Profits of Adani's Carmichael mine com­pany tum­ble, leav­ing it in fi­nan­cial peril

The Guardian Australia - - News - Michael Slezak

Profits of Adani En­ter­prises – the com­pany in Adani Group’s com­plex struc­ture that owns the pro­posed Carmichael coalmine – have col­lapsed al­most 50% year-on-year, ac­cord­ing to a half-yearly re­port re­leased this week which does not men­tion the mine.

The re­sults fur­ther show the com­pany is in fi­nan­cial dis­tress, ac­cord­ing to Tim Buck­ley from the In­sti­tute of En­ergy Eco­nomics and Fi­nan­cial Anal­y­sis, who says they also re­veal the com­pany can’t walk away from the un­vi­able Carmichael project with­out de­scend­ing fur­ther into fi­nan­cial dis­tress.

The Carmichael coalmine, which would be the largest ever built in Aus­tralia, has strug­gled to find fi­nanc­ing for either the mine it­self or the as­so­ci­ated in­fra­struc­ture such as the rail line that would trans­port coal to an ex­port ter­mi­nal on the Great Bar­rier Reef.

Ev­ery ma­jor Aus­tralian bank has said it will not be in­volved in the project, and the com­pany has been seek­ing sub­sidised gov­ern­ment fi­nance from the Aus­tralian gov­ern­ment and pos­si­bly also from China.

“If they tried to exit the project now, they would either have to write it off or find some­one will­ing to buy it,” said Buck­ley.

If the project was writ­ten off or sold for sig­nif­i­cantly less than its cur­rent book value of US$1.15bn, the com­pany would find it in­creas­ingly hard to fi­nance its many other projects around the re­gion, said Buck­ley.

Cur­rently, the Adani En­ter­prises Limited – which is the only pub­licly listed com­pany in the Adani Group – has a book value of just un­der US $2.3bn. Mean­while, its lat­est re­port shows its debt has risen by al­most US $400m to US$3.83bn.

Buck­ley said if Carmichael were writ­ten off or sold for very lit­tle, that would re­move US$1.15bn from the com­pany’s book value, leav­ing it with debt worth more than three times the value of the com­pany it­self.

And with­out the Carmichael mine, the Ab­bot point coal ter­mi­nal’s vi­a­bil­ity would be threat­ened, leav­ing an even big­ger hole in the group’s fi­nances, other work by Buck­ley has sug­gested.

Buck­ley said the Carmichael mine isn’t specif­i­cally dis­cussed in the half-yearly re­port, de­spite the project rep­re­sent­ing about half the com­pany’s value.

“It is very telling to us that the 16-page in­terim re­port makes ab­so­lutely no men­tion of Carmichael coal pro­posal, not­with­stand­ing the Aus­tralian Adani Min­ing Pty Ltd man­age­ment re­peat­edly claim­ing the group is just four months from reach­ing fi­nan­cial close of a much de­layed, multi-bil­lion dol­lar in­vest­ment pro­gram,” Buck­ley wrote in a brief­ing note.

He said the omis­sion may sim­ply be a way of the com­pany avoid­ing ad­ver­tis­ing some­thing that is “em­bar­rass­ing and fi­nan­cially costly”.

Mean­while, the com­pany re­ported re­mark­able achieve­ments in its re­new­able en­ergy busi­ness in In­dia. Within three years, it has built the na­tion’s sec­ond-largest re­new­able en­ergy busi­ness, Buck­ley said.

In a state­ment re­leased with the re­sults, Gau­tam Adani, chair of the Adani Group, said they were con­fi­dent the busi­ness would bring “sig­nif­i­cant ben­e­fits to the In­dian econ­omy and the stake­hold­ers”.

“Adani En­ter­prises con­tin­ues to con­sol­i­date its po­si­tion as en­ergy and in­fra­struc­ture player,” he said. “With favourable pol­icy mea­sures, we re­mains com­mit­ted to cre­ate as­sets of na­tional im­por­tance.”

Ra­jiv Na­yar, the CFO of Adani Group said: “Our re­new­able, coal, city gas and agro busi­nesses have de­liv­ered broad-based, durable and prof­itable growth through im­proved op­er­a­tional per­for­mance.”

Pho­to­graph: Dar­ren Eng­land/AAP

A pro­tes­tor wear­ing a mask de­pict­ing Adani Group chair­man Gau­tam Adani is seen dur­ing a protest against the Carmichael coal mine in Bris­bane.

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