Adani Group’s Carmichael coal project will not be financed by the China Construction Bank, according to a statement by a public relations firm that says it represents the bank.
If true, the news could be a blow to Adani’s plans to build Australia’s largest coal mine. It has turned to China for finance, following difficulties in getting subsidies from the Australian government.
The big Australian banks have ruled out lending to the project, and with Labor set to maintain government in Queensland, its promise to veto a potential federal loan to Adani means Australian government funding is unlikely to go ahead.
In November, it was revealed that Adani was looking to work with the China Machinery Engineering Corporation (CMEC) on building the railway that would link Carmichael coalmine to the Abbot Point coal terminal, so it could ship the coal out through the Great Barrier Reef.
The state-owned China Construction Bank is the second largest bank in the world, and one thought to have a strategic alliance with CMEC, which could allow the Carmichael project to access subsidised Chinese government loans.
But in a statement to the financial activist group Market Forces, a representative from PR firm The Continuum Partners said the firm was representing China Construction Bank in Australia, and that it was not working with Adani on the project.
“China Construction Bank is not involved with, nor considering involvement with, the Adani Carmichael Mine project,” the Continuum Partner’s representative said, saying she should be quoted as “a spokesperson for China Construction Bank in Australia”.
The executive director of Market Forces, Julien Vincent, said: “This statement is a huge blow to Adani, which had turned to China as its last hope to secure finance for their Carmichael mega coal mine and had been boasting about their prospects.
“China Construction Bank is one of the biggest banks in the world, over 10 times the size of Commonwealth Bank. As a lender to China Machinery Engineering Corporation’s recent overseas coal projects, Adani would have been salivating at the prospect of securing finance from CCB.
“The fact that CCB is actively ruling out finance for the Carmichael coal project before receiving an approach says a lot about just how toxic this project is to investors.
“China Construction Bank becomes the 25th commercial bank – and by far the biggest – to rule out finance for Adani’s Carmichael mega coal mine,” Vincent said.
China Construction Bank is just one of few big Chinese banks that could provide subsidised loans to the project. Most such loans would come with the condition that the project benefited China by relying on Chinese materials or services.
CMEC is also understood to have worked with the Export-Import Bank of China, but could potentially give Adani access to Industrial and Commercial Bank of China or the China Development Bank.
Tim Buckley, from the pro-renewables Institute for Energy Economics and Financial Analysis, said that the news, if accurate, was very significant, butdid leave open the possibility for the project to be funded by another Chinese bank.
“At the end of the day, any one of these big Chinese banks could fund 100% of the project tomorrow if they wanted. They’re that big,” he said.