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Adani gets the go ahead on $6bn plus Carmichael Coal project in Australia

Monday, 20 February 2012 | 16:30
India's largest coal importer, Adani Enterprises, is all set to mine 60 million tonnes of coal each year from an open cut and underground mine in Australia, for export to India. The Carmichael Coal Project in the Galilee Basin is the last undeveloped coal resource in Queensland.
The Indian firm purchased the site for $110 million and plans to spend $6 billion on the project. An official said a property was purchased from Graeme Acton's Moray Downs cattle station, which is stationed about 160 kilometre north-west of Clermont, to accommodate the mine.
He added that the Adani Group also has plans to build a new airstrip and new rail and port facilities in Queensland to help it export the coal to India. ``The mine's potential of 60 million tonne of coal is only in the first phase. This can go up to 100 million tonnes,'' said the official. The mine reportedly has a life of more than 100 years.
Adani boasts of being the largest single investment by an Indian firm in Australia. In May last year, the same company bought Queensland's Abbot Point Coal Terminal for $1.98 billion. Located in North Queensland in Australia, the Abbot terminal services three mines in the Bowen Basin and the port helps the Indian firm ship coal to its power plants in India.
To aid finance, the Indian firm is close to finalising a long-term project loan to the tune of around A$1.4 billion from a consortium of banks to replace the nearly US$2 billion bridge loan raised by it to acquire Abott Point terminal last year.
Chief Financial Officer Devang Desai told newswire agencies that the firm is taking loans from banks in Australia and that the process is at the documentation stage. The firm is in talks with some of the top banks in Australia including, Commonwealth Bank, National Australia Bank and Westpac Banking Corp.
Last year, the Ahmedabad-based diversified group got a one year bridge loan to fund the  acquisition of Abbot Point coal terminal from Standard Chartered Bank and State Bank of India. Desai said by replacing the bridge loan, the company would be saving on the local currency and that it would get long term project finance for five years.
Earlier, in the Galilee Basin, it had bought Australian Linc Energy's coal tenement for $3 billion, including $500 million payment and $2.5 billion in royalties.
Mining firms active in the Australian state ave been warned to hire local workers at their projects, Adani has repeatedly said it would employ Australian workers before it considers overseas workers. The project would initially employ 5,000 workers in the construction phase, and another 4,000 ongoing jobs.
India has been dipping its hands in Australia's coal sector for some time. GVK, one of India's largest power and infrastructure groups, acquired a 79% stake in the Alpha coal project in Queensland's relatively undeveloped Galilee Basin from Hancock Prospecting for $1.26 billion last year. The mines were privately controlled by billionaire Gina Rinehart.
Lanco Infratech, an Indian power group, also acquired assets of Australia's Griffin Coal for $750 million last year. Analysts maintain ownership of infrastructure assets are set to strengthen India's power to negotiate supply agreements with Australian coal miners.
``There are several big deals happening in Australia and more are likely in the near future as the opportunities are huge and the risk of doing business there is low,'' said an analyst with a broking firm.
Adani Enterprises reported a 14.15% dip in net profit at $8.2 billion (Rp407.2bn) for the third quarter ended December 31 on account of forex losses.
The Adani Group flagship company had posted net profit of $9.6 billion (Rs474.4 billion) in the October-December quarter in 2010-11. Consolidated net sales, however, rose 60% during Q3, vis-a-vis third quarter of last fiscal. The company's interest and finance charges rose over 3-fold.
The company expects its coal mining operations in India to commence from the middle of 2012. ``We expect our first mining operations in India to commence in early part of Q1FY13 at Parsa Kante coal blocks in Chhattisgarh.'' an official said. The two coal blocks are estimated to have reserves of over 452 million tonnes.
Source: Mine Web
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