Mumbai, Aug. 28: Adani Group will pay nearly $145 million (Australian $155 million) to acquire Linc Energy’s rights to future royalties from the Carmichael coal project.
This move comes despite a slump in global thermal coal prices and opposition to the project from environment groups.
Adani Mining Pty Ltd, a subsidiary of the Adani group, had acquired the Carmichael coal tenement from Linc Energy in August 2010 for $500 million in cash.
As part of the agreement, Linc Energy was to get a royalty of $2 per tonne indexed to inflation over the first 20 years of production.
The mine is estimated to have one of the largest single coal resources in Australia. Adani Group had earlier indicated that the tenement has potential to produce 60 million tonnes of coal per annum. It would have to invest over $15 billion in the project, including ports and rail connectivity.
Linc Energy said in a statement that Adani would make the payment in two instalments. While it will pay Aus $90 million in cash within five days of the exercise of an option agreement, the balance will be paid before 12 days from the date of signing of a deed of assignment and assumption.
Capital market circles said the purchase of the rights of the Australian company indicated that Adani was keen to go ahead with the project. The Indian entity is also expected to see the cost benefits as it will not have to pay royalties to Linc Energy.
Adani Group had recently said it had won approval to build a 300km rail line for the Carmichael project to enable transportation of 100 million tonnes of coal a year after construction.