Power Blow: Adani Suspends Key Contractors In Carmichael Coal Project

22/07/2015 2:00 PM IST | Updated 15/07/2016 8:25 AM IST
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Chairman and founder of India's Adani Group, Gautam Adani (L) speaks with Australia's Trade and Investment Minister Andrew Robb during a photo opportunity at the Australia India CEO Forum in New Delhi on June 23, 2015. AFP PHOTO/MONEY SHARMA (Photo credit should read MONEY SHARMA/AFP/Getty Images)

SYDNEY: Adani Mining has suspended two major contractors on its A$10 billion ($7.4 billion) Carmichael coal project in Australia, the Sydney Morning Herald reported on Wednesday, raising fresh doubts about the project's future.

Project manager Parsons Brinckerhoff and Korea's POSCO Engineering & Construction Co Ltd, which is also touted as an investor in the final project, were told late last week to stop work on the Carmichael mine, rail and port project, the newspaper said, citing sources.

Adani Mining, in a statement, said that its latest move to suspend work was due to delays in government approvals to proceed and that the project's budget, based on previous anticipated approval timelines and milestones, was no longer achievable due to delays in receiving various approvals from the Queensland state government.

Adani has signed up buyers for about 70 per cent, of the 40 million tonnes of coal, the Carmichael project was due to produce in its first phase.

"The preliminary works contracts were previously sustained due to the level of investment Adani had maintained for more than 12 months in anticipation of a range of government decisions and approvals timeframes," Adani said in a statement emailed to Reuters.

Both contractors have big roles in the project. Parsons Brinckerhoff are the principal project management consultants, while POSCO is due to build Adani's 388-kilometre (242 mile) rail line from the mine to the sea and take a financial stake in the development.

Adani had raised concerns about the project's financing last month when it said it was rejigging the budget for the mine.

Adani intends to ship most of the coal to India for use in generating household power, which would help Prime Minister Narendra Modi achieve his goal of connecting the whole country to the electricity grid during his tenure.

The project mainly hinges on environmental approval to deepen a port on the fringe of the Great Barrier Reef in order to ship the coal, a proposal generating opposition worldwide.

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