By our reporter
Melbourne, 18 July: India’s Adani group has taken a step forward towards the realisation of its dream Carmichael Coal project at Abbot Point in Queensland, by signing an engineering, procurement and construction (EPC) contract on Thursday with South Korea’s POSCO E&C, a leading global construction company and a subsidiary of the South Korean giant POSCO. This rail line is reported as being 388km and would have a construction cost approaching A$3bn.
Adani Group Chairman Gautam Adani said “The rail project will lead to the opening of the Carmichael mine project which will deliver, in excess of 10,000 jobs, and will also provide vital opportunities for Australian Infrastructure development and contribute to energy security of India by lighting the lives of millions of Indians.”
Adani Australia CEO and Country Head Jeyakumar Janakaraj said: “I am delighted with the way the two teams worked together in a collaborative manner to get this binding agreement signed in a record time. This is the first major step towards finalising the Project’s construction contracts and we are proud to be associating with a partner of POSCO’s E&C standing. The binding agreement will enable us to develop a cost efficient rail solution and this relationship gives Adani access to Korean market, POSCO’s expertise and capital.”
POSCO E&C President and CEO, Tae-Hyun Hwang stated that “We are delighted to partner with Adani and contribute to the development of the rail infrastructure. I believe the rail project will greatly benefit from this partnership. This is the largest EPC project in the region for POSCO E&C, and we will put in our best effort to maximise our engineering, procurement and financing capabilities to successfully complete the construction.”
The project has received flak from environmental and financial experts for danger to the world heritage Great Barrier Reef and being an unviable project, is estimated to cost A$ 16.5 bn covering greenfield construction of the mine, the railway and the coal export terminal, plus the associated water, road, airport, power and water infrastructure.
“This project requires a thermal coal price well in excess of US$100/t to be commercially viable – it is currently sitting at US$60/t- US$70/t,” The Institute of Energy Economics & Financial Analysis (IEEFA)’s Tim Buckley says.
“We note that that adding 60Mtpa of additional supply will have a materially adverse impact on the global seaborne price of thermal coal. 60Mtpa equates to a 6% expansion of global supply, at a time when most coal mining companies are evaluating mine closures.
“Opening up the Carmichael project will help facilitate upwards of 200Mtpa of additional thermal coal supply.
Combined, a 30% expansion of global supply over the medium term will see the global thermal coal remain under pressure, and could in isolation drive the long term coal price permanently down 20% from current commodity analysts’ projections.
“This must surely send a shiver down the spine of any investor who has their money in global coal debt or equity investments, and rightly so,” Mr Buckley said.
- SAT News Service