Adani Group has turned to China to help fund a vast coal mine in Australia, holding talks with a big state-owned enterprise and enlisting Canberra’s support to market the project.
The Indian conglomerate approved construction of the A$16.5bn (US$12.7bn) coal mine in June but is struggling to fund the railway, coal and port development — in a project that has become a litmus test for global investors’ appetite for thermal coal.
Executives from Adani and Downer Group, a partner on the Carmichael coal project, met Zhang Chun, president of China Machinery Engineering Corporation (CMEC) earlier this year, according to CMEC’s website.
“CMEC is willing to co-operate with Adani to take part in the development and construction of new-energy (such as wind power) projects in Australia as well as traditional and new-energy projects in India,” CMEC said in a statement at the time.
It is not known how far the talks with CMEC have progressed but last week the Australian government confirmed it had written to the Chinese government in an attempt to dispel alleged “misinformation” spread by environmental activists about the project.
“The Australian government has written to the government of China to confirm the project has received all necessary Queensland state government and Australian government environmental and mining approvals,” George Brandis, attorney-general, told parliament.
The government denied it was advocating on behalf of the Adani company, following criticism from some lawmakers.
The Carmichael project has become a symbol of the global battle between environmentalists and the fossil fuel industry, attracting a series of legal challenges that have caused lengthy delays.
The proposed Carmichael mine sits in Queensland’s Galilee Basin, one of the world’s largest untapped coal resources. Adani plans to ship the coal to India from Abbot Point, a port near the Great Barrier Reef marine park.
Green activists claim 21 banks have ruled out financing the mine project, which they say would have huge environmental costs.
The extent of opposition to the mine was demonstrated on Thursday when anti-Adani activists peppered Downer executives with questions about the mine at its annual meeting. Downer has previously said it would not help finance the mine.
Investors have become wary of the reputational damage associated with thermal coal due to threat posed by climate change. They are also wary of the financial risks associated with the fuel, which has experienced a sharp fall in prices since 2012.
Tim Buckley, a director at the Institute for Energy Economics and Financial Analysis, which opposes the mine, said Adani’s talks with CMEC were important as a deal could potentially provide the company with access to Chinese banks and the country’s export credit agencies.
“I think China is the last bastion for Adani in terms of funding but it is definitely not agreed yet,” he said.
Source: www.ft.com
