Adani Group may issue $1.5 bn in global bonds to fund Oz coal project

Written by feBureau | Mumbai | Updated: Dec 4 2012, 07:10am hrs
The Adani Group is considering issuing $1.5 billion in global bonds to fund the development of its coal project in Australia, its chairman Gautam Adani said on Sunday.

The group is in talks with bankers for the bond issue and is also considering other fund-raising options, including an equity sale and listing the companys mining business abroad, Adani told reporters after a press conference in Mundra, Gujarat.

The group has so far invested $3 billion in the Galilee basin project in Queensland, where it is developing the mine as well as building rail and port infrastructure. It plans to invest another $7 billion over the next few years.

There is also the possibility of raising $1.5 billion by reducing the promoters stakes in Adani Ports and holding company, Adani Enterprises, Adani said. Promoter shareholding is more than 75% in both the holding company and the ports business, which are listed on stock exchanges.

Adani Enterprises has a debt to equity ratio of 2.9:1, but hopes to bring it down to a much more relaxed 1:1 ratio by 2015, Adani said, as he expects the government to arrive at decision on tariff increases by next year.

Adani Power is currently seeking permission from Indian authorities to pass on more of the increasing cost of imported fuel to customers. The Carmichael mine in Australia is central to the companys plans to secure coal to fuel its power production capacity in India, which faces an electricity deficit. The group, which currently generates 5,320 MW, aims to generate 20,000 MW by 2022.

We will need 100 million tonnes per annum of coal to achieve our 2022 generation target, said Harsh Mishra, who heads Adani Groups international operations. We will reach peak production of 60 million tonnes (mt) of coal per annum 2022 onwards from the Carmichael mine

The mining exploration programme in the Carmichael mine in Australia established the single largest coal tenement in the world with reserves of up to 10 billion tonnes, Adani Group said on Sunday.

Adani Group aims to start production from the Carmichael mine by 2015 and plans to export its first coal shipment to India in 2016, Adani told reporters. Coal from the mine will be used to fuel the groups power plants in India as well as for trading.

Initially we plan develop 60 million tonne per year capacity out of which 50-60% will go to India, while 50-40% would be for trading, Adani said.

The group also plans to increase capacity of its Abbot Point ports coal terminal in Queensland that it acquired in 2011 to 120 mt a year from 50 mt now. Coal from the Carmichael mine will be transported via its 400km railway line to Abbot Point for exports to the groups power plants in India. The Martin Ferguson, Australian minister for resources and energy who was visiting the groups flagship port in Mundra, said regulatory clearances for the Carmichael mines project are expected by mid-2013. The move to invest in Australia defies a global commodities slowdown that has crippled many miners, but Adani reckons the market should look much brighter by 2016, when the group will begin to reap the rewards of its investment. It is a long-term investment. A little bit of pain in the short term does not bother us, he said.