You'd think as an astute investor, that the Queensland gov might take a look at the value it's getting for it's $billions in coal subsidies. The market has collapsed. Why would you pour good money after bad?
In fact, says Sanzillo, who is IEEFA’s director of finance, the projects’ huge scale, greenfield nature and foreign ownership introduce “an almost unprecedented level of financial complexity and risk.”
The projects he is talking about include the multi-billion dollar development of what would be one of the world’s biggest coalmines, largely earmarked for export to India.
In 2012, India’s Adani Group announced plans to proceed with its $10 billion development of the massive and as-yet untapped Carmichael coal deposit, including large-scale rail and port infrastructure investment, that would create 9,000 jobs, and export coal to India from 2016.
Last year, a $1.25 billion debt issuance was proposed to help refinance Adani Abbot Point Coal Terminal, the 99-year lease for which was bought for $1.8 billion in May 2011.
But IEEFA’s Sanzillo says the project faces an increasingly difficult hurdle in securing funding due to the rapid deterioration of coal project profitability following a halving of the coal price, and the increased probability of a structural decline in thermal coal.
“The Galilee coal project proposals are highly unlikely to proceed without the support of the four Australian bank majors, plus some of the nine leading global investment banks,” Sanzillo said.
Just this week, anti-coal campaigners began targeting Australia’s Big Four banks, starting with ANZ, to protest their funding of fossil fuel projects. Meanwhile, some of the world’s leading investment banks have already joined the growing fossil fuel divestment campaign, in keeping with their commitments under the Equator Principles. more
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