India’s Adani Group plans to begin extracting coal from the $16.5 billion Carmichael project in Australia in 2020 after environmental protests delayed the first phase of the mine.
The company will begin work on the project three months after it gets final approval from Australia’s federal government, Gautam Adani, billionaire chairman of the Indian group said on Friday. Adani expects permission from Malcolm Turnbull’s government for the project in Queensland’s Galilee Basin as early as May, with a final investment decision by May or June, he said.
The project is meant to fuel power generation for 100 million Indians and create 10,000 jobs in Queensland. It will likely proceed given the pressing need for fresh sources of power generation in India, according to David Lennox, an analyst with Fat Prophets in Sydney.
“They are looking to have a complete supply line from the coal face to the electric consumer in India and don’t want to be hostage to outside companies for generation,” he said. “That gives it extra impetus.”
Protests against Australia’s largest coal project had delayed production, prompting the company to cut underground mining capacity by 38 percent. Environmentalists are concerned that the development will threaten vulnerable species including a lizard known as the yakka skink, as well as the Great Barrier Reef.
“Most of the approvals have gone through,” Annastacia Palaszczuk, premier of Queensland said in Mumbai on Friday, with Adani present during the briefing. “We don’t believe there will be any obstacles for that final piece of legislation going through the federal parliament and environmental conditions have been attached as well.”
Palaszczuk, who’s on a visit to Adani’s Mundra Port in Gujarat, did not give a time frame for the final approval. First conceived in 2010, the Carmichael coal project includes the coal mine and a rail link to Abbot Point port.
“It’s very high on the prime minister’s agenda. So I am quite sure they will debate it as soon as they possibly can,” Palaszczuk said.
The group has invested $3.3 billion in the coal mine, railway and port project in Australia, Adani said. The company is adopting a different strategy to build the mine, he said.
“We will decrease our underground mining capacity and keep it at 25 million tons instead of 40 million tons in the first phase,” Adani said. That will help save money, which can be used to fund the port facility, he said.
Adani, who is valued at $6.2 billion according to the Bloomberg Billionaires Index, said the group is eligible to tap the government’s Northern Australia Infrastructure Fund for half of the project’s debt requirement. That would amount to about $900 million, he said.
In the next two years, Adani Group will raise about $2.5 billion for the rail infrastructure, with the group injecting as much as $800 million in equity and the remaining will be debt including from the Northern Australia Infrastructure Facility, Adani said.