Adani coal mine project. These banks include some of the biggest banks in the world — Industrial & Commercial Bank of China, China Construction Bank, and Bank of China.

Julien Vincent, executive director of the environmental campaign group, Market Forces, explains how the result of the Queensland election influenced the decision of the Chinese banks. “It straightaway meant the loss of 1 billion Australian dollars as the ALP would veto the loan. It also heightened the risk profile of the project because the NAIF loan would have come at an extremely low rate of interest and with heavily subordinated repayment terms. Therefore, it made the project even more risky from the point of view of any potential investor,” he said.

The changing contours of the politics around the mine symbolised by the November 4 announcement of the ALP leader in Queensland, Annastacia Palaszczuk, also meant that the Adani group no longer had the political support across major parties that it earlier enjoyed. The ALP had taken a decisive stand on the issue of the NAIF loan going into elections, even as the LNP criticised the decision arguing that it meant that regional Queenslanders would be deprived of jobs that the Adani coal mine would bring.

With the electorate voting decisively in favour of the ALP, their stand on the loan issue was vindicated, and it is likely now that their stand will solidify at a national level as well against the Adani mine. “The veto announcement definitely enhanced the credibility of the ALP in Queensland and the results have shown that. This result will also now mean that nationally the ALP’s stand against the mine will harden,” said Williams.

The ALP’s win in Queensland and the resultant veto on the NAIF loan, therefore, had two negative fallouts for the Adani group’s prospects of raising finance for the project. One, it raised the risk profile of the project as the $900 million (AUD) that the NAIF would have provided at a concessional rate of interest and on easy repayment terms, would now potentially have to be raised at non-concessional market rates of interest and with commercial repayment terms. And two, the public backing of the ALP’s stand on the Adani-NAIF loan issue seen by way of the win in the Queensland elections meant that the ALP would be encouraged to take a stronger stance against the mine itself, meaning that the political support for the Adani coal mine stood diluted.

Also read: Adani’s Australia Story: As Financial Concerns Mount, A Fierce Battle for Funding is Underway

In addition to the changing political scenario and growing financial complications for the Adani coal mine, eminent Australians have also been lobbying with Chinese political and financial leaders to ensure that the mine is not funded by any Chinese enterprise. Former Australian foreign minister, Bob Carr, and millionaire businessman turned conservationist, Geoffrey Cousins, have been meeting with Chinese bank officials and political leaders in China and Australia to dissuade them from providing any form of credit to the Adani group for the project.

“We put our case to them that the Adani mine wasn’t a project that should be funded for financial and environmental reasons. They told me that no funding could be offered to Adani without approval from the government,” Cousins told me via email.

Subsequently, on December 5, Cousins received an email from the Chinese embassy stating that no Chinese banking institution or ‘entity’ was looking to fund the project. “Beijing has taken note of your concern. It is learned that certain Chinese entity was approached by Adani group for initial phase communication on the Carmicheal coal project, but without conclusion of any binding agreement for cooperation. Due to the absence of commercial feasibility, the Chinese entity concerned has terminated the negotiation process, and no Chinese banking institution has made any financing commitment to the project,” the email read.

It is widely believed that the Chinese entity that the email mentioned was the Chinese state-owned enterprise, China Machinery Engineering Corporation (CMEC), which the Adani group had approached for financing. According to a press release (which has now been removed) on the website of CMEC, in January, a top Adani Mining Private limited executive, Praveen Khandelwal, along with the CEO of Downer EDI group – a company which has a $2 billion contract with Adani Mining Private limited for the construction of the mine in Australia – met with the president of CMEC, Zhang Chun. Chun said at the meeting that the CMEC “hoped to cooperate with Adani and Downer to take part in financing, construction and operation of relevant coal mines and railway projects”.

With any form of Chinese funding looking increasingly unlikely, particularly as China responds to the dwindling political support for the mine in Australia, the Adani group’s prospects on its flagship mutli billion-dollar investment in Australia look grim. “Political sources are also saying no China involvement in the Carmichael project is going to happen. It will be a huge challenge now for Adani to raise finance,” said Buckley.

Cousins is more emphatic, “This project is now dead.”

On December 6, Adani group chairman, Gautam Adani, met with Chinese ambassador to India Luo Zhaohui. A short statement on the Chinese embassy website stated that “they (Zhaohui and Adani) exchanged views on strengthening economic and trade cooperation between China and India”. The exact contents of what was discussed remain unknown. However, given the goings on vis-à-vis Chinese funding for Adani’s Australia project, the meeting has fuelled speculation.

