India’s Adani Enterprises has said it will fully fund its coal mine and rail project in Australia, bringing it a big step closer to building a project that has faced fierce resistance from environmental groups for long.
Last year, the company said it was looking to borrow around A$2 billion ($1.46 billion) to get the A$4 billion project off the ground, targeting its first exports in March 2020.
Having missed many deadlines over the past few years, Adani also declined to give a timeframe for beginning construction or the first production from Carmichael.
“Our work in recent months has culminated in Adani Group’s approval of the revised project plan that de-risks the initial stage of the Carmichael mine and rail project by adopting a narrow gauge rail solution combined with a reduced ramp up volume for the mine,” a company statement quoted Adani Mining CEO Lucas Dow as saying.
“This means we’ve minimised our execution risk and initial capital outlay. The sharpening of the mine plan has kept operating costs to a minimum and ensures the project remains within the first quartile of the global cost curve,” he added.
Adani reduced its project plans early last year to make it more affordable after running into problems lining up financing, as banks backed away from funding new coal mines under pressure from investors worried about climate change.
It now plans to start by producing around 10 million tonnes a year for the company’s own use, eventually ramping up to 27.5 million tonnes for the first stage of the project. A mine of that size with a railhead would typically take around two years to build.
Initial output is just a quarter of Adani’s original plan to produce as much as 40 million tonnes a year spending A$16.5 billion to build a mine along with rail and port infrastructure.
The reduced plan only requires a 200-km railway connecting to Aurizon Holdings’ rail line, rather than a whole new 388-km competing line, and no port expansion, which helped drive down the cost. A company spokesperson said the sharpening of the mine plan has kept operating costs to a minimum.
The mine has battled a string of lawsuits from environmental groups, who argue it will contribute to global warming and damage Australia’s Great Barrier Reef.
Adani said the only approvals the project now needs are standard clearance for mine management plans.
The Carmichael Project will deliver more than 1,500 direct jobs on the mine and rail projects during the initial ramp-up and construction phase, and will support thousands more indirect jobs, all of which will benefit regional Queensland communities, the statement said.