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Questions surround Adani's $1 billion loan as world's biggest investors get jumpy

Business

Speculation has swirled for weeks that Adani Australia was about to land a $1 billion loan from the State Bank of India, a prospect first raised six years ago and now actively opposed by the world’s biggest investment company.

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Whether it’s true or not no longer matters because now investors like the New York-based BlackRock, the world’s biggest asset manager with more than $US7 trillion ($A9.4 trillion) under management, and Norway’s Storebrand and its $60 billion in assets have been dragged into the debate and called for the loan to be shelved.

That could have a profound effect on the project because Adani has hit brick walls around the world when it has tried to raise funds and SBI is one of its few friends.

It’s often the case that when it comes to Adani the dominant narrative is not always strictly true, but that doesn’t always matter and in this case, Adani and its Bravus Mining and Resources subsidiary are saying little to refute it.

The financial details of Bravus Mining and Resources are commercial in confidence,’’ the company said.

Indian media reports have said a State Bank official questioned the criticism of the bank given the mine’s licence was officially approved by the Queensland Government last year. A response like that indicates that there is at least some truth in the loan story.

The reports have said that BlackRock and Storebrand have contacted the State Bank of India, which is majority-owned by the Indian government, about the loan.

“Financing new coal plants is clearly not part of a sustainable future,” Andreas Bjørbak Alnæs, senior sustainable investments adviser at Storebrand, told India’s Business Standard.

The paper also said BlackRock, which holds shares of both Adani and SBI, had met with the companies tied to the Carmichael project and raised its objections because the plan has ESG-related risks.

BlackRock has raised concerns about Adani before. In February it told Siemens that it had failed to fully consider the breadth of risks involved in the Carmichael project where it had a contract for signalling infrastructure for the rail line.

BlackRock has shifted its policies to reduce its exposure to thermal coal which is the commodity that will be mined at Carmichael.

The $1 billion was first on the table when Adani’s Carmichael mine was proposed to be much bigger and cost $16.5 billion. The loan was announced during the G20 summit in Brisbane in 2014 was said to be conditional on SBI investigating the viability of the project.

The deal caused political outrage in India where Adani has close links to the Government through the friendship of Gautum Adani and Indian Prime Minister Narendra Modi.

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