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Adani scraps $1bn contract with Downer EDI for Australian coal mine

India’s Adani Group has cancelled the A$2bn ($1.5bn) contract signed with Australia’s mining services firm Downer EDI to help construct the A$16.5bn ($12.6bn) Carmichael coal mine and rail project in Clermont Town, Central Queensland, Australia.

The long-delayed project involves construction of a 60 million tons per annum (Mtpa) green field coal mine and a 189km railway line which connects the mine to the existing Goonyella rail system.

As a result of cancelling all the letter of awards for mine services and related infrastructure, Adani plans to build the Australia’s largest coal mine by itself and on an owner operator basis.

The decision comes as the Queensland state government decided to veto a A$900m loan from the federal government’s Northern Australia Infrastructure Facility (NAIF) for the mine.

Adani said: “Following on from the NAIF veto last week and In line with its vision to achieve the lowest quartile cost of production by ensuring flexibility and efficiencies in the supply chain, Adani has decided to develop and operate the mine on an owner operator basis.”

As part of the original 5-year contract, which was signed in 2014, Downer was responsible for the management of mine operations, drilling and blasting, and the loading and hauling of waste and coal.

Adani noted that the latest decision will not affect the number of local jobs across Queensland. Currently, the company employs over 800 people and has invested over $3.3bn in Queensland

Downer, however, will provide transitional assistance to Adani until 31 March 2018.

Adani said: “This is simply a change in management structure and ensures that the mine will ultimately be run out of our Adani Australia offices in Townsville.”