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article imageAre we hearing the 'death knell' for the Carmichael mine project?

By Karen Graham     Jul 22, 2015 in World
India's coal giant, Adani Group, has hit another snag in its $16.5 billion Carmichael coal mine project in Australia. Adani has now dissolved its 50-member project management team, citing delays in government approvals for the project.
The case against Adani Group building Australia's largest coal mine in the Galilee Basin in Central Queensland has focused on the environmental damages that would be incurred as well as the risk to endangered species. But there is now another good reason why the planned coal mine and Abbott Point port expansion might fall through.
It seems that finances, or the lack of financial support might prove to be the key to killing the project altogether. If the Carmichael coal mine project fails, it would put eight other mega-mine projects in jeopardy in the Galilee Basin. The Australian government has already poured A$2.0 billion of public money into expanding Abbott Point's port, according to the Guardian in May.
Adani halts work by project managers and engineering firms
Two key project managers for the Carmichael project, Parsons Brinckerhoff and South Korean construction company POSCO, also believed to be an investor in the Queensland project, were told last week to stop work on the Carmichael mine, rail line and port projects in the Galilee Basin, according to the Economic Times today.
The suspension of the two project managers comes less than a month after Adani told four engineering firms to halt work, WorleyParsons, Aecon, Aurecon, and SMC, resulting in the laying off of scores of workers. It was also reported that senior company officials flew back to India over the weekend to discuss the future of the Carmichael mining project.
Does Adani have the financial funding to go ahead with the project?
A source speaking to the Sydney Morning Herald today, and reported by the Economic Times, is quoted as saying, "It seems to me like they're at the crossroads of do they continue or do they do what (Indian conglomerate) GVK did and sack everyone." The source added, "I think they just don't have the money and can't get the money to go ahead. I think, one, Adani don't have the money, and two, they are realising this is a long, drawn-out process."
With all the speculation going on after Adani's latest move, the company says it is still committed to the project and insists, “these structural changes are connected to the same engineering contracts and preliminary works variations Adani announced last month,” reports the Guardian.
But, Tim Buckley from the Institute for Energy Economics and Financial Analysis says with the Posco staff leaving Brisbane and returning to Korea, this poses a "critical" problem. Posco was criticized by the Korean government's treasury officials for wanting to invest $445 million in Adani's project, saying the funding structure and mine's viability was not transparent enough.
As Buckley says, “Posco by pulling out of Australia doesn’t mean the whole deal’s dead but it makes it so much harder because it’s so critically dependent on Korea." He pointed out, “Who is the bank that’s actually funding it? There isn’t any. Korea was the major funder supposedly on the book. This is a major body blow. It’s probably the death knell.”
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