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Adani may divest minority stake in Carmichael coal mine to help raise funds

Adani Enterprises Ltd. may consider off-loading a minority stake in the Carmichael coal operation in Queensland, Australia, to financial institutions and contractors to help raise funds, Reuters reported Oct. 3, citing Jeyakumar Janakaraj, CEO of Adani Australia.

The company is seeking to tie-up financing for the giant Carmichael project by March 2018, with mine construction scheduled to begin in the next few weeks.

"By the end of this financial year, all things will be in place," Janakaraj said in a phone interview.

Meanwhile, the company is in "advanced" discussions to secure loans from export credit agencies financing its mining equipment and also tying up other funding, Janakaraj noted, without identifying the agencies or lenders.

The Indian company has been seeking a A$900 million loan from the Northern Australian Infrastructure Facility, or NAIF, for its rail project. However, it may not need NAIF funding if it manages to secure sufficient debt funding from lenders for the rail line, he added.

The company is looking at a debt-to-equity ratio of 45:55 for the mine, and 70:30 for the rail project.

In late August, the miner unveiled a plan to start work on the first phase of the Carmichael mine using A$400 million of its own funds.

Production from Carmichael is set to start in March 2020, while the company expects the project to turn profitable in three years at current coal prices.

Adani expects to end the fiscal year 2020-2021 with production of 16 million to 18 million tonnes, Janakaraj said, adding that the mine will produce 27 million tonnes of coal the following year.

About 70% of the mine's output will be shipped to India, while the remaining coal will go to Vietnam, Bangladesh, China, the Philippines and Pakistan.