Adani to Self Finance Troubled Carmichael Coal Mine

India-based Adani Mining has announced that its parent company, Adani Group (BSE:512599,NSE:ADANIENT), will finance the Carmichael coal mine and rail project in full, and that both companies are ready to get started.

The proposed mine is set to be constructed in the North Galilee Basin in Queensland, with first-stage production docketed to produce 27.5 million tonnes of coal per year. The coal will then be transported along a planned 200-kilometer rail line to Abbot Point Port for export.

According to Adani Mining CEO Lucas Dow, the project has been revised to simplify construction and reduce the project’s capital requirements, and the mine’s construction and operation are set to commence immediately. The company has been unable to find an outside investor.

“Our work in recent months has culminated in Adani Group’s approval of the revised project plan that de-risks the initial stage of the Carmichael mine and rail project by adopting a narrow gauge rail solution combined with a reduced ramp up volume for the mine,” Dow said in a statement.

“This means we’ve minimized our execution risk and initial capital outlay. The sharpening of the mine plan has kept operating costs to a minimum and ensures the project remains within the first quartile of the global cost curve,” he continued.

Dow went on to highlight that the mine will be a smaller open-cut mine than other Queensland coal mines, and that construction of the shorter narrow-gauge rail line will begin so as to align with the project’s production schedule.

The company had originally planned for its railway system to be standard gauge and 388 kilometers long, but switched up the design choice in September to speed up the project’s completion and reduce capital costs; the new design also leverages existing rail infrastructure.

“We have already invested $3.3 billion in Adani’s Australian businesses, which is a clear demonstration of our capacity to deliver a financing solution for the revised scope of the mine and rail project,” Dow said. “The project stacks up both environmentally and financially.”

The project, which has now been eight years in the making between planning, security approvals and legal challenges, is expected to provide over 1,500 jobs on the mine and rail projects during initial ramp up and construction.

That said, Carmichael still has hurdles to face. According to the Guardian, Adani is still facing resistance from environmental groups, and will have to move past regulatory checkpoints.

Queensland Premier Annastacia Palaszczuk has expressed skepticism about the company’s plans to get the project off the ground. “We’ve got a lot of companies that come and say we’ve got finance to begin things and it doesn’t happen,” she said.

On the flip side, Tania Constable, CEO of the Minerals Council of Australia, is pleased about the job creation that will come with the project. “The Queensland and Australian economies will benefit from thousands of new regional jobs and long-term investment in the mine and rail infrastructure,” she said.

“The mine will also open up the North Galilee Basin for further development — an exciting new phase in Australia’s rich history of mining exploration and development which has made our nation a global mining powerhouse.”

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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.