After a long battle it appears the market is putting the last nails in the coffin for Adani's multi-billion dollar coal project in the Galilee basin, Queensland.
All the banks won't fund it as it's not economically viable with the world turning to renewable energy, and it appears nobody in the future will be willing to put up their hand to fund the venture. The coal price has collapsed and unlikely to ever recover. In India, solar is now cheaper than coal. The market is sounding the death knell for the whole project.
It would have seen the Great Barrier Reef dredged to make way for coal shipping right smack through the middle of it, and coal deposits the size of the Sydney area being dug up and shipped to India. A massive development costing $billions, that would have polluted the environment and caused major job losses in the Queensland tourist industry.
However, the Axis Capital report (an excerpt of which appears above) quoted Adani management as saying that no capital expenditure is planned for the Galille Basin mine this financial year – and none would be likely in future without “visibility of revival in global coal prices.”
Given that the outlook for global coal prices is poor, this suggests that there will be no investment in Galilee, and underscores the difficulty it will have in attracting finance for a project that analysts says will not be economic.
Even the conservative International Energy Agency said late last year that it did not expect carmichael and other projects in the Galilee Basin to be built. “It is not likely that the above listed projects will be operational by 2020, if ever,” it said in its latest medium term coal outlook.
On the other hand, Adani’s solar projects are showing “significant progress.” The company is building the largest single-location solar project in India, a 648MW facility in Tamil Nadu. It already has a power purchase agreement in place.
Indian energy minister Piyush Goyal said last week that solar energy is now cheaper than coal, following recent auction results. This applies to domestic coal prices, and coal generation from imported coal, as proposed by Adani for the Galilee projects, is even more expensive.
One company, RattanIndia Power – a major private power generation company – said this week that it wants the Punjab government to approve the use of a 324-hectare site for a solar plant instead of a proposed coal plant. The economics of solar, the company stated, are better than that of coal.
In effect, it appears that Adani is telling brokers in India the reality of the state of the market, namely that it is impossible for it to get finance in the current economic climate. Renew Economy
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