Adani re­jects bank wor­ries

Townsville Bulletin - - NEWS - JOHN McCARTHY

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.

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