Tuesday 3 July 2018
News broke today that after a year-long desperate search, Adani has finally succeeded in refinancing part of its Abbot Point coal port debt.
Korean asset manager Mirae Asset Daewoo (MAD) bought A$330 million worth of debt, and intends to sell it on to Korean insurance companies. While the refinancing does shore up Adani’s financial position over Abbot Point, the fact that it took 11 months to finalise and failed to attract any top-tier (or even mid-tier) banks says a lot about how toxic Adani and their Australian coal export plans have become.
And with good reason. The amount of coal being shipped via Abbot Point is predicted to fall rapidly from 2020 onwards. Abbot Point has barely managed to operate above half its capacity recently and strategically, they are dependent on Carmichael to provide a new source of coal throughput at the port to replace expiring contracts.
A big gamble
It’s clear that Mirae Asset Daewoo is gambling heavily on Adani’s Carmichael coal mine going ahead, and is now asking Korean insurance companies to join them. With Adani’s ongoing failure to secure financial close for the project or gain consent from traditional owners, this is looking like a bad bet. On the same day the Abbot Point refinancing was announced, the world’s biggest reinsurer (where insurance companies get their insurance) Swiss Re announced that it will stop insuring thermal coal mines or power stations, and companies more than 30% exposed to thermal coal.
This combined with the Korean Government’s policy to shift away from coal-fired power should create a tricky environment for MAD as they try to on-sell Adani’s dodgy debt to prospective buyers.