Home / Companies / Adani Group in talks with Korea, China banks for Australia project

Mumbai: The Adani Group is in advanced talks with the Exim Bank of Korea and some Chinese banks to raise over $1 billion for building a $10 billion coal project in Australia, according to two persons familiar with the development.

American equipment maker Caterpillar Inc. may also join Adani Mining Pty. Ltd’s Carmichael project, which includes development of a coal mine and required infrastructure such as railway line and a port, according to the two persons, who spoke on condition of anonymity.

The Adani Group’s fund raising efforts come in the backdrop of the group and State Bank of India (SBI), the nation’s largest lender, deciding not to pursue a $1 billion loan agreement for the Australian project.

BNP Paribas SA, Credit Agricole SA, Societe Generale SA, Barclays Plc., Citigroup Inc., Deutsche Bank AG, Goldman Sachs Group, Inc., HSBC Holding Plc., JPMorgan Chase & Co., Morgan Stanley and Royal Bank of Scotland Plc. have refused to fund the project for environmental reasons.

“Adani Group is in discussions with Korean and Chinese buyers for selling coal from Carmichael coal project in Australia. The group is leveraging these relationships and is in discussions with Chinese banks and Exim Bank of Korea," said one of the two people cited above.

This person added that Caterpillar may also team up with Adani, but refused to elaborate. Adani Group is expected to close funding for the project by the end of the first quarter of the current financial year, the second person said.

The Adani Group, the Exim Bank of Korea, and Caterpillar did not respond to emails sent last week.

Environmentalists in Australia oppose the Carmichael project citing potential damage to the Great Barrier Reef.

Nirmal Gangwal, founder and managing director at Brescon Corporate Advisors (P) Ltd, India’s leading distressed debt resolution advisor, said the credit decisions of international lenders would be largely dependent on international commodity prices and commitment of balance sheet support by the Adani Group.

“Another critical element is the support extended by the local government. If the Australian government is keen to execute the project, the banks would be flexible in their decisions of lending to Adani group," Gangwal said.

As of 31 March 2014, the Adani Group had a debt of 94,867 crore on its books.

In 2010, the Adani Group acquired the rights to develop the Carmichael coal mine in Galilee Basin, Queensland, with estimated reserves of 7.8 billion tonnes of coal. Later, the estimate was raised to 11 billion tonnes. Queensland authorities have given in-principle approvals to the project even as a court hears an objection by an environmental group.

In March, the Adani Group informed stock exchanges that it was in discussions with a number of financial institutions in India and abroad to raise money and that any denial of a particular loan was unlikely to affect its business.

“Given our various capital expenditure plans, we continue to work with various financial institutions for raising financial resources," the company said.

That announcement came soon after a Reuters report said a previous agreement exploring a loan with State Bank of India was dead.

Clarifying media reports that said companies from China and Korea are keen to buy coal from Adani’s Australian mines, the group said on 9 March that Adani Mining Pty. Ltd was in talks with various power utilities and coal traders in different countries for the sale of coal from the Carmichael project.

Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less

Recommended For You

Trending Stocks

Get alerts on WhatsApp
Set Preferences My ReadsWatchlistFeedbackRedeem a Gift CardLogout