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Adani scraps mining services company Downer over its Australian mega mine

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Posted by Stephanie Baker

Indian miner Adani has parted ways with mining services giant Downer and will instead build and run Australia’s biggest coal venture in central Queensland’s Galilee Basin on its own.

Earlier today Adani released a statement revealing that both parties had cancelled the conditional $2.6 billion contract, which was appointed in June, due to cost cutting measures by Adani. This was spurred on by the Queensland government’s decision to veto Adani’s $1 billion Commonwealth loan bid.

The Carmichael Coal mine is an enormous US$16 billion mine which has been beset with problems including numerous regulatory and legal hurdles, leading to seven years of delays.

A lease was granted last year but environmentalists have maintained high-profile campaigns against it with large claims that it will harm the nearby Great Barrier Reef which is already threatened by climate change.

Adani has had multiple struggles in the bid to secure funding for the first stage with many global banks choosing to avoid the protect, given growing opposition to investment in fossil fuels.

Last week, the Palaszczuk government vetoed Adani’s request for a $1 billion loan from the Northern Australia Infrastructure Facility (NAIF) to help build a rail line to connect the mine to the port.

The split comes after Downer was the target of nationwide activist campaigns pressuring them to quite the Carmichael project in central Queensland.

"Adani have never operated a mine of this scale and have absolutely no experience operating mines in Australia,” said Galilee Blockade spokesman Ben Pennings said.

Downer is one only two mine contactors -along with Thiess- who are considered capable of handling an operation producing up to 60 million tonnes of coal a year, which raises further questions about the fate of the massive project.

"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," Adani said in a statement today.

"Adani remains committed to develop the Carmichael project and will ensure the highest level of standards and governance."

According to the Queensland government, it backs the mine and wants the jobs it will create, but also says the project must be viable without taxpayer funds, including federal funds.

Adani claims it was full steam ahead for the mine, with Downer to provide "transitional assistance" until the end of March.

"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," Adani said.

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Sources: The Australian, ABC News.

Stephanie Baker

Stephanie Baker

As PlantMiner's Marketing Coordinator, Steph has an array of experience covering industry projects and works on creating and maintaining content for our blog so you are receiving the most relevant project and industry news.