The Adani Group has resorted to “self-financing” of the rail haulage works for the Carmichael coal mine and rail project in Queensland’s Galilee Basin with its ports unit — Adani Ports and Special Economic Zone Ltd (APSEZ) — setting up an Australian subsidiary to finance, build and run the rail link estimated at about $350 million.
The Adani Group’s move to involve APSEZ directly in financing and operating the rail haulage link is reflected in the latter’s books, which list Bowen Rail Company Pty Ltd — the new Australian unit — as a subsidiary, held via a Singapore subsidiary, Bowen Rail Operation Pte Ltd.
The Adani Group has been trying to develop the coal mine and the rail project for over a decade but is unable to attract debt or equity investors in the face of growing global campaign against the project.
The new entity will use Adani Ports’ balance sheet to fund investments estimated at $350 million for the 27-million-tonne-a-year rail haulage capacity for locomotive and coal wagon purchases, plus associated maintenance facilities and equipment, port industry sources said.
The Adani Group has awarded the civil construction works contract worth $350 million for the Carmichael rail network — its largest construction contract for the Carmichael project yet — to Queensland-based BMD Group.
Rail track construction
Carmichael rail network involves construction of about 200 km of rail track that will use some 26,417 tonnes of steel and 319,000 sleepers.
Analysts say that the renewed involvement of APSEZ in the Carmichael project could raise significant environmental, social and governance red-flags for global investors.
“The more Adani Ports increases its exposure to the Carmichael coal, rail and port business, the more climate risk is likely to be priced into Adani Ports’ bonds, particularly as more globally significant financial institutions (GSFI) are specifically excluding thermal coal exposures entirely,” the Institute for Energy Economics and Financial Analysis (IEEFA) wrote in a report published earlier this month.