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Adani Enterprises stock rises 6% after nod to Australia coalmine project

At 1131 hours, the stock was trading 6 percent higher at Rs 124.70 on the BSE. The stock opened at Rs 118.80, hit a intra-day high and low of 126.10 and 118.80, respectively.

BT Online | June 6, 2017 | Updated 14:43 IST
Adani Enterprises stock rises after nod to Australia coal project

The Adani Enterprises stock rose in early trade on Tuesday after the Adani Group Chairman Gautam Adani gave the final investment approval for the Indian conglomerate's $21.7-billion coal mine project in Australia which had hit several roadblocks over environmental concerns.

At 1131 hours, the stock was trading 6 percent higher at Rs 124.70 on the BSE.

The stock opened at Rs 118.80, hit a intra-day high and low of 126.10 and 118.80, respectively.

The stock is up 62.24 percent on a year-to-date basis and 73.66 percent on an yearly basis.

The announcement comes just days after the Adani Group agreed to pay royalties on coal produced from its project after it struck an agreement with the Queensland government to help the controversy-hit project move forward.

Adani, which hopes to secure a A$900 million ($670 million) government loan, said in a statement it had given "final investment decision approval" to build what would be Australia's biggest coal mine.

"We are committed to this project," Adani Chairman Gautam Adani said.

The Carmichael mine has faced years of delays amid opposition from environment groups who argue it will contribute to global warming and damage the Great Barrier Reef, leading some banks to rule out any role in funding.

"Announcing an intention to invest is a far cry from having the finance to do so," said Julien Vincent, executive director of environmental finance organisation Market Forces. Greenpeace Australia Pacific said the announcement was a "PR stunt".

The project is located in the remote Galilee Basin, a 247,000 square-kilometre (95,000 square mile) expanse in the central outback that some believe has the potential to become Australia's largest coal-producing region.

Adani said the project would create 10,000 direct and indirect jobs, with pre-construction works starting in the next few months. Coal from the mine will be exported to India.

Queensland premier Annastacia Palaszczuk said Australia's third biggest state had been hit by a global resources downturn and Adani's decision would help mining firms.

Adani's decision "is a vote of confidence not just in the Queensland economy, but in Queensland people", she said.

However, one energy analyst said the huge project would drive down thermal coal prices if it was built, putting pressure on local rivals.

"The Queensland government probably doesn't appreciate that they could lose thermal mines in Queensland for the sake of bringing in this one," said the analyst, who asked not to be named as he was not authorised to comment on Adani.

The Northern Australia Infrastructure Facility, the federal agency that will decide whether to grant the government loan to Adani, was not immediately available for comment.

(With Reuters inputs)

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