Indian billionaire company Adani’s decision to go ahead with its controversial Carmichael mine despite a major funding shortfall has left it scrambling for funds to little avail.
Following over seven years of legal challenges and delayed state and federal approvals Adani chairman, Gautam Adani, confirmed the board’s investment decision to proceed with the $16.5 billion mine in central Queensland last June.
Adani has been unable to rely on its usual major investors owing to increasing protests against the construction of the mine. Australia’s big four banks have distanced themselves from Adani, and Westpac has outright refused to loan to Adani following an anti-Adani protest at their 200th anniversary.
This has forced Adani to pressure the Turnbull government to help remedy its $3.3 billion funding shortfall and provide up to a $1 billion concessional loan for its out of favour mine. Whether its plea is successful or not will be confirmed later this year.
However, the Turnbull government’s hands are tied. The investment mandate for its Northern Australia Infrastructure Facility limits the government’s capacity to approve the loan. Section 17 of the mandate requires that environmental, social issues, and governance issues be considered before such a loan can be made.
If built, this will be Australia’s largest ever coal mine, and will cause Australia’s pollution levels to skyrocket. The Climate Council’s recent report estimates that the Carmichael mine would be emitting more than 1.3 times Australia’s current annual pollution levels from all sources.
The mine further threatens to irreparably damage the Great Barrier Reef, as coal shipments from the mine require the dredging of a nearby sea bed to redevelop the Abbot Point shipping port.
The Adani directors could breach due care and diligence duties if they do not properly consider environmental risk and its financial impacts, as cautioned by Sarah Barker, Special Counsel at MinterEllison and the instructing solicitor on the Hutley brief.
The government may also be forced to abandon the project to fulfil its Paris Agreement climate commitments, as explained by top Sydney Silk Noel Hutley and later by the Australian Prudential Regulation Authority.
Despite this, Prime Minister Turnbull has defended the use of the federal fund to help Adani build the vast coal project. The Queensland Government has been similarly enthusiastic about the predicted economic benefits of the project, despite a recent joint report by Ernst & Young and the Climate Council indicating that greater employment opportunities are provided by the renewal energy industry.
All in all, despite Adani’s confidence, it appears the Carmichael mine has a rocky road ahead.