Billionaire's mine financing hurdles fuel bondholder jitters
SYDNEY – The Indian conglomerate Adani Enterprises is learning how one financing problem can lead to headaches for debt investors elsewhere as it tries to secure money for one of the world’s biggest coal mines.
Three of China’s largest banks this week ruled out any involvement in financing the mine in Australia’s Queensland state. That fanned investor concerns about debt elsewhere in the company’s businesses in the South Pacific nation. Dollar bonds from wholly owned unit Adani Abbot Point Terminal – which oversees a deep water port on the coast of Queensland – sunk to fresh lows after the news.
While Adani’s port business is financed separately from its mining division, the company intends to transport coal sourced from its planned Carmichael mine by rail to the export terminal at the port.
Industrial & Commercial Bank of China, Bank of China, and China Construction Bank all said this week they won’t loan money to develop the Carmichael mine. They join a burgeoning list of lenders including Goldman Sachs Group and Australia’s four major banks in ruling out providing loans for the project, which has faced opposition from environmentalists who say it will increase carbon pollution and endanger the health of the state’s Great Barrier Reef.
Adani Abbot Point’s notes due 2022 have dropped to 97.5c on the dollar since issuance at about 99.4c last week, data compiled by Bloomberg show.
Adani plans to build a 388-km rail line to link the mine to the port, which it acquired for A$1.8-billion in 2011. Abbot Point has one terminal and is being expanded to 60-million tons from 25-million tons currently, according to its website. The terminal has exported coal since 1984, when it was commissioned.
Adani’s Australian spokesman didn’t immediately respond to a voice mail seeking comment.
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