PERTH (miningweekly.com) – Indian major Adani has secured financing for its Carmichael coal project, in Queensland, with construction at the mine set to start shortly, albeit on an initially smaller scale.

The company has been battling to secure financing for the $16.5-billion project, failing to meet a March deadline to arrange an initial $3-billion to meet its 2020 production targets.

The company, at the time, flagged the possibility of selling a minority stake in Carmichael in order to secure funding.

This came after a December decision by the Queensland government to veto some A$900-million in funding from the North Australian Infrastructure Facility to fund a rail link associated with the Carmichael project.

Adani Mining CEO Lucas Dow said on Thursday that the company had been working to simplify the construction and reduce the initial capital requirements of the $16.5-billion project.

“Our work in recent months has culminated in Adani Group’s approval of the revised project plan that de-risks the initial stage of the Carmichael mine and rail project by adopting a narrow gauge rail solution combined with a reduced ramp-up volume for the mine.

“This means we’ve minimised our execution risk and initial capital outlay. The sharpening of the mine plan has kept operating costs to a minimum and ensures the project remains within the first quartile of the global cost curve,” said Dow.

Adani would develop a smaller opencut mine comparable to several other Queensland coal mines, and would ramp up production to the planned 27.5-million tonnes a year over time, said Dow.

He noted that the construction for the shorter narrow gauge rail line would also begin to match the production schedule.

“We have already invested $3.3-billion in Adani’s Australian business, which is a clear demonstration of our capacity to deliver a financing solution for the revised scope of the mine and rail project.

“The project stacks up both environmentally and financially. Today’s announcement removes any doubt as to the project stacking up financially.”

Dow said that preparatory work at the mine site was imminent, with the company working with regulators to finalise the remaining required management plans ahead of coal production.

The process is expected to be complete within the next few weeks.

The resources sector has welcomed Adani’s funding announcement, with the Minerals Council of Australia (MCA) saying the development of the Carmichael mine would be a boost for regional communities.

“The Queensland and Australian economies will benefit from thousands of new regional jobs and long-term investment in the mine and rail infrastructure,” said MCA CEO Tania Constable.

“And through mining taxes and royalties, the Carmichael mine will generate billions of dollars for taxpayers over decades to fund nurses, teachers, police, hospitals, roads and other services and infrastructure for Queensland families and communities.”

The project is expected to deliver more than 1 500 direct jobs on the mine and rail project during the initial ramp-up and construction phase, and several thousand more indirect jobs.

Queensland Resources Council CEO Ian Macfarlane said that the investment in the project was a sign of the strength of the Queensland resources sector.

“Adani has shown it is committed for the long-term for an investment that will create jobs now and decades into the future.

“In recent months Adani has made sensible revisions to the project to ensure it can get underway as soon as possible, including a scale-up to capacity and a decision to use common narrow gauge infrastructure,” Macfarlane said.

“Today’s announcement will be an economic kickstart for all of Central and North Queensland, in particular for Rockhampton and Townsville where most of the jobs will be created. But there are also benefits for communities around Mackay, Bowen, Moranbah, Clermont and the Isaac and Central Highlands regions.”

However, a wide range of groups are opposed to the project mainly over climate change concern, the mine’s heavy water use and the potential impacts that the operation could have on the Great Barrier Reef.