Adani may seek A$3bil debt for Aussie coal plans

SYDNEY: Indian conglomerate Adani Enterprises Ltd needs as much as A$3bil (US$2.3bil) in debt financing to help start producing Australian coal from one of the world’s largest mines, after major banks from Sydney to New York said they don’t want to lend to polluting fossil-fuel projects.

The company is seeking A$2bil to A$3bil from lenders, including from banks in China, for the first phase of developing the Carmichael mine and a rail line in Australia’s northeastern state of Queensland, according to a person with knowledge of the matter.

In addition, the firm planned to inject as much as A$3bil in equity funding for the project, the person said, asking not to be identified because the details are private.

Lenders from Goldman Sachs Group Inc to three of China’s largest banks have excluded themselves from the project, prompting researcher BIS Oxford Economics to say Adani’s plans fail to stack up financially.

The project has drawn ire from environmentalists who say it will endanger the health of the nation’s Great Barrier Reef, and Australia’s four largest banks have also distanced themselves.

“We would not be investing our time, money and energy in this manner if our projects were not viable and if we were not serious about delivering our projects,” Adani Australia’s Brisbane-based spokesman said in an e-mailed response to questions yesterday.

The company has invested A$3.3bil across its existing projects in Queensland, according to the e-mail. Adani didn’t respond to questions concerning the details on its funding plans for the project.

Local authorities in Queensland have said they would block a loan of A$900mil that Adani had sought from Australia’s government to build the 388 km rail line connecting Carmichael to the company’s Abbot Point port near the Great Barrier Reef.

Adani plans to start shipping the fossil fuel from 2020 directly from the port to India for use in coal- fired power stations.

Industrial & Commercial Bank of China Ltd, Bank of China Ltd and China Construction Bank Corp, all said earlier this month that they wouldn’t loan money for the project.

Still, Adani remains focused on courting Chinese lenders to help finance the development, according to the person.

The company aimed to produce 27.5 million tonnes of coal a year in the first phase of production, the person said.

It had previously outlined an eventual annual target of 60 million tonnes from the mine, according to a Queensland government document.