SRG Global wins $455m worth of contracts across Australia, New Zealand
These include a five-year contract for asset integrity services with Switzerland-based Glencore.
A blockbuster of an article is out today describing some highly questionable associations and dealings around Adana’s long-running scheme to turn the Galilee Basin of northern Queensland into a coal mine.
The article, published this morning in the Sydney Morning Herald and reprinted in more than 100 papers across Australia, describes a “complex corporate structure” around Adani that seems designed specifically to avoid public scrutiny.
Here’s a passage that cuts to the chase: “Its use of offshore, low-tax jurisdictions in relation to its Australian operations, and the apparent uncertainty about ownership of the Abbot Point Port lease, raise questions about the ability of the public to scrutinize a project of such huge economic and environmental significance.”
Clearly, it’s time that the authorities look deeply into what’s going on and how this deal came to pass. This will require a formal inquiry (or inquiries) to ensure that financial markets are being provided accurate information about the company’s proposed coal mine, rail and port projects in Queensland.
At IEEFA, we’ve previously raised serious questions about the viability of the Adani scheme, and the assertions reported today go to the very heart of our continued analysis of Adani’s operations here and overseas. They create stronger doubts than ever about the financial viability of the project, its corporate transparency and strategic logic in the face of the structural decline of seaborne thermal coal markets.
As IEEFA has previously documented, Galilee coal project proposals are highly unlikely to proceed without the support of the four Australian bank majors, plus some of the nine leading global investment banks. While export-Import banks like the Korean Export-Import Bank could be material players, given that their focus is more risk-tolerant towards greenfield projects, but even export-import banks will be involved only if there is a clear strategic national benefit.
These reports today should be a loud warning for any investors and financiers until an investigation has been carefully undertaken and completed. A very serious set of questions needs to be answered.
Our research has shown also that the Adani proposal is not commercially viable without government support, contrary to Adani’s claim after last week’s Queensland election that it could develop the project solely with private money. The obvious question that neither the company nor the outgoing government seem capable of answering is why subsidies were being offered to begin with.
Regulators need to investigate every aspect of today’s news reports to ensure all appropriate disclosures, sources of equity and debt funding, advice to potential investors plus notices to stock exchanges and corporate regulators here and overseas were carried out in accordance with the laws that govern such matters.
Tim Buckley is IEEFA’s director of energy finance studies, Australia.
