Ambiguity and opaque disclosures continue to dog the world’s largest proposed new thermal coal project – the Carmichael Coal proposal of India’s Adani Enterprises in the Galilee Basin of central Queensland.
“Excessive financial leverage combines with complex offshore corporate structures, tax havens, government investigations into alleged multi-billion dollar over-invoicing plus new requests for government subsidies all suggest the path to financial close on Carmichael remains a long and difficult one,” said Tim Buckley, Director of Energy Finance Studies at the Institute for Energy Economics and Financial Analysis (IEEFA).
“IEEFA notes that ownership of the US$2bn Adani Abbot Point Coal Terminal remains opaque more than three years after the original purchaser – Adani Ports & SEZ Ltd of India announced it had sold the port to a private Adani family company.[i]
“We note that Adani Ports 2015/16 annual report (released this month) continues to clearly state the Abbot Point Port is not a subsidiary of the group. In contrast, latest records we have accessed from the ASIC[ii] states that the Abbot Point facility remains a wholly-owned subsidiary of Adani Ports.
“Aside from the obvious serious questions about continuous shareholders disclosure and ownership of a nationally significant facility there is the fact of the port having more than A$2.2bn of off-balance sheet debt secured against it,” said Buckley.
“IEEFA has also reviewed the latest financial profile lodged with ASIC for Adani Mining Pty Ltd (Australia), the proponent of the Carmichael proposal. IEEFA would suggest that with net debt of A$1.42bn as at 31 March 2016 against shareholders’ funds of negative $227m, the mine proponent is far from robust.
“Adani Mining Pty Ltd has reported combined losses of a net A$182m over the last two years. How the Australian government can ascertain how such an entity can fund a $10bn greenfield development is far from clear, particularly given the financial leverage of the listed parent entity of Adani Enterprises,” he said.
On the positive side for the Adani project, the global traded thermal coal price has lifted 20% year to date in 2016 to over US$60/t, reflective of significantly curtailed Indonesian supply and rising Chinese imports near term in the face of accelerating and unexpectedly swift domestic coal curtailments across China.
The National Bureau of Statistics reports that China’s total coal production was down 9.7% yoy YTD, and down a staggering 16.6% yoy in the month of June 2016. The result of this collapse has provided a near term recovery in China’s total coal imports, up 8.2% yoy in the six months to June 2016.
“It is confounding that the Australian government is pushing this ‘exciting project’ two years after Indian Energy Minister Piyush Goyal announced the target for India to cease thermal coal imports. Tellingly, Indian coal imports peaked in FY2015, with Platts reporting this week that imports fell 8% yoy to 200Mt in FY2016. Goyal forecasts an accelerating decline in FY2017 of down 20% yoy to 160Mt.
“Given India was the main destination for Carmichael, this data raises questions over any remaining strategic logic of why Australian taxpayers should open up the Galilee to expand global supply for a low quality export product where the global market in terminal, structural decline and stranded assets are prevalent,” said Buckley.
Six months after the global climate accord agreed at the COP21 in Paris, it would be financially reckless for the newly re-elected Australian government to contemplate any taxpayer subsidy for any aspect of, or related infrastructure associated with, the world’s largest greenfield thermal export coal mine proposal.
Despite the Australian government signing the COP21 agreement, the new Resources Minister, Matthew Canavan has questioned the impact of carbon emissions on global warming while peculiarly describing the Carmichael project as“incredibly exciting”.
IEEFA questions how the North Australia Infrastructure Fund (NAIF) could undertake full due diligence on the private family structures that appear to be involved in this project, particularly with offshore entities spanning Singaporean, Cayman Islands and Mauritius tax havens and while reports of Indian government investigations claiming alleged coal import fraud against the Indian people are open. There are conflicting reports regarding if there is any Adani associate making any application to the NAIF.
Yesterday, the Queensland State Government again reiterated its pre-election pledge to not offer any taxpayer subsidy to the company saying “as promised, the government will not contribute taxpayer money to Adani’s project,” again raising serious concerns about how the proposal could proceed.
The financial risk of stranded coal related infrastructure assets was illustrated bluntly this week with China’s Qinhuangdao Port Co (the world’s largest coal port, one that moved 230Mt of coal in 2015 alone) releasing a stock exchange announcement of a“80-90% yoy profit warning” for 1HCY2016 due to the “weakened supply and demand in the coal market.”
“All of this further raises real questions of why Australian taxpayers would support funding the construction of even more stranded coal infrastructure at a time when Australian coal ports are running at an average utilisation rate of less than 70% of existing capacity,” concluded Buckley.
4 Common Items That Can be Reused Again and Again
As a society we are getting much better at taking our obligations to the world and environment around us more seriously. This is undoubtedly a good thing! The effects of climate change are beginning to manifest across the world, and this is turning the issue from an abstract threat into a very real danger. Trying to introduce some greener, more eco-friendly practices into your life isn’t just a great way of doing something beneficial for society and the world around you. It is a wonderful way of engaging positively with the world and carries with it numerous psychological benefits.