“They (Adani group) are certainly going to try hard to revive the project. But, the events of the last one month have been dramatic and have put us (Stop Adani alliance) on the path to victory. But, we are also careful to not celebrate too early. We will now demand that the Federal government cancel the mining leases of the Adani group. We will not rest till the project is officially dead”, said Regester.

A questionnaire has been sent to the Adani group. This story will be updated if and when a response is received.

Kabir Agarwal is an independent journalist whose writings have appeared in The Kashmir Walla, The Times of India, Mint, Al Jazeera English and The Caravan. He can be found on twitter @kabira_tweeting.

As Potential Funding Troubles Mount, Adani Meets Chinese Ambassador

Although it’s unclear what was discussed, the meeting comes days after China’s two top banks said they would not fund the company’s controversial coal mine in Australia.

Although it’s unclear what was discussed, the meeting comes days after China’s two top banks said they would not fund the company’s controversial coal mine in Australia.

Luo Zhaohui, Chinese ambassador to India, with Adani Group chairman Gautam Adani (left). Credit: Chinese embassy.

Luo Zhaohui, Chinese ambassador to India, with Adani Group chairman Gautam Adani (left). Credit: Chinese embassy.

New Delhi: Adani group chairman Gautam Adani on December 6 met with Chinese ambassador to India Luo Zhaohui, days after it was reported that China’s two top banks said they had no plans to finance the company’s controversial coal mine in Australia.

Although it’s unclear what was discussed, the Chinese embassy’s website stated that they “exchanged views on strengthening economic and trade cooperation” between both countries.

“Ambassador Luo Zhaohui, Chinese ambassador to India, met with Gautam, chairman of the Adani Group in India at the embassy. Adani, (sic) exchanged views on strengthening economic and trade cooperation between China and India,” the Chinese version of the website (translated) stated.

The English version of the embassy’s website, as of Thursday evening, has not uploaded a similar notice documenting the meeting.

Australia woes

As per latest estimates, Adani Enterprises needs roughly $1.5 billion in financing by March 2018 for the first staged of its Carmichael coal mine in the state of Queensland.

Earlier this week, the Industrial and Commercial Bank of China (ICBC) and the China Construction Bank emphatically noted, in response to media reports stating otherwise, that they were not working on the coal project.

As The Wire has reported in the past, both Australian and overseas banks have been hesitant to grant loans, even as local environmentalists oppose the mine due to climate change and potential for damage to the Great Barrier Reef.

While it’s not clear if Adani was actually in talks with the banks that have issued statements – the conglomerate is primarily in negotiations with the state-owned China Machinery Engineering Corp (CMEC) for a loan – it has been reported that the CMEC deal could have roped in China Construction Bank, which has now ruled out any involvement.

While former Australian foreign minister Bob Carr told The Guardian that he had received confirmation “that no Chinese bank would be financing” the Carmichael project, well-known energy analyst Tim Buckley has noted that it was still very much possible for another Chinese bank to step in.

“At the end of the day, any one of these big Chinese banks could fund 100 percent of the project tomorrow if they wanted. They’re that big,” he told South China Morning Post.

Adani in China

The Adani group, like many Indian conglomerates, also has a history of doing business with Chinese companies. Over the last few years, it has signed a number of memorandum of understandings (MoUs) with Chinese businesses for manufacturing units that will produce everything from solar equipment to chemicals.

The Wire has sent a questionnaire to the Adani Group regarding the Chinese ambassador meeting and will update this story if and when a response is received.

China’s Two Top Banks Won’t Lend to Adani’s Australian Coal Mine

Industrial and Commercial Bank of China and China Construction Bank said in separate statements they were not working on the project after media recently reported that Chinese banks may get involved.

FILE PHOTO - Industrial and Commercial Bank of China Ltd (ICBC)'s logo is seen at its headquarters in Beijing, China, March 30, 2016. Credit: Reuters/Kim Kyung-Hoon/File Photo

Industrial and Commercial Bank of China Ltd (ICBC)’s logo is seen at its headquarters in Beijing, China, March 30, 2016. Credit: Reuters/Kim Kyung-Hoon/File Photo

Sydney: China’s two biggest banks said they do not plan to finance a controversial Australian coal mine, in the latest blow to Indian conglomerate Adani Enterprises’ long-delayed project.

