Adani signs $350m rail link deal

Adani is gearing up to proceed with its contentious Carmichael coal project, signing a $350m earthworks contract for its rail link.

Adani is gearing up to push ahead with its controversial Carmichael coal project, extending its relationship with Queensland’s BMD group with a $350m rail contract.

Adani said on Thursday it had formally awarded the civil earthworks component of the construction of its 200km rail spur linking Carmichael to Queensland’s coal rail network, extending its contracts for work on the mine to more than $1bn.

BMD has been working with the coal developer for some time, and last year became the target of anti-Adani activists, who successfully pressured Greyhound into ditching a contract to bus BMD workers to the worksite.

Adani did not say when construction was due to begin on the line, but said work building the first camp to house rail workers was now complete, with construction of two others under way.

Under the deal, the privately owned Queensland company — which booked $1.2bn in revenue across its national property and construction arms last financial year, according to its last set of accounts — will deliver earthworks, drainage, bridges, rail camp construction and associated road upgrades for the rail line, before handing over to Martinus Rail for the second stage of rail work.

Adani’s annual accounts, lodged on May 25 with the Australian Securities & Investments Commission, said the miner remained confident it would begin producing coal in the 2021-2022 fiscal year, saying its work on the mine had not so far been impacted by the coronavirus crisis.

The company booked an annual after-tax loss of $279m, after spending $142.1m on work at Carmichael in the year to March 31, and booking a $283m foreign exchange loss in the period.

But, in a sign Adani is confident of reaching production at Carmichael despite ongoing opposition from environmentalists, the company’s accounts reclassified the $1.1bn book value of its mining tenements from “exploration and evaluation assets” into mine reserves and development.

However despite its confidence in pushing ahead with the project, the accounts also show the path to financial viability is still not clear.

Adani has built up $1.3bn in unused tax losses against Carmichael, and its financials say “it is not likely that taxable income will be earned in the foreseeable future”.

Its independent valuer concluded that every three-month delay until production would wipe $73m from Adani’s value.