Export credit funds to finance project

Leading global financers that earlier refused to fund the Adani Group’s Carmichael coal mine project in Australia are again in talks with the Indian conglomerate. The company has played down opposition to the project by climate groups, saying it would not affect the funding.

“Till now, only equity has been infused in the project... There are three streams we are now tying up debt with —export credit funds from our EPC (engineering, procurement and construction) contractors of Korea and China, Northern Australia Fund and global commercial banks,” Jeyakumar Janakraj, Chief Executive, Adani Group Australia told Business Standard.

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

The total cost of the 25-milliontonne coal project, along with the 380km rail line, is A$ 22 billion. The Adani Group has till now spent A$ 1.1 billion on the mine, A$ 0.2 billion on the rail line and A$ 1.8 billion on the commissioned port facility of 50 million tonnes.

Janakraj said the capex of A$ 4.8 billion is yet to be spent on the project. The project would follow the 70:30 debt-equity ratio. Adani has close to 1.15 lakh hectares of land ownership in the Queensland of Australia for this project.

The company entered into an agreement with the Australian government to develop the largest coal mine of the country in 2010.

Janakraj said the banks that were earlier wary of funding the project due to protests by various climate groups are back in discussion with them, after an assurance from the Australian authorities that the project would not be scrapped. State Bank of India was one of the banks that announced a funding $2 billion for the project but backed off after protests against the project intensified.

Responding to the latest development where 90 prominent Australians urged the company and the government to shelve the project, Janakraj categorically denied 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 by phone.

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 had said “the delays are frustrating”.

The coal from the Carmichael coal mine would be imported to India.