Industrial and Commercial Bank of China (ICBC) and China Construction Bank said in separate statements they were not working on the project after media recently reported that Chinese banks may get involved.

Adani is seeking A$2 billion ($1.5 billion) in financing by March 2018 for the A$4 billion first stage of its proposed Carmichael coal mine in the state of Queensland, a project that has been shrunk from a A$16.5 billion plan to make it more viable.

Adani declined to comment on its financing plans on Monday or the statements from the Chinese banks.

Australian and overseas banks have balked at granting loans for the project, which environmentalists oppose due to climate change and the potential for damage to the Great Barrier Reef.

Also read: Adani’s Australia Story – A Crucial Ideological Battle Over the Politics of Coal and Jobs

“ICBC has not been, and does not intend to be, engaged in arranging financing for this project,” ICBC, China’s biggest listed lender by assets, said in a statement on its Australian website.

“ICBC attaches great importance to its social responsibilities and keenly promotes ‘green financing’ … This statement is made without any view on or prejudices towards the Carmichael mine project.”

The mine‘s location 400 km from a Pacific Ocean shipping terminal means financing infrastructure costs has been at the forefront of the debate over the project’s economic viability.

“China Construction Bank is not involved with, nor considering involvement with, the Adani Carmichael Mine project,” an external spokesperson for China Construction Bank in Australia said in an emailed statement on Monday.

CCB in China was not immediately available for comment.

Reuters has previously reported that Adani was in talks with China Machinery Engineering Corp (CMEC) for a loan, which could have involved China Construction Bank or China Export-Import Bank.

China Export-Import Bank was not immediately available for comment.

Carmichael has been delayed by court challenges from environmentalists and indigenous groups concerned about climate change and the impact on native land and water supply, but those challenges have been rejected.

Adani hopes to start shipping coal from Carmichael by March 2020 in the first stage of the project, which it bought amid a coal boom in 2010.

Adani’s Australia Story: As Financial Concerns Mount, A Fierce Battle for Funding is Underway

Even as China has swooped in to save the day, critics claim that the project is financially unsustainable and will only work if the risk is shifted onto Australian taxpayers.

Even as China has swooped in to save the day, critics claim that the project is financially unsustainable and will only work if the risk is shifted onto Australian taxpayers.

Adani’s quest to secure funding is a bit of a litmus test for global investor appetite when it comes to coal projects. Credit: Reuters

Note: This is the fourth story in a five-part series that examines how the Adani and Carmichael coal mine has divided the Australian public and in the process, sparked fierce debate on issues such as coal-based energy, energy financing, jobs and the rights of indigenous people. Read the first, second and third parts. 

In August 2010, the Adani group bought from the Australian energy company Linc Energy its coal tenements – estimated to contain 7.8 billion tonnes of coal – in Central Queensland’s untapped Galilee basin for a total of $680 million (AUD). According to the Adani group’s official proposal for the ‘Carmichael coal mine and rail project’, made to the government of Queensland in October 2010, the mine required a capital investment of $4.1 billion for construction and an additional $16.4 billion for operations. Peak production of 60 million tonnes was to be reached in 2022, while 2014 was to be the first year of production.

The idea was to export coal from the mine in Australia to Adani group’s power plants in India, and develop an integrated ‘pit to plug’ energy vertical comprising mines, rail and port links. Following that strategy, in May 2011, the Adani group acquired Queensland’s Abbot Point coal terminal – approximately 400 km from the site of the proposed mine – for $1.98 billion from the government of Queensland on a ninety-nine-year lease. The Adani group also proposed a 388-km rail link, connecting the mine to the port to enable it to ship coal from its mine to its power plants in India through its port in Australia.

The stage was set and things were looking up for the Adani group’s flagship investment in Australia. In 2011, coal prices touched soaring highs of $124 a tonne, and were expected to go up further, owing to growing demand. There were forecasts of an impending coal shortage in India, as demand for power was expected to rise rapidly. The Indian government was encouraging private Indian companies to invest in coal assets abroad.

However, the Adani group’s project ran into trouble from the very beginning as environmental groups, concerned about the environmental impact of the largest new coal mine in Australia, provided stiff opposition. In addition to street protests and social media campaigns, they filed court cases against the proposed coal mine.  

Due to the legal tussles and a lengthy process of environment impact assessment, the project was delayed and the final mining lease was issued only in April 2016. The project was already two years behind schedule.

