Adani to seek $2.3 billion of debt for Oz coal projects

Indian conglomerate Adani Enterprises Ltd. needs as much as A$3 billion ($2.3 billion) in debt financing to help start producing Australian coal from one of the world’s largest mines, after major banks from Sydney to New York said they don’t want to lend to polluting fossil-fuel projects.

The company is seeking A$2 billion to A$3 billion from lenders, including from banks in China, for the first phase of developing the Carmichael mine and a rail line in Australia’s northeastern state of Queensland, according to a person with knowledge of the matter. In addition, the firm plans to inject as much as A$3 billion in equity funding for the project, the person said, asking not to be identified because the details are private.

Lenders from Goldman Sachs Group Inc. to three of China’s largest banks have excluded themselves from the project, prompting researcher BIS Oxford Economics to say Adani’s plans fail to stack up financially. The project has drawn ire from environmentalists who say it will endanger the health of the nation’s Great Barrier Reef, and Australia’s four largest banks have also distanced themselves.

"We would not be investing our time, money and energy in this manner if our projects were not viable and if we were not serious about delivering our projects," Adani Australia’s Brisbane-based spokesman said in an emailed response to questions Friday. The company has invested A$3.3 billion across its existing projects in Queensland, according to the email. Adani didn’t respond to questions concerning the details on its funding plans for the project.

Local authorities in Queensland have said they would block a loan of A$900 million that Adani had sought from Australia’s government to build the 388 kilometer rail line connecting Carmichael to the company’s Abbot Point port near the Great Barrier Reef. Adani plans to start shipping the fossil fuel from 2020 directly from the port to India for use in coal-fired power stations.
Industrial & Commercial Bank of China Ltd., Bank of China Ltd., and China Construction Bank Corp., all said earlier this month that they won’t loan money for the project.

Still, Adani remains focused on courting Chinese lenders to help finance the development, according to the person.

The company aims to produce 27.5 million tons of coal a year in the first phase of production, the person said. It had previously outlined an eventual annual target of 60 million tons from the mine, according to a Queensland government document.