Ahmedabad: After battling environmental protests and legal and regulatory hurdles for seven years, Adani Enterprises Ltd said on Tuesday that it is finally ready to proceed with the $16.5 billion Carmichael mine and rail projects in central Queensland, Australia.
The company’s board has given its final go-ahead to the project, chairman Gautam Adani said in a statement.
“I am proud to announce the official start of one of the largest single infrastructure and job creating developments in Australia’s recent history,” Adani said, calling it a historic day for Queensland and for Indian investment in Australia.
Investors cheered the announcement. Shares of Adani Enterprises rose 8.63% to Rs127.80 on BSE on a day the benchmark Sensex fell 0.38% to 31,190.56 points.
Adani, which has already invested $3.3 billion in the project, including buying the bulk coal handling port at Abbot Point, has battled protests by environmentalists who claim the coal project would increase carbon pollution and cause irreparable damage to the Great Barrier Reef marine park in northern Queensland.
“We have been challenged by activists in the courts, in inner city streets, and even outside banks that have not even been approached to finance the project,” chairman Adani said in a stock exchange filing.
“We are still facing activists. But we are committed to this project,” he added.
Adani’s announcement comes on the heels of an agreement reached with the Queensland government last week on royalty payments for the coal mine project. The Adani Enterprises board had earlier deferred a final go-ahead for the project pending the royalty agreement.
The company said it had signed contracts for design, construction, operations, supply of materials and professional services. This includes a $2.6 billion agreement with Downer EDI Ltd for the construction and operation of the Carmichael mine.
The company has also announced in the past few weeks contracts totalling more than $150 million for railway tracks and concrete sleepers for the planned 388-km standard gauge rail link between the mine and the Abbot Point port terminal.
Queensland Premier Annastacia Palaszczuk on Tuesday officially opened Adani’s Regional Headquarters (RHQ) in Townsville from where the company will oversee the construction and operations of the project.
Palaszczuk said Australia’s third biggest state had been hit by a resources downturn which has hit mining firms across the country. Adani’s final decision “is a vote of confidence not just in the Queensland economy, but in Queensland people”, she said.
Environmental finance campaigning group Market Forces said Adani’s “final investment decision” could end up forcing the Australian and Indian public to shoulder major risks.
“The Carmichael mine is an economic disaster but the fact that it would pose significant risks to the environment, air pollution, and our chances of avoiding runaway climate change means that investors have also seen this project as laden with reputational risk,” said Julien Vincent, executive director of Market Forces, in a statement.
The Carmichael project is expected to generate 10,000 direct and indirect jobs, with pre-construction works starting in the September quarter of 2017. The group expects to mine 25 million tonnes per annum in the first phase by 2020-2021.
Last year, the Queensland department of environment and heritage protection issued the final clearance for the project in the Galilee Basin. On 19 August, Adani won a major legal battle when the Australian apex court dismissed appeals lodged by indigenous community member Adrian Burragubba as well as a Brisbane-based environmental group against the project.
In a press statement on Tuesday, Burragubba said that the battle with Adani group for the mine project would continue. “Adani can put on whatever song and dance they like but the reality is that we have never consented to Adani’s mine being constructed on our land,” he said.
Adani group’s Australia head of country and chief executive Jeyakumar Janakaraj on Tuesday announced a contract for the Carmichael Rail Network linking Galilee Basin mines including to the Abbot Point point.
“But we are building more than a rail line. We are building a line that will open the Galilee Basin, linking that massive coal reserve to markets around the world, generating power, and—importantly—generating many thousands of direct and indirect jobs in regional Queensland,” Janakaraj said.
“To those activists who sit and criticize us, I ask a simple question—what are you doing for these people,” Janakaraj said
The nation’s banks have come under increasing pressure from green groups to review their lending to fossil fuel developments, with Westpac Banking Corp. in April ruling out involvement in Carmichael. Australia’s four biggest banks likely won’t play a part in raising money for the project, according to David Lennox, a resource analyst at Sydney-based Fat Prophets.
“They will get that money externally now,” said Lennox. “They won’t raise that here in Australia. They wouldn’t have given the green light to the project if they thought funding was going to be an issue.”