Adani to start work on Australian Carmichael coal mine in 2017

Sydney (Platts)--23 Sep 2016 605 am EDT/1005 GMT

Indian Adani Group is planning to begin construction work on its giant Carmichael thermal coal project in the Galilee Basin in Australia's Queensland next year, and gradually ramp up production to 60 million mt/year, a company spokesman said Friday.

The project -- which is approaching its seventh year of the environmental approvals process -- has been forced to delay its start-up and change its development ramp-up profile due to a raft of legal challenges, including an appeal against it to the Federal Court by the Australian Conservation Foundation as recently as this week, the spokesman said.

"While the original first stage has been split into two slightly smaller sequential phases to allow for this longer ramp-up, the development is still for a 40 million mt/year and then, in the longer term, a 60 million mt/year project," he said.

Production from the mine is expected to increase from 25 million mt/year during the initial startup to 40 million mt/year around five to seven years into the mine's life, with the growth to 60 million mt/year to be determined from there, the spokesman told S&P Global Platts.

Article Continues below...

Request a free trial of: Coal Trader InternationalInternational Coal Report
International Coal Report

Platts Coal Trader International is the only daily publication where you can access Platts proprietary price assessments for coal trading in the Atlantic and Pacific markets, including FOB Newcastle 5,500 NAR; CFR South China 5,500 NAR; and FOB Kalimantan 5,900 GAR.

Every Friday, CTI includes a weekly biomass supplement containing a wood pellet market comment, CIF ARA industrial wood pellet price assessment and pellet generation spreads. Sign up for a free trial below.

Request a trialRequest More Information

"Not only has this legal interdiction been costly to taxpayers and for those in regional communities looking for work, but the additional cost of approvals and delays has to be accommodated in the project development plan," he said.

And the plan to begin construction next year will only happen upon resolution of outstanding approvals and court proceedings.

Director of energy finance studies at the Institute for Energy Economics and Financial Analysis Tim Buckley, said Thursday that even "downsized and delayed", the Carmichael coal proposal remains unbankable.

"The Galilee Basin is stranded 400 km inland from the coast without any industrial grade power, road, water, aviation or rail infrastructure in place," IEEFA said.

"Adani Enterprises argues their coal proposal is de-risked by the existence of its sister company Adani Power willing to provide long dated offtake agreements for its largely yet-to-be-built import coal-fired power plants in western India," it said.

"IEEFA would note Adani Power is in financial distress with net debts of over $7.3 billion against a market capitalization of just $1.4 billion," it added.

The Adani spokesman said that the company's commitment to the project is evidenced through its agreement to purchase the Abbot Point Coal Terminal operator Abbot Point BulkCoal from Glencore on Tuesday this week.

Adani is the terminal owner and plans to link the Carmichael mine to it via 388 km of rail way line.

--Nathan Richardson,

--Edited by Irene Tang,

Copyright © 2018 S&P Global Platts, a division of S&P Global. All rights reserved.