Export credit funds to finance Adani's Australian coal mine project

Company denies any plan to shelve project, apprehensive investors back on table

Leading global financers, export credit fund from China and Korea and international banks which earlier refused to fund the Carmichael coal mine project of the Adani Group are in talks with the Indian conglomerate to fund the project. The company has yet again rubbished the opposition from the climate groups saying this will not impact the funding for the project.

“Till yet, only equity has been infused in the project and we are in process to tie up the debt. There are three streams we are now tying up debt with – export credit funds from our EPC (Engineering, Procurement & Construction) contractors of Korea and China, Northern Australia Fund and global commercial banks,” Jeyakumar Janakraj, Chief Executive and Country Head, Adani Group Australia told Business Standard. 

Northern Australian Fund can support up to 50 per cent of the cost of rail project associated with the mine. One of the mining development contractor is South Korean mining giant POSCO.

The total cost of the 25 million tonne Carmichael coal project is Australian Dollar (ASD) 22 billion along with a 380 km rail line. Adani Group has till now spent capex of ASD1.1 billion on the mine, ASD 0.2 billion on the rail line and ASD 1.8 billion on the commissioned port facility of 50 million tonne. Janakraj said capex of ASD4.8 billion is yet to be spent on the project as capex by the company.

The project would follow the 70:30 debt-equity ratio. Adani has close to 1.15 lakh hectare of land ownership in the Queensland district of Australia for this project. The company entered into agreement with the Australian government to develop the largest coal mine of the country in 2010. 

Janakraj said the banks which earlier got wary of funding the project due to the protest by various climate groups, are back in discussion with them, post the federal assurance from the Australian authorities that the project will not be scrapped. State Bank of India was one of the banks which announced funding $2 billion for the project but backed off later after protests against the project thickened.

Responding to the latest development where 90 prominent Australians urged the company and the government to shelve the project, Janakraj categorically denied that there is any such plan.

“Just because some 90 people sign a petition doesn’t mean we would rethink a project of such national importance and in an OECD country like Australia. All those who are opposing the projects are vocal minority and are all well funded by very motivated vested interest groups. Any amount of development that has to happen will not be deterred. We deal with all this very professionally. We have a very strong environment and sustainability team which is taking care of the ecological impact responsibly,” Janakraj told the paper over a telephonic interaction.

He said the early engineering work would begin from June 2017 and they would stick to the deadline of first tranche of coal dispatch by 2020.
 

In an earlier conversation with Business Standard, Australian Natural Resources minister Matthew Canavan said the project has 70-80 per cent from the local community. Canavan told the paper that “the delays are frustrating and the project would be the first such one to get off the ground and spur other investment.”

The coal from the Carmichael coal mine would be imported to India. It received approval last year to build permanent rail line till the port to transport the coal.