Mining and Heavy Industries

Adani cancels mine deals with Downer

Indian energy giant Adani has cancelled $2.6 billion in potential contracts with Downer for drilling, blasting, coal and waste haulage at its proposed Carmichael project in the Galilee Basin.

Downer told the ASX on Monday the sides had mutually agreed to part ways on all Letters of Award relating to the mine services and related infrastructure, which have been in place since 2014.

Adani said it plans to move forward with the project as an owner operator.

Downer said it would provide transitional assistance to Adani until March 2018. Downer boss Grant Fenn said the company remained “committed to growing its Mining division and continuing to deliver outstanding service for its customers”.

It is unclear what the news means for the Carmichael project, which has been targeted with strong opposition from certain groups, on both environmental and economic grounds.

Adani said it was making the move after the Queensland Government formalised its veto of a potential $1 billion loan for the Carmichael project from the Commonwealth’s Northern Australia Infrastructure Facility.

The company has also seen a number of Chinese financial institutions decline to take part in Carmichael.

“Following on from the NAIF veto last week and in line with its vision to achieve the lowest quartile cost of production by ensuring flexibility and efficiencies in the supply chain, Adani has decided to develop and operate the mine on an owner operator basis,” the Indian company said on Monday.

“Adani remains committed to develop the Carmichael project and will ensure the highest level of standards and governance.

“This will not affect our commitment or the number of local jobs across Queensland. This is simply a change in management structure and ensures that the mine will ultimately be run out of our Adani Australia offices in Townsville.”

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