Australian news, and some related international items

Adani’s Carmichael coal mine surviving on lifeline from Indian parent company

Adani’s Carmichael coal mine surviving on lifeline from Indian parent company, ABC 23 July 19

Key points:

  • The company responsible for the Carmichael coal mine has current liabilities of more than $1.8b versus current assets of less than $30m
  • The auditors signed off on the company being a “going concern” because of a 12-month guarantee from the Indian parent firm
  • Accounting expert Sandra van der Laan says “effectively on paper they are insolvent. I wouldn’t be trading with them”………
She examines a diagram of Adani’s Australian structure: a labyrinth of trusts interposed between private companies and Indian stock market-listed companies with ties to, and in some cases ownership in, tax havens stretching from Singapore to Mauritius, on to the Cayman Islands and the British Virgin Islands.

The more immediate concern is Adani Mining Pty Ltd, the Australian-registered company which is the proponent of the Carmichael coal mine in the Galilee Basin.

Adani Mining recently provided ASIC with its financial accounts to March 31.

As a private company, the subsidiary is only required to release reduced financial statements with limited detail — but enough to raise red flags for Professor van der Laan and other critics.

The accounts show the owners have contributed less than $9 million in equity to the business and total liabilities exceed total assets by more than half a billion dollars.

Current assets of less than $30 million are swamped by current liabilities, due over the next 12 months, of more than $1.8 billion.

“Adani Mining is in a very fragile, even perilous, financial position,” Professor van der Laan observes.

“The gap between the current assets and liabilities is what’s really concerning………

‘They will never pay any material corporate tax in Australia’

Adani is now going it alone and “self-funding” the Carmichael mine after failing to secure loans from banks or government wealth funds.

Although the mine has been scaled down to an initial 10 million tonnes a year output, rather than the mega-mine of 60 million tonnes a year it has approval for, the price tag for building it and an accompanying railway will still be a multi-billion-dollar sum.

Even for a man as rich as family patriarch Gautam Adani, it is no small ask.

But in the tangled web that is the Adani Group, there are ways.

Adani’s ports business is the most profitable part of the empire, headed by the Bombay stock exchange-listed company Adani Ports SEZ.

It is currently raising more than $1 billion in debt on global markets.

Critics are suspicious that Adani may channel the money through its opaque corporate structure and use the money to fund the Queensland coal mine that no bank was willing to finance………

Whether or not concerns about the solvency of various Adani companies or funding for the Carmichael mine are well-founded, the promise of a company tax bonanza from the Queensland mine seems destined to remain unfulfilled, according to Tim Buckley.

Already, accumulated losses mean that, if the mine is built, Adani Mining won’t pay company tax for many years in Australia and may never do so — like the Abbot Point Coal Terminal, which has paid little to no company tax under the ownership of Adani.

“They have carry forward losses that mean the first $1.5 billion of profit are corporate tax free,” says Mr Buckley.

“My surmise is that they will never pay any material corporate tax in Australia.”

July 25, 2019 - Posted by | AUSTRALIA - NATIONAL, climate change - global warming

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