Extract from The Guardian
Briefings spark speculation company might abandon plans for mine altogether amid move into solar projects worth US$16bn
Adani has frozen its investment in Australia’s largest proposed
coalmine until world coal prices show a clear recovery, its executives
have indicated in stock analyst briefings in India.
The briefings even gave rise to speculation that Adani Enterprises, which has previously flagged spending $4.1bn on the Carmichael mine in north Queensland, might abandon its plans for the mine altogether amid a huge move by the company into solar energy.
A note from an Axis Capital stock analyst who was briefed by Adani Enterprises management on Tuesday gave valuations of the company stock that included one factoring in a “write-off of [its] dormant investment in Australia coalmine”.
“Management mentioned that further investments in its Australian coalmine project shall be dependent on visibility of revival in global coal prices,” it said.
Axis said that, despite the Carmichael mine receiving environmental clearance from the Queensland government this week, no major capital expenditure was expected “in the near term”, meaning until after June.
Adani Enterprises has already announced solar projects worth US$16b – more than the total A$16.5b flagged investment in the Carmichael mine and accompanying rail and port expansion.
The indefinite pause in its mine investment came as Queensland’s Liberal National party opposition called on the state government to urgently grant a mining lease.
The leader of the LNP, Lawrence Springborg, said the resources minister, Anthony Lynham, was “dragging the chain” on the lease approval while “tens of thousands of direct and indirect jobs are on the line and the state is missing out on the billions of dollars the Carmichael project could be pumping into the state’s economy”.
Tim Buckley, a former Citibank analyst now working with the pro-renewable energy Institute for Energy Economics and Financial Analysis, said the numbers revealed in the company’s December 2015 quarter results meant it had “a very remote prospect” of funding a new multibillion-dollar coalmine.
Buckley said no financial institution was going to finance Adani’s Australian coal venture in the face of a Indian electricity sector transformation, whereby record growth in domestic coal production and record high inventories would trigger a rapid fall in Indian coal imports this year.
Adani must show “financial closure” on its project before the Queensland government will allow dredging of Great Barrier Reef waters to expand its Abbot Point port.
Buckley noted that Adani Enterprises’ net debt of US$2.5b was double the market value of the company, itself down 44 per cent in the nine months to December 2015 to just US$1.2b. Net profit in the same period dropped 21 per cent to US$129m.
However, the company was “on track to commission the world’s largest solar project”, a US$650m, 648MW project in Tamil Nadu from next month, which Buckley said was part of a “massive strategic shift” into Indian solar projects.
“This suggests both Adani Enterprises’ focus on and capacity to finance Carmichael is more remote with every month, particularly with the ongoing collapse in coal import demand and prices,” Buckley said.
A spokesman for Adani’s Australian arm, when asked if he could confirm the Indian parent’s position that further investment hinged on a coal market rebound, responded with a statement referring only to the need to obtain regulatory certainty obtaining government approvals amid legal challenges by conservation groups.
He said that “endless appeals or extra delays or new red tape could still undermine these projects and we would have more confidence to get some of those works that were disrupted last year back on track were these resolved”.
Adani last year suspended engineering work on its joint venture rail line and Abbot Point expansion, as well as the project management team for the mine.
Adani Australia was “in a position to resume some of the development and other works on its projects within months of a mining lease being granted”, the spokesman said.“So, while endless appeals are designed to prevent jobs and prevent final investment decisions, we can resume a number of contracts that had to be disrupted by approvals uncertainty during 2015,” he said.
“The company has continued to progress contracts, with a view to ensuring that some work can get under way that will allow some jobs to start to flow within months.”
The Queensland Greens senator Larissa Waters said it was “clear this pollution bomb is a white elephant” and called on state and federal government to “rule out wasting taxpayer money by propping up this unprofitable project, which threatens agriculture and Great Barrier Reef tourism jobs”.
The briefings even gave rise to speculation that Adani Enterprises, which has previously flagged spending $4.1bn on the Carmichael mine in north Queensland, might abandon its plans for the mine altogether amid a huge move by the company into solar energy.
A note from an Axis Capital stock analyst who was briefed by Adani Enterprises management on Tuesday gave valuations of the company stock that included one factoring in a “write-off of [its] dormant investment in Australia coalmine”.
“Management mentioned that further investments in its Australian coalmine project shall be dependent on visibility of revival in global coal prices,” it said.
Axis said that, despite the Carmichael mine receiving environmental clearance from the Queensland government this week, no major capital expenditure was expected “in the near term”, meaning until after June.
Adani Enterprises has already announced solar projects worth US$16b – more than the total A$16.5b flagged investment in the Carmichael mine and accompanying rail and port expansion.
The indefinite pause in its mine investment came as Queensland’s Liberal National party opposition called on the state government to urgently grant a mining lease.
The leader of the LNP, Lawrence Springborg, said the resources minister, Anthony Lynham, was “dragging the chain” on the lease approval while “tens of thousands of direct and indirect jobs are on the line and the state is missing out on the billions of dollars the Carmichael project could be pumping into the state’s economy”.
Tim Buckley, a former Citibank analyst now working with the pro-renewable energy Institute for Energy Economics and Financial Analysis, said the numbers revealed in the company’s December 2015 quarter results meant it had “a very remote prospect” of funding a new multibillion-dollar coalmine.
Buckley said no financial institution was going to finance Adani’s Australian coal venture in the face of a Indian electricity sector transformation, whereby record growth in domestic coal production and record high inventories would trigger a rapid fall in Indian coal imports this year.
Adani must show “financial closure” on its project before the Queensland government will allow dredging of Great Barrier Reef waters to expand its Abbot Point port.
Buckley noted that Adani Enterprises’ net debt of US$2.5b was double the market value of the company, itself down 44 per cent in the nine months to December 2015 to just US$1.2b. Net profit in the same period dropped 21 per cent to US$129m.
However, the company was “on track to commission the world’s largest solar project”, a US$650m, 648MW project in Tamil Nadu from next month, which Buckley said was part of a “massive strategic shift” into Indian solar projects.
“This suggests both Adani Enterprises’ focus on and capacity to finance Carmichael is more remote with every month, particularly with the ongoing collapse in coal import demand and prices,” Buckley said.
A spokesman for Adani’s Australian arm, when asked if he could confirm the Indian parent’s position that further investment hinged on a coal market rebound, responded with a statement referring only to the need to obtain regulatory certainty obtaining government approvals amid legal challenges by conservation groups.
He said that “endless appeals or extra delays or new red tape could still undermine these projects and we would have more confidence to get some of those works that were disrupted last year back on track were these resolved”.
Adani last year suspended engineering work on its joint venture rail line and Abbot Point expansion, as well as the project management team for the mine.
Adani Australia was “in a position to resume some of the development and other works on its projects within months of a mining lease being granted”, the spokesman said.“So, while endless appeals are designed to prevent jobs and prevent final investment decisions, we can resume a number of contracts that had to be disrupted by approvals uncertainty during 2015,” he said.
“The company has continued to progress contracts, with a view to ensuring that some work can get under way that will allow some jobs to start to flow within months.”
The Queensland Greens senator Larissa Waters said it was “clear this pollution bomb is a white elephant” and called on state and federal government to “rule out wasting taxpayer money by propping up this unprofitable project, which threatens agriculture and Great Barrier Reef tourism jobs”.
No comments:
Post a Comment