An Australian federal court on Wednesday rejected the government's environmental clearance to the $16-billion (Rs 1 lakh crore) Adani coal mining project for not taking into consideration two endangered species, the yakka skink and the ornamental snake.
Within hours of the ruling, the Commonwealth Bank of Australia withdrew as an advisor to the project.
Analysts said this would hit Adani Mining’s ability to raise funds.
“With no bank ready to finance the project, it will become difficult for Adani to go ahead with the project. They will have to write off close to a billion dollars already invested,” said Tim Buckley, director of energy finance studies at the Institute of Energy Economics and Financial Analysis in Sydney.
When contacted, the Adani Group said it would continue to pursue the project. “It is regrettable that a technical legal error from the federal environment department has exposed the approval to an adverse decision. It should be noted the approval did include appropriate conditions to manage the protection of the yakka skink and the ornamental snake,” an Adani statement said.
“Adani will await the minister and his department’s timely reconsideration of its approval application,” the statement added. The Australian project involves mining coal in the hinterland, transporting it to the coast, and shipping it to customers in Asia. The Adani group has invested $2 billion (Rs 12,738 crore) in acquiring the Abbot Point port and another $1 billion (Rs 6,369 crore) in buying land and securing approvals for the coal mine and railway.
Local environmental activists have campaigned against the project saying the dredging will destroy the Great Barrier Reef, a world heritage site. Coal prices have also fallen by 56 per cent in the last four years, making the project unviable.
Barring the Adani and GVK groups, other energy entities have abandoned their coal mining projects in Australia. A few weeks ago, the Adani group had withdrawn its external contractors at the mining site, leading to speculation the group was abandoning the project.
"This is a devastating blow to Adani, and leaves their plans to build Australia's biggest coal mine and a new export terminal hanging by a thread,” said Julien Vincent, executive director of Market Forces.
"Commonwealth Bank was in line to be a leading lender to Adani's coal mine. Adani has lost the credibility that a major Australian institution's support brought to the project," she added.
Some of the world’s biggest banks have decided not to invest in the project citing environmental concerns.
GREAT BARRIER GRIEF
- Environmentalists hailed the ruling against the mine
- They say the project threatens two vulnerable species and endangers the Great Barrier Reef
- The project is estimated to cost up to $16 billion (Rs 1 lakh crore)
- Adani plans to build the coal mine and ship the coal out through the Great Barrier Reef
- The Great Barrier Reef is the largest collection of corals on earth, making up thousands of individual reefs of all shapes and sizes, alongside hundreds of exotic islands