Adani brawl intensifies

Via The Guardian:

Profits of Adani Enterprises – the company in Adani Group’s complex structure that owns the proposed Carmichael coalmine – have collapsed almost 50% year-on-year, according to a half-yearly report released this week which does not mention the mine.

The results further show the company is in financial distress, according to Tim Buckley from the Institute of Energy Economics and Financial Analysis, who says they also reveal the company can’t walk away from the unviable Carmichael project without descending further into financial distress.

The Carmichael coalmine, which would be the largest ever built in Australia, has struggled to find financing for either the mine itself or the associated infrastructure such as the rail line that would transport coal to an export terminal on the Great Barrier Reef.

Every major Australian bank has said it will not be involved in the project, and the company has been seeking subsidised government finance from the Australian government and possibly also from China.

“If they tried to exit the project now, they would either have to write it off or find someone willing to buy it,” said Buckley.

If the project was written off or sold for significantly less than its current book value of US$1.5bn, the company would find it increasingly hard to finance its many other projects around the region, said Buckley.

Currently, the Adani Enterprises Limited – which is the only publicly listed company in the Adani Group – has a book value of just under US$2.3bn. Meanwhile, its latest report shows its debt has risen by almost US$400m to US$3.83bn.

Buckley said if Carmichael were written off or sold for very little, that would remove US$1.15bn from the company’s book value, leaving it with debt worth more than three times the value of the company itself.

And without the Carmichael mine, the Abbot point coal terminal would be unviable too, leaving an even bigger hole in the group’s finances, other work by Buckley has suggested.

And Herald Sun:

OPPOSITION to Adani’s coal mine continues to build as two prominent Australian business leaders come out against the project.

Entrepreneur and philanthropist Michael Myer of the prominent Myer retailing family, and Intrepid Travel founder and chief executive officer Geoff Manchester, have both decided to speak out against the $16.5 billion project in Queensland’s Galilee Basin.

The two men share similar concerns but were not aware of the other’s views before going public.

“The mine itself is an outrage,” Mr Myer told news.com.au.

“It’s a stranded asset … and the proponent (Gautam) Adani is basically doing a very good job at conning our politicians at all levels of government.”

But he said the fact that governments were subsidising the project was also concerning. Federal, state and local governments have all agreed to, or are considering, providing the project with financial assistance.

Mr Myer said the economics of the project did not stack up and the leading supporters of the project were politicians, not those in the business world.

“The whole line that this is good for Queensland jobs is farcical and delusional,” Mr Myer said.

“It doesn’t stack up economically and as time goes on the economics get even worse.”

While the governments have continued to spruik the “10,000 jobs” that will be created, Adani’s own expert has admitted the figure will be closer to 1400 once jobs lost in other areas are taken into consideration.

Mr Myer believes the 10,000 number is “mythical” and the real number will likely be even less than 1400 as many operations can now be automated.

These jobs could also come at the expense of others.

At risk is Australia’s lucrative tourism industry with many concerned about the impacts of climate change on the Great Barrier Reef.

“Tourism operators are very concerned about this because we’ve already seen some negative impact on the Great Barrier Reef from bleaching in the last couple of years,” Intrepid CEO Geoff Manchester said.

“We’ve already had seen some local tourism operators impacted.”

Not to mention the many job that will be lost in NSW coal mines.

But the One Nation beast must be fed.

Comments

  1. Good on Mr Myer. But why do the retailers have nothing to say about the real estate bubble and private school fees?

    A great chunk of retailers, if not most, pay rent. Not to mention, if land is fairly priced – voters will have more disposable income.

  2. Here’s the question for me; if the gov thinks this is so important for jobs, what about the auto industry jobs that could have gone to electric vehicles, and all the suppliers.. One stat from an ex Pilkington worker; 10 million pieces of glass supplied to auto industry …gone. So car workers and all the supply chain worth nothing, but coal is for how many jobs? Let alone the environmental damage from the moral vacuum lot.

    So much we could do as a country with the right policies.

  3. Back in my banking days we raised 350m Euros for a Bulgarian Steelworks which had been bought (with a tiny equity stake) by an Indian outfit. It was bankrupt within 18 months and the Indians high-tailed it back from whence they came (presumably), the bondholders getting royally shafted. Just saying ..

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