Adani to abandon $16.5-bn Australian mining project?

Adani last week advised four major engineering contractors to stop work on projects around the Carmichael mine in Queensland including a joint venture rail line and the expansion of Abbot Point port, Guardian Australia reported citing industry sources.

The report quoted sources as saying that the move to suspend preparatory work by WorleyParsons and Aecon, Aurecon and SMEC at this stage of a project was unheard of and made no sense as a savings measure even amid delays.

“It’s Adani’s practice not to comment on specific commercial arrangements,” a spokeswoman for Adani was quoted as saying by the daily.

The report follows setbacks that have pushed back what would be Australia’s largest coal project, including the forced scrapping of plans to dump dredge spoil from the port in Great Barrier Reef waters and then the Caley Valley. Adani is also facing legal challenges from indigenous landholders and conservation groups, one of which is likely to push state government decisions on mining lease and environmental approvals back until the end of the year at least.

A team of up to 40 engineers at WorleyParsons’ Brisbane office, who were working with <g data-gr-id="30">Aecon</g> on the rail joint venture, were among those pulled off the project, the report said.

A senior engineering industry source was quoted as saying that it was difficult to read the move as anything but “Adani beginning to run up the white flag” on the project.

The cost of contracts for engineering design and proposals, at several million dollars a year, was negligible in the context of a multibillion-dollar project and Adani would need the work done in any case, the source said.

He said it “makes no sense” for Adani to suspend work done by engineering teams employed on short-term contracts who would have already moved on should the company later wish to have the work resumed.

“In my experience, the most common reason for delays in project completion is because engineering hasn’t been finished on time,” he said.

“So when you get the chance where you then continue with the engineering but the project has been pushed out, usually that’s a blessing in disguise,” the source added.

Tim Buckley of the Institute for Energy Economics and Financial Analysis said to stop work at this stage “just crucifies the project, it all goes out the window”.