Queensland treasury officials in the Newman government regarded the Carmichael coal project as “unbankable” due to high debt and offshore corporate structure.
Documents procured under Freedom of Information laws and reported by SMH showed senior treasury officials doubted Adani’s ability to complete the project, and warned then-premier Campbell Newman, who went ahead with moves to guarantee public funding to assist with development of the mine and infrastructure.
Correspondence from senior figures including former under treasurer Mark Gray and principal commercial analyst Jason Wishart expressed their fears about Adani’s high debt levels, and even identified the Indian mining giant as a “risk” because of the high levels of debt required to finance the mine, as well as Adani’s unclear corporate structure involving the use of offshore entities.
An email dated November last year, only days before the announcement that the Newman Government would provide funding assistance for Adani’s rail corridor, Projects Queensland principal commercial analyst Jason Wishart told Projects Queensland executive director David Quinn that, "It is unlikely to stack up on a conventional project finance assessment."
SMH said there was a rising level of urgency in the treasury as officials tried to conduct financial assessments of Adani, against the public backdrop of proposals to assist Adani from the Department of State Development, Infrastructure and Planning led by deputy premier Jeff Seeney.
Treasury briefing notes said Adani was “highly susceptible to cost shocks”.
At the time parent company Adani Enterprises had total assets of $21.5 billion which was “heavily geared” with liabilities of $16.4 billion, of which Wishart said, “Continued expansion to meet power and mine ambitions will place this financial position under increased strain.”
Wishart told under treasurer Mark Gray that it was “fair to say that there is not a lot of market support for investing in Galilee thermal coal projects at present.”
The documents also reveal that Quinn and Gray has raised questions about an “exit strategy” for the state, and tried to determine what security was available to the government on loans to Adani.
The Abbott Government has said that Galilee Basin projects could be eligible for taxpayer funding from the $5 billion North Australia Fund, providing they would not be viable without government assistance.
Wishart also raised the issue that publically available information about Adani was “not particularly transparent”, and that there was nothing “substantive on Adani’s financial capacity or credit worthiness at this stage”.
The North Queensland Conservation Council spokesman Jeremy Tager has called on the Palaszczuk government to conduct a full due diligence analysis and release the findings publicly.
"These secret documents make clear that Treasury has serious concerns about Adani's financial ability to actually build these projects and that its demands for proper due diligence have continued to be ignored," Tager said.
Greens deputy leader Larissa Waters said the documents appeared to vindicate critics of the project.
"It was perfectly obvious that the project wasn't viable, which makes it more insulting that public money was going to be stumped up under the former Newman government," Waters said.