Change in scenery

Between 2010 – when Adani group bought coal tenements in the Galilee basin – and 2016, there were significant changes in the coal market. Demand for coal in the US fell as alternatives in the shape of oil and natural gas became significantly cheaper. China too reduced its consumption of coal as its pace of economic growth slowed and it launched a crusade against high levels of air pollution. The US and China account for more than 60% of the world demand for coal, and the reduction in demand had a massive impact on global coal prices, which fell from $90 a tonne in August 2010 to $52 a tonne in September 2016.

Closer home, India’s coal imports peaked in 2014-15 at 217 million tonnes, and then fell to 204 million tonnes in 2015-16, falling even more in the subsequent year. During this period, Piyush Goyal, Central government minister for power, coal, new and renewable energy at the time, announced the government’s intention to stop the import of coal. Solar energy prices fell drastically to be almost at par with coal prices.   

As a result, in September 2016, the Adani group decided to scale down the size of the mine from the initially proposed investment of $16.4 billion to $4.2 billion, with production being curtailed at 25 million tonnes of coal per annum in the first phase of operations, instead of the initially proposed 60 million tonnes per annum at peak production.

“Between 2010 and now, things have changed drastically for the mine. It is now no longer financially viable, and that is why it has not been able to achieve financial close for seven years. On top of that, there are so many political and environmental risks associated with the project that it becomes toxic from a banking perspective,” said Tim Buckley, Director of Energy Finance Studies, Australasia, within the Institute for Energy Economics and Financial Analysis (IEEFA), a pro-renewables energy research firm. As many as twenty-four Australian and international banks have either refused funding the project or have introduced rules that would make the Carmichael project out-of-bounds for them.

To add to its woes, according to a recent report by the IEEFA, the Adani group will need to refinance $1.48 billion of debt on by November 2018 and a cumulative debt refinancing of $2.11 billion by 2020 on its Abbot point port terminal. This at a time when the port is only operating at 50% of its capacity and most of its ‘take-or-pay’ contracts, which currently earn revenue for the port, expire soon. “They have this situation where three-quarters of their debt on the port will have to be refinanced in the next 12 months. With the take-or-pay contracts progressively expiring, they will find it difficult to convince financiers that the port will be fully utilised in the future,” said Buckley, one of the authors of the report.

“For them to convince financers that port capacity will be utilised in the future, they need to show that the Carmichael mine will be up and running soon because otherwise, the export volumes will not be enough. So it now makes the mine crucial for the future of the Abbot point port,” Buckley added.

Jeyakumar Janakaraj, the chief executive officer (CEO) of Adani Australia, recently told the Economic Times in an interview that the Adani group still needs to tie-up $4.2 billion in finance for the Carmichael mine and rail project, and has a set a deadline of March 2018 to tie up funding.

A surfer carries his board as he walks behind protesters participating in a national Day of Action against the Indian mining company Adani’s planned coal mine project in north-east Australia, at Sydney’s Bondi Beach in Australia, October 7, 2017. Credit: Reuters/David Gray

According to John Quiggin, Australian Laureate Fellow in Economics at the University of Queensland, the project now relies heavily on financial support from the Australian government. “There has been a general move away from financing coal projects. It is increasingly difficult to get finance and this is a marginal project. It is low-quality coal and a long-way away from ports. There is no clear market for the coal. So the project is not very attractive commercially. They (the Adani group) are therefore looking mostly at government or quasi-government financing,” Quiggin told The Wire.

The government financing, which the project now crucially hinges on, is a prospective concessional loan of up to $900 million from the Northern Australia Infrastructure Facility (NAIF) which was set up by the government of Australia in 2016 to ‘encourage and complement private sector investment in infrastructure that benefits northern Australia’. The prospective loan is concessional as it can be provided at an interest rate lower than commercial lending rates, and for a period longer than commercial lending periods.

“The structure of the NAIF is very opaque. The interest rates could be as low as federal government bond rate, which is currently 2.75%. And the loan period could be 30 years, with the risk profile of the loan likely to be heavily subordinated terms. It would operate like quasi-equity,” said Buckley.

In effect, tax-payers in Australia would be subsidising the Adani group’s coal mine, and Julien Vincent, executive director of the environmental campaign group, Market Forces, believes that the project is only possible through tax-payer subsidy. “This project is financially unsustainable. It only works if you are prepared to shift the risk on to the tax payers. So, the NAIF is critical for Adani,” he said.

