Adani Coal Mine Project Suffers Another Setback, Drops Contractor

Multinational conglomerate Adani has announced on Dec.18 that it has dropped Downer EDI Ltd, a contractor, which was helping them develop and run its Carmichael coal mine in Australia after they failed to secure a cheap government loan for the project, Reuters reported.

“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 Australia said in a statement.

Adani and Downer announced that the decision to cancel all letters of award for mine services and related infrastructure came after the premier of the state of Queensland said she would veto a A$900 million loan from the federal government’s Northern Australia Infrastructure Facility (NAIF) for the mine’s rail line.

Adani Australia had made announcement in 2014 where it said that it planned to outsource the operation of Carmichael mine in Queensland, Australia to Downer EDI Ltd under an $2 billion agreement. The decision to part ways is “mutual”.

This marks the latest setback to $13 billion Carmichael coal mine project after banks–major Australian banks as well as international banks and more recently three Chinese lenders–issued statements saying they would not support the controversial project.

The newly-elhttps://littleindia.com/chinas-top-banks-distance-adani-coal-mine-project-australia/ected Labor government fulfilled it’s election promise to veto the NAIF loan to Adani, saying that while it backs the project since it will create jobs, it must be viable without taxpayer funds, including federal funds, reported the Guardian.

The Letters of award received in 2014 by Downer’s were preliminary agreements that was expected to lead to contracts worth A$1 billion or more over the course of seven years to build infrastructure and run Adani’s mine. The companies never signed actual contracts. Downer’s market shares fell 1.6 per cent in early trade on Dec.18 and in a broader market the shares were up 0.4 percent.

Gautam Adani-owned firm meanwhile, said it remains committed to the project that has faced setbacks since its inception in 2014. The project has faced numerous court challenges from environmental groups who claim that the project might cause potential damage to the Great Barrier Reef and were concerned about climate change.

“This will not affect our commitment or the number of local jobs across Queensland. This is simply a change in management structure and ensures that the mine will ultimately be run out of our Adani Australia offices in Townsville,” the firm said.

The development has been welcomed by anti-Adani protestors. “Downer walking away from Adani is the biggest nail in the coffin for the Carmichael mine thus far. Adani are unlikely to find another Australian company willing to risk building and operating such a controversial mine,” said Ben Pennings, a spokesperson of Galilee Blockade, a protest group.