Adani ends Carmichael partnership with Downer

Adani Australia CEO Jeyakumar Janakaraj

Adani has decided to manage its $16 billion Carmichael coal mine development in Queensland’s Galilee Basin as owner-operator, scrapping the agreements it had with mining services contractor, Downer.

The Indian company said the decision followed last week’s veto of the proposed Northern Australia Infrastructure Facility (NAIF) loan for Carmichael’s rail development.

It added the move was in line with its vision to achieve the lowest quartile cost of production by ensuring flexibility and efficiencies in the supply chain.

Adani and Downer have agreed to cancel all letter of awards, with the contractor to provide transitional assistance until March 31 2018, a statement from the Indian company said.

“Adani remains committed to develop the Carmichael project and will ensure the highest level of standards and governance. This will not affect our commitment or the number of local jobs across Queensland,” Adani explained.

“This is simply a change in management structure and ensures that the mine will ultimately be run out of our Adani Australia offices in Townsville.”

The NAIF funding, potential worth $1 billion, was vetoed by Queensland Premier Annastacia Palaszczuk after she made an election promise to oppose the loan.

Adani and Downer have signed several letters of award for contracts at Carmichael since late 2014, with the mining services contract worth around $2 billion.

Downer chief executive Grant Fenn said the contractor remained committed to growing its mining division and continuing to deliver outstanding service.