Adani puts Australian mine project on hold

Confirms report that it has asked independent contracting firms to halt work

Indian coal giant Adani Mining has asked its four engineering contractors working on the Carmichael project to halt work around the mine, the Guardian Australia reported, citing people familiar with the matter. Confirming the report, Adani spokeswoman Kate Haddan said: "This is only temporary." The spokesperson added that a target to commence coal mining in 2017 stood for now.

Halting work at this stage of the project made no sense even as a savings measure, and raises speculation that the Indian company might scrap the project altogether, Guardian Australia said.

The company also said on Wednesday that it was rejigging the budget on the A$10-billion ($7.72-billion) Carmichael coal mine project in Australia as it faces delays in government approvals. Adani intends to ship most of the coal from the mine to India for use in generating household power in line with Prime Minister Narendra Modi's goal to connect all of India to the electricity grid during his tenure.

Adani in a statement said the Carmichael project's current budget based on previous anticipated approval timelines and milestones were no longer achievable due to delays in receiving various approvals from the Queensland state government. "As a result of changes to a range of approvals over that time, it's necessary to synchronise our budget, project timelines and spending to meet those changes," it said.

Adani has signed up buyers for about 70 per cent of the 40 million tonnes coal the Carmichael project is due to produce in its first phase, with production expected to begin in late 2017. The report said it is understood that about 40 engineers working for one of Adani's contractors, WorleyParsons, were among those pulled off the project. Tim Buckley, a director of energy finance studies, Australasia, at the Institute for Energy Economics and Financial Analysis, which opposes new coal developments said halting work at this stage "just crucifies the project", the newspaper reported. SMEC, one of the contractors hired by Adani, declined to comment. Adani’s other contractors Aecon, Aurecon and WorleyParsons could not be reached for comment. Adani's ambitions in Australia have been uncertain following a surprise election result in Australia's coal-rich Queensland state, leading to a policy reversal, and heightened pressure to protect the Great Barrier Reef. Adani's project mainly hinges on environmental approval to deepen a port on the fringe of Australia' Great Barrier Reef in order to ship the coal, a proposal generating opposition worldwide.

An earlier plan to dump 3 million cubic metres of soil dredged at the port of Abbot Point into the sea about 25 km (15 miles) from the Great Barrier Reef was rejected.

A draft UN ruling has recommended against listing the Great Barrier Reef as "in danger" but indicated it remains on its watchlist ahead of a final ruling due by the end of this month as it monitors plans for dredging. Eleven of the world's biggest private investment banks, including Citigroup, Morgan Stanley, Goldman Sachs, and JPMorgan Chase, have ruled out providing financing to Adani, citing environmental concerns over the reef and fossil fuel development.
 

The Queensland Department of State Development, which is charged with approving the storage procedure, did not immediately respond to a request for comment.

Australia's minister for industry and science, Ian Macfarlane, recently said he was confident Adani would build the mine because India was looking for a stable supplier of coal.

($1 = 1.2957 Australian dollars)