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Doubts have emerged over the eligibility of Adani’s rail link for public funding as the company pushes ahead with plans for the controversial Carmichael coal project with a promise of 600 jobs at a new operational headquarters in Townsville, US-based Institute of Energy Economic and Financial Analysis (IEEFA) has said.
The Indian conglomerate’s announcement on Tuesday of new operational headquarters in Townsville comes days after it gained conditional approval of a $1bn federal loan for a coal rail line. It highlights new momentum for a project that has been fiercely resisted by environmental groups and traditional owners.
But while Adani has flagged building Australia’s biggest coalmine from mid-2017, doubts remain about its ability to gain bank funding for a project that will require another $10bn of investment over four years, the research organisation has said.
IEEFA added there is now a suggestion that Adani’s position that government funding for the rail line was “not critical” could put it at risk of being ruled ineligible to access the Northern Australia Infrastructure Fund.
Both the Australia Institute and Environmental Justice Australia argue that Adani – whose spokesman said a subsidy could fast-track the project but was “not critical” and was sought “because it’s available” – may not meet the NAIF investment criteria.
Tim Buckley, a former Citibank analyst now with the Institute for Energy Economics and Financial Analysis, said the Carmichael mine was at clear risk of being a “stranded asset”. In a briefing note, Buckley pointed out the mine’s Indian parent company, Adani Enterprises, which was separately committed to a US$10bn solar investment program, had a “current market capitalisation of equity of just US$1.1bn against…net debts of US$2.4bn”.
IEEFA questioned how it planned to fund at the same time “A$10bn greenfield investment program in building the world’s largest new thermal coalmine complex” along with an in-house power station, railway line and new expanded coal port at Abbot Point, Buckley said.
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