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Has Adani lost interest in its Australian coal project?

Infrastructure conglomerate Adani Group seems to have lost interest in its ambitious $12 billion mining project in the Galilee Basin of Queensland, Australia, and is instead looking back at India for opportunities with better odds.

According to the Institute for Energy Economics and Financial Analysis (IEEFA), a Cleveland-based researcher, Adani’s once-ambitious mining plans in Australia have now petered out.

In its 13 August report, authored by Tim Buckley, director of energy finance studies - Australia, IEEFA said: “Carmichael, it seems, is no longer the hope, nor the priority it was (for Adani).” The research firm cited certain comments made by a senior management representative of Adani Enterprises earlier this week, while reporting the company’s first-quarter results for fiscal year 2015-16, to corroborate this claim.

“Our financial performance reflects the improved margins in our coal trading, mine development and operations and agro business,” said Ameet Desai, chief finance officer of Adani Group and executive director at Adani Enterprises.

Desai added: “With progressive policy measures by the government, we believe that Adani Enterprises is better placed to tap the growth potential in domestic mining and renewable energy space. We remain committed to leverage these opportunities and deliver sustainable growth.”

IEEFA has quoted the above passage in its report.

Adani had initiated the Carmichael coal project in 2010 with plans to develop a coal mine and a a rail link with Abbot Point port, but the project soon ran into opposition from environmentalists.

“When Adani says it’s ‘better placed’ to focus on domestic mining, one might reasonably ask ‘better than what’? On its former obsession with turning the Galilee Basin of Northern Queensland into one of the biggest open-pit coal fields in the world with its Carmichael mine project, a proposition that seems all but doomed now as banks step back from supporting it, as public opposition mounts, as—by Adani’s own admission above—the company’s better bet now is elsewhere,” the IEEFA report said.

Standard Chartered Plc on Monday said it will not advise or help finance the multi-billion dollar Carmichael coal mine in Australia. Last week, overturning environment permissions for the mine, the federal court of Australia said environment minister Greg Hunt had “ignored his own department’s advice about the mine’s impact on two vulnerable species, the yakka skink and the ornamental snake”. The yakka skink is a lizard seen mostly in Queensland.

IEEFA noted that Adani has its eggs in far more baskets, anyway, than the Galilee Basin.

True, the Adani Group is one of India’s leading business houses with revenue of over $10.4 billion. Founded in 1988, Adani has grown to become a global integrated infrastructure company with businesses in key industry verticals of resources, logistics and energy.

The research firm noted that the Indian government is currently focusing on renewable energy, while Adani Group plans to develop solar projects worth $700 million. On 11 August, IEEFA said that solar capacity will account for more than one-fifth of India’s increase in electricity demand by 2022 as installed capacity reaches 75 gigawatts.

“The losses associated with the development of the Carmichael project—years in the making now even as the odds against it actually being built diminish day by day—most likely continue to be capitalized against the balance sheet rather than through the income statement,” IEEFA said, referring to Adani’s Australian project.

However, Adani Enterprises while announcing its earnings had a special mention about its overseas mining business. From its coal mining business in Indonesia, the company extracted 1.1 mt (million tonnes) of coal in the first quarter of the current fiscal. It expects to do about 5 mt of coal mining in the current fiscal year, Adani Enterprises said in a statement.

“At the Carmichael coal mine, the company is continuing to select its key partners for the project development and finalize key contracts and awaits reconsideration of the decision by the federal environment minister,” the statement said.

source: http://www.livemint.com