The Adani Group company financing the Carmichael mine in north Queensland has told shareholders to expect a first coal shipment in August 2021, but the project’s rail plans will still require unspecified additional investment from “the family”.
In a conference call to discuss its financial-year earnings, executives from Adani Enterprises Limited – the ultimate parent company of the Carmichael mine – indicated the company may use “additional lines to fundraise”.
The chief financial officer of AEL, Robbie Singh, said expected capital expenditure of US$1.7bn would be required to build the project, including US$1.1bn for the rail line and US$600m for the mine.
“Funding is part of the AEL’s plan which was disclosed last year after annual results,” Singh said.
“So AEL has additional lines to fundraise. In relation to rail the AEL’s proportion of the rail also is part of AEL financial capacity and then rail also is partly funded by the [Adani] family,” Singh said.
On the call, AEL executives said they hoped the rail line would be completed by May 2021, with the first shipment the following August – a timeline that looks ambitious given elements of the project are still in the planning stage. Adani this month awarded a minor $1.4m “early services” contract to scope bulk earthworks required along the freight rail route.
Last month the Guardian revealed Adani had sought to delay a number of large upfront payments, raising questions about whether the company had allocated the required finance.
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The AEL call indicates a clear intent from the parent company to build Carmichael. Executives told callers from Indian financial institutions the mine itself “can be ramped up very quickly” and that the rail was “a critical path”.
It remains unclear how much funding would need to come direct from the Adani family, or how that arrangement would work.
The director of energy finance studies at the Institute for Energy Economics and Financial Analysis, Tim Buckley, said the project appeared to be “treading water while still waiting for money from India”.
Buckley said AEL seemed to be more focused on Carmichael than previously, though it appeared the financial situation left wriggle room for family patriarch Gautam Adani to pull the plug at any point, but the call backed up claims by Gautam Adani’s son Karan last week that the company’s intention to build the project were firm.
“All the signals are that he’s intending to go ahead … They could make that call and just get on with it tomorrow.
“Is this closer to starting than ever before? Yes. Is the personal capital risk profile for Gautam Adani higher than ever before? Yes.”
Buckley said a nonbank financial sector crunch had unexpectedly slowed economic activity in India. The economic situation combined with the continued collapse of the price of thermal coal, which has put miners across the world into financial stress, had made the financing process more difficult for Adani.
Since gaining its approvals last year, Adani says it has agreed more than $450m worth of contracts and has 150 workers on site conducting land clearing, surveying, fencing works, civil earthworks and other construction activities.
