Adani Parts Ways With Mining Services Company Downer Over Proposed Carmichael Mine

ABC News - Josh Robertson

Adani says the split has been mutually agreed to with Downer. (ABC News)

Embattled Indian miner Adani says it will build and run Australia's biggest coal venture in central Queensland's Galilee Basin on its own after parting ways with mining services giant Downer.

Adani released a statement today revealing both parties had cancelled a conditional $2.6 billion contract as part of Adani's cost-cutting drive spurred on by the Queensland Government's veto of its $1 billion Commonwealth loan bid.
The split comes after Downer was the target of a nationwide activist campaign pressuring them to quit the Carmichael project in central Queensland.
The move raises further questions about the fate of the massive project, with Downer one of only two mine contractors — along with Thiess — considered capable of handling an operation producing up to 60 million tonnes of coal a year.
It is the latest in a long series of project hiccups for the Carmichael mine, including the veto of Adani's application for a Northern Australia Infrastructure Facility (NAIF) loan last week, and its so far unsuccessful attempts to raise finance in China.

'Simply a change in management structure'
Adani said in a statement it remained committed to the project and the split with Downer was "simply a change in management structure".

Adani had already shifted its deadline for financial close on the project from the end of 2017 to the end of March 2018. (AAP)

"Following on from the NAIF veto last week, and in line with its vision to achieve the lowest quartile cost of production by ensuring flexibility and efficiencies in the supply chain, Adani has decided to develop and operate the mine on an owner operator basis," the statement said.
"Adani and Downer have mutually agreed to cancel all Letter of Awards and Downer will provide transitional assistance until March 31, 2018.
"Adani remains committed to develop the Carmichael project and will ensure the highest level of standards and governance.
"This will not affect our commitment or the number of local jobs across Queensland.

"This is simply a change in management structure and ensures that the mine will ultimately be run out of our Adani Australia offices in Townsville."

'Nail in the coffin for Carmichael mine'
The split, which Downer also announced via the Australian Stock Exchange, ends three years of negotiations between Adani and the mine contractor.


Drone vision of the proposed location for Adani's Carmichael mine (ABC News)

Downer has been operating mines for almost a century.
Adani had already shifted its deadline for financial close on the project from the end of 2017 to the end of March 2018.
The Galilee Blockade activist group had targeted Downer for a year, including by purchasing a large parcel of shares to confront management at its annual general meeting.
The group had also agitated among local councils in Victoria, New South Wales and Queensland to boycott Downer for road contracts over its role in the mine.
Galilee Blockade spokesman Ben Pennings hailed Downer's departure as "the biggest nail in the coffin for the Carmichael mine thus far".
He said it was a testament to "all the Australians who bought Downer shares, protested, blockaded and even got arrested to get Downer out of bed with Adani".
"Adani are unlikely to find another Australian company willing to risk building and operating such a controversial mine," Mr Pennings said.

"Adani have never operated a mine of this scale and have absolutely no experience operating mines in Australia — building Carmichael mine themselves would take years longer and significantly increase risks for investors."

Adani clinched most of its government approvals, including mining and environmental licences, as well as an Indigenous mine site access agreement that remains subject to a Federal Court challenge in March.
But with Adani having swept aside a series of legal challenges by conservation groups, financial close on the $22 billion project remained its main hurdle.
The company said it employed more than 800 people and had invested more than $3.3 billion in Queensland, saying it was "the biggest investment by an Indian company in Australia".
Just over $2 billion of that was to purchase the existing Abbot Point coal port at Bowen in north Queensland.

Infographic: A map showing the Adani Group's Carmichael coal mine and rail project as of March 2015. (Sourced: adanimining.com)

Links

• Contentious Adani deal clears crucial hurdle
• Adani referred to consumer watchdog over 'misleading' employment claims
• Major Chinese banks reject bankrolling Adani mine
• Why Adani may still get its $1 billion government loan
• Palaszczuk's Adani loan veto decision 'jeopardises mine project'
• Queensland Premier to exercise state veto on Adani, slams 'smear campaign'