24/06/2015 2:53 PM IST | Updated 15/07/2016 8:25 AM IST

Adani Stops Work On $16.5 Billion Mining Project In Australia

SAM PANTHAKY via Getty Images
Adani Group Chairman, Gautam Adani addresses the media in Ahmedabad on July 21, 2009. Adani spoke about 'Adani Power Limited IPO' which opens on July 28. AFP PHOTO/ Sam PANTHAKY (Photo credit should read SAM PANTHAKY/AFP/Getty Images)

In March, Adani Enterprises had said that the project to build Australia's largest thermal power plant was on track after successful negotiations with the Queensland administration on dredging that would not damage the Great Barrier Reef.

Now Adani, one of India's biggest conglomerates, seems to have decided to scrap the project. Adani Mining has asked its four engineering contractors working on the $16.5 billion Carmichael project to halt work, reported Guardian Australia.

READ: Adani, GVK Get Port Expansion Clearance For Mega Mining Projects In Australia

The move to suspend work at this stage is unusual, and does not make sense as a savings measure, the report said. The project was supposed to generate over 4,000 jobs.

Adani's problems began with the election of a new Labour government in the state earlier this year, which reversed earlier policies. The new administration is perceived to be less supportive of the coal industry than its predecessor with whom Adani had signed initial agreements, including dumping three million cubic meters of soil dredged at Abbot Point port in the sea, about 15 miles from the Reef. Environmentalists protested saying this move might damage the Reef, one of Australia's famous natural landmarks.

The Labour administration banned all dredge dumping around the Reef, forcing to push back the project to make sure that the soil was dumped on land, on a site earlier earmarked for a coal terminal.

WorleyParsons and Aecon, Aurecon and SMEC are the contractors asked to stop work. About 40 engineers of WorleyParsons have been asked to pull out.

Tim Buckley of the Institute for Energy Economics and Financial Analysis said to stop work at this stage “just crucifies the project, it all goes out the window”.

“The minute Adani stops moving forward, the project is just dead, in my view,” Buckley said. “And the reason is you’ve got billions of dollars of debt in Australia and they’ve got this interest bill. Adani's Australia operations have raked up $1.3 billion of debt, according to the company's annual report.

Adani might have also considered further obstacles. Landholders and conservation groups have sued, which might mean a year-long delay in getting environmental and mining lease approvals.

HuffPost's call to an Adani spokesperson went unanswered.

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