BlackRock has a mountain to climb if it wants the moral high ground on Adani

Coal feeder

7 February 2020

After Siemens’ annual general meeting in Munich became a parade of criticism and rebuke over the company’s decision to work on the Adani Carmichael coal mine, BlackRock decided to weigh in to the issue.

The Financial Times reports that BlackRock rebuked Siemens, saying the company had failed to fully consider the breadth of risks attached to the Carmichael mega coal mine and rail project.

We agree. And we don’t have a problem with BlackRock calling out Siemens. But we’re not about to award many points to BlackRock here. A look over BlackRock’s ownership of Adani Companies, as well as companies on our Adani List page reveals a massive financial interest in Adani and the companies working to make the Carmichael coal export project a reality.

Based on current records from Thomson Reuters, BlackRock collectively owns US$144 million in stock of Adani Group companies, including $7 million (0.22%) of Adani Enterprises, $11 million (0.33%) of Adani Power, $108 million (1.03%) of Adani Ports and Special Economic Zone, and $17 million (0.34%) of Adani Transmission.

Only one of the Adani Group of companies we examined showed no investment by BlackRock and that was Adani Green, which handles the company’s renewable energy business.

BlackRock also has a huge stake in many of the companies that comprise the Adani List, which consists of the insurance, construction, engineering and infrastructure providers to the Adani Carmichael mine and rail project. A search of the listed companies on the Adani List shows BlackRock holds a total of US$26.8 billion in companies that are providing services to the Carmichael project, including some very influential stakes in some companies.

BlackRock holds the following stakes in Adani List companies:

  • 7.25% of Aurizon, one of two companies that could potentially provide coal haulage services to Adani to get the coal from mine to port.
  • 7.74% of AIG, which was insuring Adani as recently as September 2019 and has not declared themselves out of the project.
  • 7.94% of Decmil, a construction company which has a $40m contract to design and construct three temporary camps along the Carmichael rail corridor.
  • 8.31% of Marsh, which is Adani’s broker and attempting to secure insurance for the Carmichael coal mine and rail project.
  • 4.93% of Oracle Corp, a software company providing the Aconex project management software for use on the Adani Carmichael coal project.
  • 8.22% of Siemens, which has agreed to provide essential signalling services for the Carmichael rail line.
  • 0.66% of the State Bank of India, which is still bankrolling Adani’s Australian activities, most notably the debt funded acquisition of the Abbot Point Coal Export Terminal, through which the Carmichael coal would be exported.
  • 0.9% of Telstra, a telecommunications company believed to be providing communications links for the Carmichael project.

BlackRock also owns 7.45% of SAP, which is also understood to be providing specialist communications services to the Adani Group but is not yet on the Adani List.

When you’ve got a direct financial stake in the Adani Group that stands to be some of the few beneficiaries of the Carmichael coal project, and are one of the most influential investors in companies that can literally make or break the project, offering criticism of Siemens after the point where they have doubled down on a decision to work on the rail project doesn’t carry much water.

Where were BlackRock in January when the Siemens board were contemplating this deal? How did they engage?

What have BlackRock done to convince other companies like Aurizon, Oracle, Marsh, AIG and Decmil that the Adani Carmichael project isn’t worth the risk?

Will BlackRock be engaging with Adani or selling their stakes in Adani group of companies?

There’s still time. But BlackRock has a lot to do if it wants to be taken serious on coal divestment, as well as the Adani Carmichael project.