Nemo trumps NaMo? It's the end for Adani's $12bn coal mine in Australia

A tale of two selfies

According to reports in the Australian media, Turnbull tried to charm the activist by asking if they could click a selfie together but "Nemo" didn't relent. His condition for a selfie was that Turnbull must give a commitment that there would be no public funding for Indian industrialist Gautam Adani's $12 billion coal mine project in Queensland. The PM assured "Nemo" that "no public money would be given to Adani". The PM's statement means the death knell for Adani's project, which was supposed to be the largest coal mine in the southern hemisphere. Turnbull got his selfie. "Nemo" got his commitment.

Cut to another selfie clicked in November 2014. The protagonists were the then PM Tony Abbott and Adani's most powerful friend - Indian Prime Minister Narendra Modi, during the latter's visit to Australia.

Also read:Why Adani's kin Jatin Mehta gave up Indian citizenship for a tax haven

Though the Modi-Abbott selfie was the most memorable part of the visit, it would also be remembered for clearing the decks for Adani's ambitious Carmichael coal mine project in Queensland.

Struggling to find investors for the project, Adani was rescued by the State Bank of India with a $1 billion loan. The announcement was made during Modi's visit to Australia. Adani was part of the Modi's delegation as was SBI chairperson Arundhati Bhattacharya.

Turnbull's selfie with "Nemo" seems to have undone the deal struck on the sidelines of Abbott's selfie with "NaMo", as Narendra Modi is called by his supporters.

Adani to pull out?

But Adani seemed to have read the writing on the wall much earlier. In his first interview to the Australian media, Adani recently expressed disappointment that the projects was being delayed indefinitely because of court battles initiated by environmentalists.

"I have been really disappointed that things have got too delayed,'' he said.

He also said that he could not wait indefinitely and that he was already scouting for alternative sources of coal to feed his power stations in India.

Adani admitted that he had appealed to PM Turnbull last year to take action to end the legal activism that was delaying the project. He had apparently requested Turnbull to pass a law preventing green activists from repeatedly approaching courts to review government sanctions.

It was because of the legal and environmental roadblocks that investors refused to put their money behind Adani's project. Top international banks - including 13 of the world's top coal financers - ruled out lending to Adani's project.

When questions regarding the unviability of the project were raised, the SBI too developed cold feet. In December last year, SBI issued a statement saying that it had never committed any loan to the Adani group but had only signed a memorandum of understanding.

Therefore Australian public funding was the only way out for Adani and even this hope seems to have been destroyed by Turnbull's statement that "there is no public money for Adani".

A victim of political changes

The Adani group flourished during Narendra Modi's 12 years as the chief minister of Gujarat. According to estimates Adani group's turnover increased around 20 times during Modi's tenure - from Rs 3,741 crore in 2002 to Rs 75,659 crore in 2014. Admitting the role of state patronage, Adani told Fortune magazine in 2011, "I firmly believe that the business of infrastructure cannot be done without the blessings of the government."

It is the lack of precisely this state patronage that went against Adani in Australia. The group's cause was harmed by a change of guard in the federal government as well as the government of Queensland.

The Centre-right Liberal National Party government in Queensland was much more sympathetic to Adani's project. It had also offered to provide a soft loan for rail infrastructure, which was critical for the mine's success. But it was voted out in the elections in January last year and the Australian Labor Party withdrew the offer after coming to power.

Adani had made donations to both the major political parties in Australia

After that there was speculation that the Federal Government would provide soft loans to Adani for rail or port infrastructure to improve the economic viability the project.

However, Adani was in for another blow when when Turnbull defeated Abbott in the internal elections of the Liberal Party. Though both ideologically Centre-right, Abbott and Turnbull differed on environmental issues. Abbott is said to be somewhat of a climate change sceptic and believes that environmental concerns must not be allowed to harm economic progress.

As a result, he was an enthusiastic backer of Adani's project, which he believed was "vitally important" for Australia. He also slammed activists for using "courts as a means of sabotaging development projects".

The environment was one of the main issues Turnbull attacked Abbott on. And as the architect of Australia's Beyond Zero Emissions Plan for a transition to 100% renewable energy, Turnbull couldn't have been expected to be a cheerleader for Adani's coal mining project.

Opposition leader Bill Shorten of the Labor Party had already ruled out spending public money for Adani's project. It must be said that neither party opposed the project per se. But pledging public money for the project is another matter.

Interestingly, the Adani group had made donations to both the political parties in Australia - 50,000 Australian dollars to the Liberal Party and 11,000 to the Labor Party.

What next for Adani?

Even though Gautam Adani has said that he was looking for alternative sources of coal for his power plants in India, there might be a small glimmer of hope for his project in Australia. Last year, Turnbull's energy minister had hinted that the use of public money could be considered to make Adani's project "stand on its own two feet". Therefore it is possible that Turnbull could dilute his position if he comes back to power.

In this context, India's power minister Piyush Goyal's statement that he aims to stop thermal imports in the next 2-3 years would be a cause of concern for Adani.

Meanwhile, the group is reported to have its eyes set on 4 coal blocks in Chhattisgarh that are up for auction. It already has a mine in Indonesia, which has been fuelling it's thermal power station in Mundra, Gujarat.

In March this year, the Adani group won the Jitpur coal block in Jharkhand - it's first block in India. The Adani group has also massively increased its investment in solar energy projects, in India as well as in Australia.

It might have suffered a setback down under, but the Adani group's Achhe Din aren't ending anytime soon.