Even with the $900 million NAIF loan, the Adani group will need to secure another $3.3 billion in financing for the project. According to a recent report of the IEEFA, the Chinese state-owned enterprise China Machinery Engineering Corporation (CMEC) is one of the prospective financers that the Adani group has approached. According to a press release on the website of CMEC, in January, a top Adani Mining Private limited executive, Praveen Khandelwal, along with the CEO of Downer EDI group – a company which has a $2 billion contract with Adani Mining Private limited for the construction of the mine in Australia – met with the president of CMEC Zhang Chun. Chun said at the meeting that the CMEC “hoped to cooperate with Adani and Downer to take part in financing, construction and operation of relevant coal mines and railway projects”.

“The CMEC is in strategic alliance with the China Construction Bank and the China Import Export Bank which are two state-owned enterprises. They could take equity stakes in the Adani project. They have a history of taking minority equity stakes in projects of this kind,” said Buckley.

Aiding that theory is a statement that Janakaraj gave to Reuters in early October, where the CEO of Adani Australia said that the Adani group was ‘looking to sell minority equity stakes in the coal project’.

Further fuelling speculation is a recent revelation that certain Australian government ministers wrote to the Chinese government assuring it that the Carmichael coal mine has been approved. The letter was written by the minister for trade, tourism and investment, and by the deputy prime minister, and addressed to the National Development and Reform Commission in China. The secretary of the Department of Foreign Affairs and Trade, told Australian senators that Adani may have requested the letter to help it secure funding from the Chinese.

Three countries, three interests

According to Buckley, if the deal materialises, it could effectively mean that the Australian government is providing subsidies to a project owned by an Indian billionaire and a state-owned enterprise of the Chinese government.   

However, Buckley argues that the NAIF loan remains critical even for this prospect. “The NAIF loan is absolutely crucial. I don’t think the Chinese state owned enterprise would even contemplate doing a project in Australia without an explicit endorsement of the project by the Australian government. And there is nothing more explicit than being a key funder. If the Chinese knew that the NAIF wasn’t available, I don’t think they would even give it a moment’s thought. It is too controversial a project,” he said.

Effectively, the NAIF loan – a federal government funded subsidy of almost $1 billion – would act as a signal of government support for the project, and would make it a more attractive investment proposition for prospective financers.

But government funding in the form of the subsidised NAIF loan is hugely unpopular with the Australian people, with some arguing that it amounts to a bailout. It seems that the NAIF loan has become a double-edged sword for the Adani group, as the project is unlikely to find willing financers without it, and it could face even stronger opposition from citizens if the NAIF loan is provided.

On November 4, Annastacia Palaszczuk, the Premier of Queensland and a strong supporter of the Adani project, held a dramatic press conference and announced, in a surprising turn of events, that her government will veto the prospective federal government-funded NAIF loan to the Adani group. She cited a potential ‘smear campaign’ against her by her principal opposition party in the state, the Liberal National Party (LNP), leading up to the election day in Queensland scheduled for November 25. The LNP, she argued, would use a perceived conflict of interest to ‘impugn’ her character and ‘suggest something unto worth’ as her partner works as managing partner at PricewaterhouseCoopers, which helped Adani with its NAIF loan application. She said, “to remove doubt about any perception of conflict, my government will exercise its ‘veto’ to not support the NAIF loan”.

On October 4, a survey of 2,194 residents across Australia asked respondents, ‘Should the Queensland government veto any $1bn federal loan to Adani?’. Sixty-six percent responded ‘yes’. With elections approaching, the popular opposition to the NAIF loan would also have been on Palaszczuk’s mind.

However, as her government is now in care-taker mode, she would need bipartisan support to veto the loan. The leader of the LNP in Queensland, Tim Nicholls, has already said that his party will block the Premier’s move to veto the NAIF loan to Adani.

The NAIF is expected to decide on the Adani application in December, after the Queensland election is held. According to Quiggin, the NAIF loan will now depend on the outcome of the Queensland election. “If Labour wins the election, I doubt that they will support the NAIF loan. On the other hand, if the LNP wins then the NAIF money will come through,” he said.

Battle lines have been drawn, and the question of government funding for Adani’s Carmichael coal mine project could be one of the main issues that decide the Queensland state elections.  

Kabir Agarwal is an independent journalist whose writings have appeared in The Kashmir Walla, The Times of India, Mint, Al Jazeera English and The Caravan. He can be found on twitter @kabira_tweeting.

Premier of Australia’s Queensland Promises to Veto Adani Coal Mine Funding

Annastacia Palaszczuk reversed her previous support for Gautam Adani’s application for a concessional Australian government loan to pay for a rail line from the outback mine site to a coastal port.

