Australian media investigates Adani, uncovers unknown tax havens

An investigation by the ABC’s Four Corners programme has uncovered previously unknown tax haven ties for Adani Group's Australian operations, with key assets ultimately owned in the British Virgin Islands.

“Adani Group has promised a $22 billion windfall in taxes and mining royalty payments for Australia over the life of the giant Carmichael coal mine it has been given approval to build in outback Queensland,” the report said and added, “but experts say an opaque web of companies and trusts behind its Australian assets gives it ample opportunity to minimise the tax it pays.”

“Adani has put in place multiple ways in which they can minimise the amount of tax they pay in Australia, and maximise the amount of profits if they choose in Caribbean tax havens," the report quoted Adam Walters, research director at the consultancy Energy and Resource Insights.

In August, Adani’s Abbot Point coal facility was fined more than $12,000 for releasing water during Cyclone Debbie that contained eight times more sediment than allowed, reported news.com.au.

“The Indian mining giant was granted a temporary emissions licence during Cyclone Debbie in March to allow stormwater to be released due to high rainfall,” the report said, adding that “in April, Adani advised the Queensland Department of Environment and Heritage Protection it had breached the strict conditions of the licence by releasing more sediment than allowed and the department has now issued the miner with a $12,190 fine.”

“Temporary emissions licences and environmental authorities are not taken lightly by the department and there can be harsh penalties for companies that breach their approvals,” the report stated.

Mackay Conservation Group co-ordinator Peter McCallum was quoted as saying that the “inadequate” fine will not act as a deterrent to pollution from Adani. “Without sufficient penalties for breaching environmental conditions there’s little point in having them,” the report quoted him as saying.

In what counts for a double whammy, the Adani Group's entire A$3.5 billion ( ₹178 billion) debt-funded 'investment' in Australia is gravely at risk, the US-based Institute for Energy Economics and Financial Analysis (IEEFA) said on Monday only.

In a new report, it details how Adani's Abbot Point Coal Terminal has excessive financial leverage, negative shareholders equity and runs the risk of becoming a stranded asset if Adani's Carmichael mine does not get a $1 billion Australian subsidy.

The Abbot Point Coal Terminal is due for a $1.5 billion debt refinancing next year and a cumulative debt refinancing of $2.11 billion by 2020.

Currently, operating at just over 50 per cent capacity, the Abbot Point Coal Terminal needs the Carmichael mine to fill the gap created as its current take-or-pay contracts progressively expire.

"Securing this refinancing is going to be a real challenge, not the least because the port value has been tied to the success of the Carmichael coal mine proposal which is itself yet to secure funding and which the 'big four' Australian banks have refused to touch," an official statement quoting report co-author Tim Buckley said.

Buckley's the IEEFA's Director of Energy Finance Studies, Australasia.

“The potential for a loss of up to $1.5bn on any decision to walk away from Carmichael mine and rail proposal, explains why the Adani Group has been so focused on securing Australian tax payers money and royalty holidays to subsidise his loss making ventures,’ he said.

“To the extent able to be analysed from Australian Securities and Investments Commission records, Adani's entire mine, rail and port operation in Australia looks to be 100 per cent debt financed and shareholders funds now tally an unprecedented, negative $458 million combined. The value at stake for the Adani Group's Carmichael mine proposal is far bigger than previously understood,” Buckley added.

Whilst Adani continues to search for overseas project funding, the report, “House of Cards: The Escalating Financial Risk of Adani’s Abbot Point Coal Terminal”, the report traces events that make the Carmichael project an even greater financial risk.

The events include Adani's major proposed off-take coal customer, Adani Power Ltd's 4.6 GW power plant at Mundra in Gujarat, is financially distressed and its equity is for sale for just ₹1 but has no buyers so far.

India's thermal coal imports have continued the downward trend of the last two years and are down 13 per cent year-to-date in 2017 compared to the prior year.

And, in the light of new solar infrastructure projects delivering electricity at prices now 20 per cent below many Indian thermal power plant tariffs, financial analysts don't see any imported coal demand to justify more expensive seaborne supplies. Claiming that Adani companies are embroiled in ‘mafia type operation’ to illegally export coal in India and accused of several financial crimes, many residents have been writing critical comments on twitter using hashtag, #4corners. “If it is not corruption, its wilful ignorance,” wrote a social media user from twitter handle @pauldotm.

Here’s a collection of more critical tweets: