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Australian banks may still want to fund Adani’s disputed coal project

SBI's commitment to fund the Adani Group's coal project in Australia up to $1 billion in loan may be fraying with environmental activists led by Greenpeace International successfully forced many European and the US banks to pull out of the project citing damage to ecologically sensitive area, three people familiar with the development said.

But it may not be the end of the road for Adanis as many domestic Australian banks such as ANZ Banking, Westpac Banking and National Australian Bank along with some other Asian banks such as ones from Japan may still be willing to fund the transaction, they said preferring anonymity.

The nation's biggest bank, which signed the memorandum with the Adanis ahead of Prime Minister Narendra Modi's visit to Brisbane for the G-20 meet last year, is increasingly wary of getting drawn into it without other lenders also backing it, said a banker who did not want to be identified. State Bank of India did not respond to queries on the issue.

"State Bank of India is very exposed at the moment with their existing financial ties to Adani's controversial plans to develop a destructive coal port in the heart of the Great Barrier Reef," said Hozefa Merchant, an activist at Greenpeace India which is being targeted by the government for stalling growth and acting against the interest of the nation.

French lenders BNP Paribas, Credit Agricole and Societe Generale recently joined the 11 banks such as Barclays, Citigroup, Deutsche Bank, Goldman Sachs, HSBC, JPMorgan, Morgan Stanley and Royal Bank of Scotland which turned their backs on the project succumbing to pressure from environmental activists. Adanis have not followed up with a concrete plan for the project, due to the opposition from environmentalists fearing damages to the Great Barrier Reef, and also the collapse in coal prices. Some believe that due to the falling coal prices, it may not be viable for Adanis to develop the project and ship the coal to run its power plants in India.

Australia's Newcastle prices are down to $56 a tonne — almost 70% lower than the ruling prices some seven years ago. Prices of certain categories of coal in Europe are at a 10-year low. In Australia, prices are down 17% from a year ago. Spot prices, too, have declined following an oversupply situation in thermal coal globally. With demand from China unlikely to be robust many do not see any revival in coal prices.

source: http://economictimes.indiatimes.com