India’s infrastructure major Adani Group had announced yesterday that it has cancelled a $2.6 billion dollar contract with Australian mining services company Downer, just days after the Queensland government vetoed a concessional loan to the company for Carmichael coal mine.
In a setback to India’s energy giant Adani, the newly- elected Queensland government last week vetoed a plan to give a 900-million dollar concessional loan for the construction of a rail line in the controversy-hit Carmichael coal mine project in Australia. Notably, the split comes after Downer was the target of a nationwide activist campaign pressuring them to quit the 16.5 billion dollar project in central Queensland, according to media reports.
According to PTI reports, the Adani group had applied for the Northern Australia Infrastructure Facility (NAIF) loan worth 900 million dollars for building the 388-km rail line to connect the major coal mine to the sea port. The Adani group entered Australia in 2010 with the purchase of the greenfield Carmichael coal mine in the Galilee Basin in central Queensland, and the Abbot Point port near Bowen in the north. We take a look at why Adani cancelled such a major contract.
The Gujarat-based company said that the move was to lower its cost of production. “Following on from the NAIF veto last week, and in line with its vision to achieve the lowest quartile cost of production by ensuring flexibility and efficiencies in the supply chain, Adani has decided to develop and operate the mine on an owner operator basis,” Adani said in a statement. Further, the company also said that both parties had cancelled a conditional 2.6 billion dollar contract as part of its cost-cutting drive spurred on by the Queensland Government’s veto of its 1 billion dollar Commonwealth loan bid. Earlier this month, China’s two major state-run banks said they have no plans to finance the Carmichael coal mine project.
However, both the companies were also a target of environmentalists who had been opposing the controversial mega mine in Queensland’s Galilee Basin. In September this year, Alan Jones a radio broadcaster, had run a campaign to ‘stop the taxpayer loan to Adani.’ In the ad, Jones expresses his disbelief at the potential use of taxpayers’ money to help fund the $16.5 billion coal mine. “How is it that Australian governments are committed to Adani when no bank in the world will lend them money?” Jones asks.
However, the company says that the move was “simply a change in management structure” and that it is committed to developing the Carmichael project. According to PTI reports, China’s two major state-run banks said they have no plans to finance the Carmichael coal mine project. The Carmichael project, expected to create hundreds of jobs in Australia, has been facing opposition from environmentalists and indigenous groups.