Adani’s coal port failing to refinance debt, again

7th May 2021

Ratings agency reporting has revealed that Adani’s Abbot Point coal port (recently rebranded to North Queensland Export Terminal – NQXT) has so far failed to secure external financing to repay a US$140 million debt due in September this year. Instead, the debt-ridden port, located in the Great Barrier Reef World Heritage Area, has once again been forced to repay debt using funds from an Adani parent company.

This is the third debt maturation in 12 months that Adani has failed to refinance externally, after A$100m in bonds due in May 2020 and a A$170m bank loan due in November 2020 was paid back out of Adani’s own pocket. This is another signal that the port has become a funding drain for the Adani Group. and a testament to the community resistance campaign that has convinced 100 companies to rule out supporting Adani’s Australian thermal coal operations. 

S&P Global Ratings foreshadowed (paywalled) the Adani-funded refinancing, lowering its credit rating of Adani’s Abbot Point coal port, from BB+ to BB– with a negative outlook. The agency also outlined the risks inherent in Abbot Point port due to its links to the globally controversial and increasingly unviable Carmichael coal project. 

As part of the downgrade, S&P wrote “we believe that the refinancing risks and borrowing costs associated with the project have increased. The credit margin for refinancing remain uncertain as the project has been unable to attract financing for its last two maturities (A$270 million); instead having to turn to its ultimate parent to provide shareholder loans.”

As mentioned, S&P lists several risks associated with Abbot Point coal port, including:

  • Exposure to refinancing risk given increasing reluctance of capital providers to finance coal-related assets.
  • Some headline environmental, social, and governance (ESG) risk given linkages to the Carmichael Mine as one of the users.

S&P’s acknowledgement of the ESG risks associated with the Carmichael project itself is a sign that investors are increasingly aware of the controversial nature of the Adani coal mine. 

On top of the debt repayments to cover the purchase of the port, Abbot Point Port had to borrow A$98 million to meet its legal liabilities arising out of the August 2020 Queensland Supreme Court decision, which found Abbot Point had overcharged some of its customers. S&P’s downgrade assessment indicates that the controversial port has a senior debt of A$1.34 billion.

The combination of Abbot Point Port having to draw funds from Adani Group and the mounting cost of constructing the Carmichael mine due to repeated delays should ring warning bells for Adani Group decision makers. While they continue to pursue the Carmichael coal project, the entire Group has to bear the financial and reputational risks. 

Take action now by contacting Abbot Point’s at risk bankers and creditors.
  • Email to existing creditors

  • Email to Adani group bond arrangers