Adani rejects bank worries
ADANI has hosed down claims its Carmichael megamine project is struggling, with reports out of India saying it can’t find banks to fund it.
The reports suggest the country’s banks can’t finance the coal mine project because Adani’s debt levels are too high and that their exposure to the company had reached their limits. There were also claims banks were concerned about reputational damage.
However, the company restructured its debt recently and yesterday said it had been in talks during the past month with lenders over the project.
There has also been speculation about a British company buying a stake in the project.
“We are gaining momentum all the time,’’ an Adani spokesman said last night. “We have financial arrangements with the parent company and less than $ 2 billion to gather.’’
The Adani spokesman asked if critics were so certain the project was not financially viable, why were they spending so much time trying to attack it. He said the debt issues were not as bad as critics pointed out.
However, Adani also faces a problem at the Mundra power station, which will take coal from the Carmichael mine.
The massive power station in India’s northeast has effectively become unviable due to higher costs which it cannot pass on to consumers and Adani is now trying to hand it off to a provincial government.
And London’s Financial Times has reported that even the State Bank of India, which in 2014 said it would fund $ 1 billion of the Gallilee Basin project, had also backed away.
Global market research company Wood Mackenzie said under current price assumptions, the Carmichael mine did not generate a positive net present value.
It however expected the project to start in 2023 but financing was “the single biggest hurdle to project delivery’’.
University of Queensland economist and Adani critic John Quiggin also recently wrote a report claiming the project was not viable. He said on current economics the project would not provide sufficient returns for it to get financing.