Adani to go ahead with $16.5-bn Australian mine project

Defying activists, Adani says group is committed to project and addressing energy poverty in India

The Adani Enterprises board of directors on Tuesday gave its nod to the $16.5-billion Carmichael mine and railway project in central Queensland, Australia, which had faced several roadblocks over environmental concerns. 

The announcement came a few days after the Adani Group agreed to pay royalties on the coal produced from its project, in an agreement with the Queensland government. 

The markets reacted positively to these developments, with Adani Enterprises stock on the BSE jumping 8.6 per cent, or Rs 10.15 per share, to close at Rs 127.8 on Tuesday. It had touched an intra-day high of Rs 128.4.

A previous deal had faced headwinds, with activists and locals saying the project received too much support from taxpayers’ money.

“This is the single largest investment by an Indian corporation in Australia, and I believe others will follow,” said Adani Group Chairman Gautam Adani. 

He added, “We have been challenged by activists in courts, in inner city streets, and even outside banks we have not even approached to finance the project… But, we are committed to this project. We are committed… to addressing energy poverty in India.”

Queensland Premier Annastacia Palaszczuk also inaugurated the regional headquarters of the Adani Group at Townsville on Tuesday.

Adani Enterprises Australia head and Chief Executive Jeyakumar Janakaraj said the company had already invested $3.3 billion in the project. It had bought bulk coal-handling facilities at Abbot Point port.

In the first phase, the mine would produce 25 million tonnes of coal annually. A 388-km railway line would be constructed to connect the mine to the Abbot port. Gradually, the mine’s production would be ramped up to 60 million tonnes per year.

Environmentalists have raised concerns over the project’s carbon emissions and potential damage to the Great Barrier Reef. They have also questioned its financial viability. 

“Adani Enterprises simply does not have the capital to fund this project,” said Tim Buckley, director, energy finance studies, Australasia, Institute for Energy Economics and Financial Analysis.

He added the investment decision was aimed at securing a $900-milion subsidy as well as a $370-million royalty holiday in Queensland.

Environment finance campaign group Market Forces called the investment decision a public relations stunt.

“The project is an economic disaster and would pose a significant risk to the environment,” said Julien Vincent, executive director, Market Forces. 

He added that the project had found no private investor. “Since the State Bank of India is the one of the few potential backers, the project could end up as a nightmare for taxpayers in India.”

Adani has dismissed the critics by claiming that the company is addressing power poverty in India and paucity of jobs in Queensland. He said the Carmichael projects would generate 10,000 direct and indirect jobs. Preconstruction work starts in the July-September quarter.

On Tuesday, Adani Enterprises also signed contracts for design, construction, operations, supply of materials and professional services. The biggest of these was a $2.6-billion deal with Downer Mining for operation of the mine.

In the past few weeks, the company has also announced contracts worth $150 million for railway tracks and concrete sleepers for the line between the mine and Abbot Point. Arrium Steel, Whyalla (railway tracks worth $74 million) and Austrak, Rockhampton (sleepers worth $82 million) got these contracts.

Janakraj also announced another railway project. “We are building a line that will open the Galilee Basin, linking that massive coal reserve to markets around the world, generating power and jobs,” he said.

The decision might still face headwinds from local councils, with the Wangan and Jagalingou (W&J) Traditional Owners Council still claiming that their consent was necessary for the project. Adrian Burragubba, a senior spokesperson for the Council said, “We are fighting this mine. The federal court will hear our case.”