South African bank Investec has told Adani it will not help it raise capital for the Abbot Point coal terminal in Queensland, adding more complications to the project's attempt to refinance hundreds of millions of dollars worth of debt.
Investec adds its name to a long list of financial institutions and other businesses, including the big four Australian banks and a large number of local and international insurance companies, that have shunned Adani's Carmichael coal mine and associated operations.
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| Abbot Point coal terminal will serve the Carmichael coal mine in Queensland. Tom Jefferson/Greenpeace |
But in March the bank announced a new climate change policy, in which it said it would "only finance new coal mining transactions or the expansion of ongoing operations if there is a comprehensive socio-economic motivation that is processed through special senior risk forums and approved by senior executive".
A spokesman for Investec said the renewal of the hedging facility for Adani Abbot Point Terminal did not align with the new policy and so it had decided not to renew it when it expires in 2022. The AAPT will serve the controversial Carmichael coal mine, linked by the Carmichael Rail Network.
"We were originally involved in helping to arrange the bond but we don’t have any exposure in terms of the bond or any other lending to AAPT," a spokesman for Investec said.
"Our only connection is the historic hedging facility and we would need to honour our legal obligations in terms of that facility (eg helping convert US dollars to Australian dollars). We have informed the client that we will not be renewing the facility."
In March international ratings agency Fitch downgraded the ratings of AAPT's senior secured debt to 'BB+' from 'BBB-', and placed the ratings on a "negative" watch. In April the Indian conglomerate was forced to pump $100 million into the AAPT itself, after its attempts to refinance expiring debt were derailed by the impacts of the coronavirus.
An Adani spokeswoman said: ''We repaid $100 million of debt on our Abbot Point coal export terminal in North Queensland before its maturity days.
“We had postponed refinancing debt maturities due late this year and next year due to prevailing market conditions. These debt facilities were placed more than six years ago.
“In year 2017 and 2018, the company had successfully refinanced [a] large tranche of debt issued for the terminal in 2013."
Unlike many banks and insurers that have introduced strict limits on lending to or underwriting thermal coal companies – Westpac being one of the most recent examples – Investec's climate and coal policy is more ambiguous.
It has left the door wide open to finance thermal coal operations in countries considered to be developing economies, such as South Africa.
"We have a global business and operate in both the developed and developing world with varying economic, social and environmental contexts," a spokesman for Investec told The Australian Financial Review.
"We need to find a balance between the need for increasing energy access and economic growth (particularly in our South African business) and the urgency to reduce carbon emissions across all areas of operation.
"As such, when assessing our participation in all fossil fuel activities, we will ensure we consider a variety of financial, socio-economic and environmental factors relevant to a local context (for example poverty, growth, unemployment and carbon impact)."
One of the core principles of the United Nations Framework Convention on Climate Change is that developed economies take the lead in emissions reduction.
According to Climate Action Tracker South Africa's commitments under the Paris Agreement – which at their worst could result in a 12 per cent increase in emissions on 2010 figures by 2030 – are "highly insufficient" and consistent with a potentially catastrophic 3 to 4 degrees of warming.
Under the Paris Agreement, the nations of the world agreed to keep temperature rises below 2 degrees and as close to 1.5 degrees as possible.
Climate Action Tracker classes Australia's target of 26-28 per cent emissions reduction on 2005 levels by 2030 as "insufficient" and consistent with 2 to 3 degrees of warming. That assumes Australia will not follow through with its controversial plan to use Kyoto carryover credits to meet the targets, which would worsen its standing.
Links
- The Adani List
- Adani Demands Names Of CSIRO Scientists Reviewing Groundwater Plans
- Adani Mine Approval Shows Climate Change Debate Reaches New Level Of Lunacy
- Adani Decision Must Not Be Last Word In Climate Fight
- Adani Mine Gets Final Environmental Approval For Carmichael Mine
- Scientists Warn Ancient Desert Springs May Dry Up Under Adani Plan
- Al Gore Slams Adani, Tells Queensland 'Good Luck' In Selling Coal To India
- Explaining Adani: Why Would A Billionaire Persist With A Mine That Will Probably Lose Money?
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