Seven years ago, Anna Bligh announced the approval of what would be Australia’s largest ever coal mine. Now that mine — Adani’s proposed $16.5 billion Galilee Basin project — is swamped with controversies. These include the expected environmental impact of the mine, rubbery employment figures spruiked by Adani, and questions around native land use agreements.       

Of more immediate concern, however, is the fact the project is financially unbankable, with Annastacia Palaszczuk announcing that she will officially veto a $1 billion railway loan to Adani, after being sworn in as Queensland Premier today. Not to mention the fact India and China are planning to end coal imports, and the commodity isn’t anywhere near valuable enough to see any return on investment. So, whatever ends up being built increasingly looks like a stranded asset. And yet many politicians are still pushing for Adani to get a loan described as a “high-risk gamble” by The Institute for Energy Economics and Financial Analysis.

Let’s take a look at the various places Adani is trying to source funding from, and why it seems the company has Buckley’s of ever getting the money it needs. 

Will the National Australia Infrastructure Facility loan Adani $1b?

Resources Minister Matt Canavan wasn’t lying when he called state Labor “all over the shop on Adani”. Palaszczuk’s mid-election decision to veto a $1 billion federal loan for the link came as a surprise to just about everyone involved in the debate (not least of all Treasurer Curtis Pitt, who very quickly had to distance himself from comments he made supporting the loan in May).

After months of holding firm in the face of pissed-off protesters and advice from her own Treasury against the mine’s viability, Palaszczuk announced in early November that, while Labor still supported the mine itself, the government would veto a $1 billion loan from the federal government’s NAIF. She announced earlier this morning that it will be one of her first orders to sign off on after being sworn in as Premier today.

But as flimsy as the party’s attempt to walk the tightrope has been, Labor’s tentative backflip seems to have worked; the party just clawed back a majority of 48 seats, held firm against a swing to the Greens in south-east Queensland, and performed better than expected in regional Queensland. Indeed, Pitt eventually admitted the decision was down to public opinion, which GetUp! exit polls showed was overwhelmingly against the loan, even among voters who supported the mine generally.

Of course, the danger for anti-mine activists was always NAIF putting the money through anyway while everyone was tied up with the Queensland election; Palaszczuk would have needed Opposition Leader Tim Nicholls’ support in issuing a veto during caretaker mode, a move he unsurprisingly rejected. But with that window now over and the loan not even signed off on, let alone deposited, even state LNP analysts are admitting the NAIF loan is dead in the water.

How about any of the Australian banks?

In short, they’re all out. Facing pressure from activists and (likely much more impactful) pressure from economists, all four of Australia’s big banks have rejected funding the mine, with Westpac the last to speak out in April.

Again, it bears emphasising that this is not simply an environmental issue: coal mines are currently one of the most expensive new forms of producing energy, and much less than solar and wind at any rate. So Westpac’s decision to only finance “existing coal producing basins” is not quite as much a kowtow to pinko lefty commie hippies as Canavan would have let us believe.

What about the Indian banks?

Full disclosure, this one has been the hardest to pin down by far. A $1 billion loan request from the State Bank of India was rumoured to have been turned down in March 2015, and, while SBI chairperson Arundhati Bhattacharya quickly dismissed those reports as gossip, the bank later in the year rejected notions it had agreed to a loan, only signing a Memorandum of Understanding, and eventual reports stating that they had turned it down entirely, to SBI’s possible detriment in the face of Indian Prime Minister Narendra Modi. The bank has not had to release figures one way or the other, citing commercial confidence laws during calls in 2016)

But with Adani feverishly pursuing a $1b loan years later, we can likely take SBI’s involvement as moot. Whether the company received SBI support or not, Adani is still $3.3b in the red and it’d be unlikely, although not impossible, to see SBI make any further moves considering the 2015 back-and-forth.

Surely the US or Europe must have some interested banks … ?


OK, well what about the Chinese banks?

Following the Queensland government’s decision to veto the loan, Adani was quick to suggest they didn’t even need the money anyway — so there! — because China was coming to their rescue; reports as recent as November 23 stating that the company was only weeks away from announcing financial support from Chinese state-owned enterprises, banks, and export credit agencies.

But true to the nature of the besieged, outwardly crumbling mine, China’s two largest state-sanctioned banks ruled out investing in early December, days before a particularly proud former NSW premier — Bob Carr — announced that the Chinese embassy has flat-out rejected the “dirty coal mine” and the project was effectively dead. The investment had been largely seen as Adani’s last hope, and the consistent rejection now sets an unenviable precedent that could honestly only be ignored by a very brave, very stupid, or very corrupt financial institution.

The question now becomes whether Adani finds another, other Hail Mary, or just takes the goddamn hint.

Help us keep up the fight

Get Crikey for just $1 a week and support our journalists’ important work of uncovering the hypocrisies that infest our corridors of power.

If you haven’t joined us yet, subscribe today and get your first 12 weeks for $12.

Cancel anytime.

Peter Fray
Peter Fray
Editor-in-chief of Crikey