MELBOURNE Adani Enterprises (ADEL.NS) won support on Monday from the State Bank of India (SBI) and an Australian state to help it build a $7 billion coal mine, defying a slump in coal prices to 5-1/2-year lows that has stalled rival projects.
The infrastructure conglomerate, whose founder, Gautam Adani, has close ties to Prime Minister Narendra Modi, has signed a memorandum of understanding for a loan of up to $1 billion from the SBI for the mine, rail and port project, which it aims to build by end-2017.
The loan, which would be one of the largest extended by an Indian bank for an overseas project, was announced as Adani was in Brisbane with a business delegation for the G20 summit, which Modi attended over the weekend.
"The MOU with SBI is a significant milestone in the development of our Carmichael mine," Adani said in a statement.
Adani, 52, has enjoyed a rapid rise in Indian business circles in recent years, a rise often associated with Modi, who until this year headed the government in Gujarat state where Adani is based and where it has a huge coal-fired power plant.
Shares in Adani Enterprises have surged 85 percent this year - helping Adani to more than double his net worth to $7.1 billion, according to Forbes - largely in the run-up to Modi's national election victory in May.
Adani also won a commitment from Queensland state government to take short-term, minority stakes in rail and port infrastructure needed to unlock the massive coal reserves in the untapped Galilee Basin. Coal from the region must be sent 400 km (250 miles) by rail to Australia's east coast.
Adani aims to reach a final investment decision on the Carmichael project in late 2015.
Australia's federal and Queensland governments are eager to see the mine built following the loss of more than 4,000 coal jobs over the past two years, but analysts and project finance experts believe Adani may have underestimated the challenge of raising funds for the project.
"People have been very sceptical about the financing of this project. As we always said, we'll keep getting this, one by one. The pieces are falling in place," Adani Mining CEO Jeyakumar Janakaraj told Reuters.
Adani, which is also facing a campaign by anti-coal campaigners, is counting on securing A$1.2 billion to A$1.5 billion in funding from South Korea's export credit agencies, as well as a loan from the U.S. Export-Import Bank.
The company's apparent momentum on Carmichael is in stark contrast to rival Indian firm GVK's slow progress on another huge coal mine in the Galilee Basin, the Alpha project, which is co-owned by Australian billionaire Gina Rinehart.
Much bigger coal rivals, such as BHP Billiton (BHP.AX) and Glencore (GLEN.L), have shelved coal developments at a time when a third of Australia's coal output is making losses.
Janakaraj dismissed comments by Indian Power and Coal Minister Piyush Goyal that the country may be able to stop importing thermal coal within three years.
(Additional reporting by Tommy Wilkes in NEW DELHI and Devidutta Tripathy in MUMBAI; Editing by Richard Pullin and Alan Raybould)