Adani Enterprises has agreed to pay A$155 million ($145 million) to Linc Energy to buy out the Australian firm’s rights to future royalties from Adani’s huge but delayed Carmichael coal project, already four years behind schedule.
The deal comes amid growing questions on whether Adani will eventually go ahead with a project to build what would become Australia’s biggest coal mine, amid opposition from green groups and a slump in coal prices to five-year lows.
A final decision to go ahead with the project, in Northeastern Australia, would mean spending A$16.5 billion to dig the mine, build a rail line and a port.
“This agreement reflects Adani’s confidence in the progress of Carmichael mine, which received final federal environmental approvals from the Australian government last month,” Adani said in a statement emailed to Reuters. “The agreement…underlines Adani’s consistent commitment to ensure that the high-quality coal from the Carmichael mine is cost-efficient.”
The agreement announced by Singapore-listed Linc on Thursday means Linc is walking away from a A$2 per tonne royalty, indexed to inflation, on the first 20 years of production from the coal mine. Adani bought Carmichael from Linc Energy amid a coal boom in 2010, paying A$500 million in cash upfront and agreeing to pay the royalty stream.