Australia does not rule out government loan for Adani mine project

By Harry Pearl

SYDNEY (Reuters) - Australian resources minister Matt Canavan on Sunday did not rule out providing a A$1-billion ($748-million) government loan to Adani Enterprises for its Carmichael coal project, saying it would help create thousands of jobs.

Adani have submitted an application to the Australian government's Northern Australia Infrastructure Fund for a cheap loan to help fund a rail line into the untapped Galilee Basin, where the Carmichael project is located.

The project would help create 16,000 jobs, said Canavan, who is also the minister for northern Australia.

"This is about opening up a massive coal basin for Australia," he told Sky News. "Without a rail line your coal is stranded in the ground."

The Australian unit of Adani could not immediately be reached for comment outside business hours.

Environmentalists have lobbied banks not to provide loans and a number, including Germany's Deutsche Bank and Commonwealth Bank of Australia, have stated they will not participate in the project.

One of Australia's largest banks, Westpac, published a new climate policy on Friday, which effectively rules out funding for the Adani project.

Canavan labelled it a piece of propaganda, saying it was unfortunate major Australian banks were prepared to cave to activist pressure and did not want to help Australia grow.

Adani has battled opposition from some landowners and green groups who are worried about the project's carbon footprint and its impact on the nearby Great Barrier Reef World Heritage Area.

Adani plans to make a final investment decision in May or June on the project, which now targets annual output of 25 million tonnes in the first phase, down from an original plan of 40 million tonnes.

($1=1.3362 Australian dollars)

(Reporting by Harry Pearl; Editing by Clarence Fernandez)