NAB rules out funding Adani's Carmichael mine as buyer LG pulls out

The National Australia Bank has ruled out funding Adani’s Carmichael mine, as the country’s biggest proposed coal project also lost a key customer in Korean electronics giant LG.

NAB, Australia’s fourth largest bank, had “no plans to be involved in any financing” of the controversial project, the Australian Financial Review reported. Sources said the bank would not buy in even if approached by Adani, the report said.

Meanwhile, Adani has lost one of its two major outside customers for the Queensland coal, with a 4m-tonne coal deal with LG lapsing in July, Fairfax Media reported.

The developments represent further setbacks for Adani, which must show the project has sufficient financial backing and customers before the Queensland government will allow it to dredge in Great Barrier Reef waters to expand its coal port.

LG said in a statement that a letter of intent (LOI) signed by both companies over the deal was “non-binding and is invalid as of July 21, 2015, in accordance with the expiration of the LOI”.

NAB publicly distanced itself from the Carmichael mine a month after the country’s biggest lender, the Commonwealth Bank, parted ways with Adani as a project finance adviser.

Adani now technically retains a single major outside customer for its coal, its prospective equity partner Posco, although the Korean steelmaker’s staff working on the Abbot Point coal port joint venture in Brisbane have been sent home.

Most of the Carmichael coal is slated for Adani’s own power business in India.

Adani Mining’s spokesman told the AFR it had not approached NAB for funding and the company “emphatically rejects every aspect of Fairfax’s characterisation of either the company’s position or indeed that of NAB”.

Adani remains focused on obtaining government approvals for its mine, rail and port developments. It has blamed delays in those approvals for having to put much of its project work, including engineering planning and project management, on ice.

Adani’s travails, which include having commonwealth environmental approval for its mine overturned in the federal court last month after a challenge by conservationists, have prompted attacks by the federal government and the mining lobby on the environment movement.

The Greens senator Larissa Waters called on the Abbott government to “scrap its plan, supported by the Palaszczuk government, to fund the Adani mine using taxpayer money” through the Northern Australia Infrastructure Fund.

The government is understood to be considering using the fund to replace money for Adani’s rail line promised by the former Newman government but dumped with the election of Palaszczuk’s Labor.

Waters said it was “economically and environmentally reckless to pour taxpayer money down the drain into this dying industry”.

The former NAB chief executive Cameron Clyne told the AFR that “NAB ruling out involvement with the Adani Carmichael coal mega-mine seems proper” and “prudent” for shareholders.

“You would be hard-pressed to find a financial institution that would make a different call to NAB’s today,” Clyne said. “This project, by all accounts, doesn’t seem to stack up economically and appears unlikely to ever turn a profit.”

Clyne also spoke of Australia being “heavily addicted to coal” as a source of energy and growth, which he labelled “economically reckless”.

NAB’s announcement was welcomed by conservation groups and the Wangan and Jagalingou clans, traditional owners of the mine site, who are mounting a legal challenge to its progress through the federal court.

Wangan and Jagalingou traditional owners family council spokesman Adrian Burragubba said they were “deeply heartened” that NAB “acted with moral authority and in accordance with the principles of corporate social responsibility to which it is signatory”.

“Its decision brings this disastrous project one step closer to its demise,” he said.

Greenpeace campaigner Nikola Casule said NAB had “done the right thing by the reef and has become the 14th major bank to distance itself from the stranded asset that is the Carmichael mega mine”.

Casule said the move put the federal government on notice that the project was unviable.

He called for Westpac and ANZ, the other two of Australia’s big four banks, to also rule out funding the mine project.

The national director of the Australian Youth Climate Coalition, Kirsty Albion, said the project had “been opposed by Indigenous people, tourism operators, young people, bank customers and now we’re seeing it opposed in the boardrooms of Australia’s biggest banks”.