Annastacia Palaszczuk reversed her previous support for Gautam Adani’s application for a concessional Australian government loan to pay for a rail line from the outback mine site to a coastal port.

Queensland premier Annastacia Palaszczuk is running for reelection in the northeastern-most state of Australia. Credit: Annastacia Palaszczuk/Twitter

Queensland premier Annastacia Palaszczuk is running for reelection in the northeastern-most state of Australia. Credit: Annastacia Palaszczuk/Twitter

Hobart: The future of the giant Adani Carmichael coal mine in northern Australian – considered a “carbon timebomb” by opponents – may be decided by a state election this month after the local premier shocked observers by pledging to block an A$900 million loan considered vital for it to go ahead.

At a snap media conference late on Friday, Queensland Labor premier Annastacia Palaszczuk reversed her previous support for Indian billionaire Gautam Adani’s application for a concessional Australian government loan to pay for rail line from the outback mine site to a coastal port.

She said she would exercise the state government’s power of veto over any loan after learning of rumours circulating about the role her partner had played in the proposed mine’s approval.

The announcement comes amid heated political debate in Australia and the Pacific region over the proposal to create one of the world’s biggest coal mines in the Queensland outback.

Adani says the fully developed Carmichael mine, to be developed in the state’s north about 340 km south-west of Townsville, would produce up to 60 million tonnes of coal annually for 60 years. It plans to export the coal to burn in its Indian power plants. It would increase Australia’s coal exports by up to 30%.

Members of the Liberal National Party – which is in government nationally, but opposition at Queensland state level – have expressed strong support for the project receiving a loan from a new government agency known as the Northern Australia Infrastructure Facility. The Labor Party has been divided over the project, though Palaszczuk has personally been a consistent backer, claiming it would be a job creator in areas of high unemployment.

The $21 billion proposal has struggled to win financial backing. It was revealed this week Adani was in discussion with a Chinese state-owned company.

Several analyses have found the mine was unlikely to be viable given existing Indian coal plants are running below capacity and the price of solar power is falling dramatically. They also found claims about the number of jobs the mine would create in Australia have been dramatically overstated.

Some Pacific leaders have condemned the proposal, saying it was inconsistent with Australia’s commitment to limiting global warming to less than 2 degrees C. Tuvalu’s prime minister, Enele Sopoaga, last month said Australia could not continue to open new fossil fuel mines while islands were sinking.

Also read: Adani’s Australia Story – How a Massive Coal Mine is Sparking a New Wave of Environmental Concerns

At a climate meeting in Fiji in October, Australian ambassador for the environment Patrick Suckling was reproached in public and private over the project.

A developing country negotiator said: “People were attacking them at the pre-COP.” The pre-COP was a meeting to thrash out negotiating priorities ahead of the UN conference of parties (COP), which opens in Bonn, Germany next week. The negotiator said diplomats were watching closely how Australia handled the project. “Everybody is aware of this mine.”

Palaszczuk did not address climate concerns in her announcement, and said she still supported the mine and the jobs it would deliver. She said she did not know her partner, PricewaterhouseCoopers infrastructure advisory director Shaun Drabsch, was working on the Adani project before hearing of what she described as a “smear campaign” by local members of the national Liberal National government.

“Let me make it absolutely clear – I guard my integrity most dearly,” Palaszczuk said. “I want to put beyond any doubt that this is nothing more than an LNP smear.”

Whether the national government could legally bypass a state veto is untested, but the announcement will fuel the hopes of environment groups who oppose the mine.

Campaigners trying to block the campaign were taken by surprise, but believed it could at least in part be explained by internal polling ahead of the state election on November 25.

Also read: Why Thousands of People Are Protesting a $16-Billion Coal Mine

“This is a great moment for Australians that support clean air, clean water and a safe climate. But it is not the end of this campaign. Australians will stop this mega coal mine,” said Australian Conservation Foundation CEO Kelly O’Shanassy.

There have been concerted national and local campaigns against the mine, and the government’s position on the mine has come under scrutiny in the first week of the campaign, including having the election announcement interrupted by anti-Adani protesters. Recent polls have suggested a majority of taxpayers oppose the mine.

With the government in caretaker mode ahead of the election, Palaszczuk called on her opponent, state Liberal National leader Tim Nicholls, to join her in vetoing the project. He refused.

This article was originally published on Climate Home News and is republished here with permission.