Being a greener, more ecologically friendly person doesn’t require any dramatic life changes. Breaking or making a few small habits is all it takes to make your life a greener one. In this article we look at one of the easiest, yet most effective green practices to get into: reusing everyday items.
Jars and Containers
Glass and metal are widely recycled, and recycling is a good thing! However, consider whether any containers you buy, whether it’s a tub of ice cream or a jar of coffee, can be washed out and reused for something else. Mason jars, for example, can be used to store homemade pasta sauce and can be washed for future use. Once you start thinking about it, you will find endless opportunities to reuse your old containers.
An ice-cold soda is a wonderful treat on a hot day, but buying soda can get expensive, and the manufacturing and distribution of the drinks themselves isn’t great for the environment. However, by holding on to your old soda bottles and repurposing them as water bottles, you can save money on drinks, or use them to measure out water for your garden.
Most of the time groceries come in paper bags, which are better for the environment than the plastic alternatives, but they are less durable and thus harder to reuse. Whenever the store places your items in a plastic bag, hang onto it so you can reuse the bags again. If you want to take it one step further, consider looking into buying some personalized recycled bags. These bags are designed to last for a long time and are made of recycled materials. They look striking and unique, they’ll turn heads, and maybe even attitudes!
If you’re a keen gardener, then you will already probably know how to reseed your plants in order to ensure a fresh crop after each plant’s lifecycle. If you have space in your garden, or haven’t yet tried your hand at gardening, then consider planting a small vegetable plot. Growing your own veggies means that you’ll be helping to cut back on the emissions generated by their transport and production. The best part about growing your own food in this way is that, by harvesting properly and saving the seeds, you can be set up with fresh vegetables for life!
Reusing and recycling common household items is an easy way to make your world a little bit greener. Once you start looking for these opportunities you’ll realize that they’re everywhere!
These 5 Green Office Mistakes Are Costing You Money
The sudden interest in green business is very encouraging. According to recent reports, 42% of all companies have rated sustainability as an important element of their business. Unfortunately, the focus on sustainability will only last if companies can find ways to use it to boost their ROI.
Many businesses get so caught up in being socially conscious that they hope the financial aspect of it takes care of itself. The good news is that there are plenty of ways to go green and boost your net income at the same time.
Here are some important mistakes that you will want to avoid.
Only implementing sustainability on micro-scale
The biggest reason that brands are going green is to improve their optics with their customers. Too many businesses are making very minor changes, such as processing paperwork online and calling themselves green.
Customers have become wary of these types of companies. If you want to earn their business, you are going to need to go all the way. Bring in a green business consultant and make every feasible change to demonstrate that you are a green organization from top to bottom.
Not prioritizing investments by long-term ROI
It isn’t realistic to build an entirely green organization overnight. You will need to allocate your capital wisely.
Before investing in any green assets or services, you should always conduct a long-term cost benefit analysis. The initial investment for some green services may be over $20,000. If they don’t shave your cost by at least $3,000 a year, they probably aren’t worth the investment.
Determine which green investments will have the best pay off over the next 10 years. Make these investments before anything else. Then compare your options within each of those categories.
Implementing green changes without a plan
Effective, long-term planning is the key to business success. This principle needs to be applied to green organizations as well.
Before implementing a green strategy, you must answer the following questions:
- How will I communicate my green business philosophy to my customers?
- How will running a green business affect my revenue stream?
- How will adopting green business strategies change my monthly expenses? Will they increase or decrease them?
- How will my company finance green upgrades and other investments?
The biggest mistake that too many green businesses make is being overly optimistic with these forecasts. Take the time to collect objective data and make your decisions accordingly. This will help you run a much more profitable green business.
Not considering the benefits of green printing
Too many companies believe that going paperless is the only way to run a green organization. Unfortunately, going 100% paperless it’s not feasible for most companies.
Rather than aim for an unrealistic goal, consider the option of using a more environmentally friendly printer. It won’t be perfect, but it will be better than the alternative.
According to experts from Doranix, environmental printers have several benefits:
- They can process paper that has been completely recycled.
- They consume less energy than traditional printers.
- They use ink that is more environmentally friendly.
You want to take a look at different green printers and compare them. You’ll find that some will meet your needs as a green business.
Poorly communicating your green business strategy to customers
Brand positioning doesn’t happen on its own. If you want to run a successful green business, you must communicate your message to customers as clearly as possible. You must also avoid the appearance that you are patronizing them.
The best approach is to be clear when you were first making the change. I’ll make an announcement about your company‘s commitment to sustainability.
You also want to reinforce this message overtime by using green labels on all of your products. You don’t have to be blatant with your messaging at this stage. Simply provide a small, daily reminder on your products and invoices.
Finally, it is a good idea to participate in green business seminars and other events. If your community has a local Green Chamber of Commerce, you should consider joining as well.
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