Adani Group stops work at Australian mine project; revises budget to fight delays

MUMBAI: The Adani group's ambitious and controversial plan to export Australian coal from a port near the Great Barrier Reef to feed power-hungry households in India has suffered a setback due to delay in securing crucial clearances. Engineering work at the Carmichael coal mine in Australia's Queensland state has been halted and the Ahmedabadbased group is revising its budget and strategy given that the project is yet to take off after five years of development.

In a statement on Wednesday, Adani hinted at discomfiture with the delays and said that it is now critical to get approvals. "Adani has made a commitment to build a long term future with Queensland that will deliver 10,000 jobs and $22 billion in royalties and taxes that will be reinvested back into community services.

to note we are now into the fifth year of development and approvals and therefore the need to finalise those approvals and timelines is critical," the Ahmedabad-based group said in a statement.

It planned to mine the coal, transport it 300 km to the Abbot Point port near the ecologically sensitive Great Barrier Reef and export it to India at a cost of $7 bln.

Given the size and scale, it attracted controversy from the beginning with environmentalists warning of severe damage to the Great Barrier Reef. The Queensland government allowed Adani to dredge in the waters to near the Barrier Reef but the dumping of the seabed was shifted onshore instead of in the wetlands and waters near the sensitive Reef.

Adani has not secured funding for the project and bunch of big global banks have declined to participate citing environmental concerns. The Guardian newspaper reported on Wednesday that engineers have been asked to stop work and Reuters reported that the company has confirmed the work stoppage.

"For the past six to 12 months, Adani has maintained a level of investment, jobs and sub-contractor engagement for its mine, rail and port projects in anticipation of finalising approvals and decisions.

The project budget was based, understandably, on these anticipated approvals timelines and milestones. As a result of changes to a range of approvals over that time, it's necessary to synchronise our budget, project timelines and spending to meet those changes," Adani's statement said. A senior executive from the group said that Adani was still keen to go ahead with the project but the lack of clarity on approvals had made it difficult for the company to take decisions regarding the project.

The timeline for the project has been pushed back due to delay in getting approvals for the project, which would be Australia's largest coal project. Adani is also facing a federal case from Indigenous landholders and conservation groups challenging the Indian conglomerate's project which may further delay the government's decision to give it a green signal.

Adani Group floated Adani Mining Private, a special purpose vehicle, in August 2007 with the purpose to undertake activities related to development and operation of domestic coal mine. The SPV is now being merged with Adani Enterprises as a part of the group's restructuring plans. Indian companies like Adani Mining, Lanco Infratech, and GVK acquired coal assets in Australia to plug the fuel gap. While Lanco is the only one with an operational projects, all three have faced resistance from local landowners and environment groups. Lanco even ran into trouble with its local contractor Carna, its supplier for workers and equipment, and has to terminate the pact leading to production coming to a standstill.