Adani says it still needs a loan for rail line if coalmine is to go ahead

Adani says its Carmichael coalmine remains contingent on a loan to build a rail line to the Galilee Basin – comments that analysts believe will ramp up pressure on the Australian government to further subsidise the project.

Karan Adani, the son of company boss Gautam Adani, and the head of the conglomerate’s ports business, told India’s Economic Times the company had “completed financing on the mine” and that it had received all necessary approvals.

He said Adani was “just closing” a loan to pay for a rail line connecting the Galilee Basin to the Abbot Point port. “Once that is done, we will start,” he said.

Adani Australia put out a clarifying statement on Wednesday morning. It repeated Karan Adani’s comments but said the company “continues to work to secure finance for the Carmichael project”.

“Finance for the mine is contingent on securing finance for the rail component of the project as both are interdependent,” the statement said.

Adani had previously applied to the Northern Australia Infrastructure Facility for a loan to build the rail link. Any Naif loan was vetoed in November last year by the Queensland government, which had promised no public money would go towards the project.

Adani then missed two self-imposed deadlines to secure finance for the project. It struggled to find an investor without government effectively underwriting the project.

It remains unclear, given the company’s clarifying statement on Wednesday, where the money to build the mine will come from, or the extent of any external commitment to Carmichael.

Tim Buckley, from the Institute for Energy Economics and Financial Analysis, said Gautam Adani had the financial wealth to self-fund Carmichael and that “we can’t assume this project is dead”.

“Gautam Adani has never been wealthier than he is today. Never underestimate a billionaire,” Buckley said.

Buckley said the statements by Karan Adani and by the company appeared to be “continued pressure on the federal government to provide yet another massive subsidy”.

Adani has previously insisted that a federal loan for the rail line was not critical to the Carmichael project, but the goalposts have changed since late 2017, after Chinese banks and others baulked at the opportunity to invest.

It’s unclear why investors would back the coalmine separately to the rail link, which Buckley said could be “easily securitised” because it was a long-term infrastructure asset, and would be profitable in the event the Galilee Basin was developed.

The risk, Buckley said, was the rail line would become a “stranded asset” in the event the world responds to climate change. The International Energy Agency, in a Paris agreement baseline scenario, predicts demand for thermal coal will halve by 2040.

Adani Australia also clarified comments made by Karan Adani that: “We have all the government approvals for everything.” The company said it was continuing to work through “secondary approvals”.

There remain several obstacles before work at the mine can begin. They include:

• Federal approval for Adani’s proposed water scheme, to pump 12.5bn litres of water a year from the Suttor River to the mine. The government delayed its decision and has asked Adani for more information.

* A court challenge by a group of Wangan and Jagalingou people to a land-use agreement. If the challenge to invalidate the agreement is successful, Adani would then require the Queensland government to extinguish native title at the mine site.

* A stop order application by a group of Juru people, amid a dispute about cultural heritage in the vicinity of the Abbot Point coal terminal and a section of the rail link.

* Finance to build an airstrip near the mine site for fly-in fly-out workers. Townsville council reallocated funding for the project recently, having expressed concerns about Adani’s ability to continue with the Carmichael project.

* Finance to build the rail line. After the Queensland government vetoed a loan through the Naif, environmentalists have focused on the ability of the government-backed Export Finance and Insurance Corporation to support the rail link.