Carmichael coal mine failure could bring down Adani Enterprises

The Guardian Australia reported yesterday that Adani Enterprises, the only publically traded part of the opaque Adani Group, could fail if it is forced to walk away from its Carmichael coalmine, which it hopes to develop in Queensland’s Galilee Basin. If realized, the controversial mine would be the world’s largest export coal mine.

Analyst Tim Buckley, from the Institute of Energy Economics and Financial Analysis, made the observation today that abandoning or selling the Carmichael project well below is current book value of US$1.15 billion would leave Adani Enterprises with debt levels well in excess of its assets.

The company’s financial situation was revealed in its 1H 2017 results, released on Monday.

While the failure of the Carmichael project, which is been strongly opposed by environmentalists would be seen as a climate windfall, Adani Enterprises has developed a sizeable fleet and pipeline of renewable energy projects in India.

In its latest financial statement, Adani Enterprises reported operational renewable projects totalling 1.088 GW, and a pipeline of 1.06 GW.

Adani Australia has announced ambitions to develop 1.5 GW of large scale solar in Australia over the next five years.

Adani Enterprises also reports that it is currently establishing PV manufacturing capabilities in India spanning much of the solar production value chain. This includes c-Si ingots, wafers, cells and modules, and materials including EVA, backsheets, glass, junction boxes, and cell interconnection ribbon.

“It is very telling to us that the 16-page interim report makes absolutely no mention of Carmichael coal proposal, notwithstanding the Australian Adani Mining Pty Ltd management repeatedly claiming the group is just four months from reaching financial close of a much delayed, multi-billion dollar investment program,” analyst Buckley observed in an investor note.

Buckley’s analysis of Adani Enterprises’ balance sheet points to debts of US$3.83 million, while its assets total US$2.3 billion – including the US$1.15 billion Carmichael project.

In its half year result, Adani Enterprises reported that its ‘consolidated profit after tax’ (PAT) had fallen over 6% YoY.