US-based Institute for Energy Economics and Financial Analysis (IEEFA) has said that Adani Group’s most ambitious initiative, the $3.5 billion (Rs 178 billion) coal project in Australia, may be at risk. The Australian coal mining initiative is a debt-funded project and it is significantly at risk, said IEEFA. The report published by IEEFA says that the success of the project depends on the $1 billion subsidy the Australian government has said it will provide. However, if the subsidy does not come through, the project will become a loss making initiative. The report pointed out the many negatives of the project such as excessive financial leverage, reduced shareholders equity, etc. The project, which has been named as the Abbot Point Coal Terminal, is being financed through huge debt. Debt refinancing worth $1.5 billion is due next year and a cumulative debt refinancing of $2.11 billion by 2020.
Currently, the Abbot Point Coal Terminal is operating at just around 50 percent capacity. It will require the Carmichael mine to increase production so that the terminal can work to its full capacity. The IEEFA report says that the refinancing won’t be easy since the top banks in Australia have already refused to finance the Carmichael mine. Speaking about the matter, Tim Buckley, IEEFA’s Director of Energy Finance Studies, Australasia said, “The potential for a loss of up to $1.5bn on any decision to walk away from Carmichael mine and rail proposal, explains why the Adani Group has been so focused on securing Australian tax payers money and royalty holidays to subsidize his loss making ventures.”