The Indian mining giant Adani has rejected a report that found its proposed Carmichael mega-mine in Queensland was financially unviable.
The report from the Institute for Energy Economics and Financial Analysis, released on Tuesday, dissects a corporate restructure by Adani Enterprises and its impact on the Carmichael proposals.
“IEEFA views the Carmichael proposal as commercially unviable and no longer consistent with the financial interests of the Adani Group,” the report said.
The restructure includes a demerger of Adani Ports and Adani Power. The report found this “further marginalises the Carmichael proposal” by making lenders less likely to provide the debt funding needed to see the project to fruition.
The report’s author, Tim Buckley, said the restructure would have the “unintended consequence of further undermining financing” for the Queensland mine project. Carmichael was already “effectively a stranded asset” rendered unviable because of changes in the Indian electricity market and the world market for thermal coal, he argued.
Buckley said Adani’s restructure pointed to the company’s eventual exit from Australia.
Adani said the report was riddled with “flawed assumptions” about financing and did not take into account India’s demand for coal.
“Contrary to the claims of anti-mining activists such as Mr Buckley about the decline in coal, in India around 16.6m tonnes is being imported per month and an additional 22,566 megawatts in generation has been added recently to India’s generating capacity,” a spokesman said.
“Of that increased capacity, 92% is coal-powered – with more to come. That is, it is a rapidly expanding energy market, with growing demand met largely but not exclusively from coal.”
The spokesman said the restructure would improve Adani’s focus on coal trading and coalmining.
The $16.5bn Carmichael mine, planned for the Galilee basin, was last month the subject of a legal challenge by conservationists in the land court of Queensland.
Buckley, who gave evidence during the case , estimated Adani had already outlaid $1bn on the project and still had to fund another $3.6bn for stage one.
Adani’s spokesman rejected that analysis. He said Adani stood by a commitment to deliver $22bn in taxes and royalties to Queensland over 30 years and create 10,000 direct and indirect jobs.
Last month, three major French banks declared they would not fund the Galilee basin projects, joining another eight international institutions that have stepped away.
