Adani Group's Abbot Point Coal Terminal may become a stranded asset: Report

The IEEFA has found that the Adanis' Abbot Point Coal Terminal is excessively leveraged and promises negative shareholders' equity

The Adani Group's Abbot Point Coal Terminal in Australia faces the risk of becoming a stranded asset if its proposed Carmichael mine fails to get 1 billion Australian dollar (AUD) subsidy, according to a report by US-based Institute for Energy Economics and Financial Analysis (IEEFA). 

The IEEFA, which conducts research and analysis on financial and economic issues related to energy and environment, has found that the Adanis’ Abbot Point Coal Terminal (AAPCT) is excessively leveraged and promises negative shareholders’ equity.

The Abbot Point terminal, IEEFA said, also "runs the risk of becoming a stranded asset if Adani's proposed Carmichael mine does not get the AUD 1 billion Australian taxpayer subsidy it seeks." 

The IEEFA further said the analysis finds more broadly that "Adani's entire AUD 3.5 billion debt-funded investment in Australia is at grave risk." 

Currently, operating at just over 50 per cent capacity, the AAPCT needs the Carmichael mine to fill the gap created as its current take-or-pay contracts progressively expire. 

"Securing this refinancing is going to be a real challenge, not the least because the port value has been tied to the success of the Carmichael coal mine proposal, which is itself yet to secure funding and which the big four Australian banks have refused to touch," Tim Buckley, lead author of the report and IEEFA's director of energy finance studies, Australasia was quoted as saying in the report. 

"The potential for a loss of up to AUD 1.5 billion on any decision to walk away from Carmichael mine and rail proposal, explains why the Adani Group has been so focused on securing Australian taxpayer money and royalty holidays to subsidise its loss-making ventures," he said. 

Meanwhile, Adani continues to search for overseas project funding, and events have transpired that make the Carmichael project a greater financial risk than ever, it said adding "Adani's major proposed offtake coal customer, Adani Power's 4.6 Gw import-coal power plant at Mundra in Gujarat, is financially distressed..." 

No comment could be obtained from Adani group on the IEEFA's report.