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American and Norway investors exert pressure on SBI due a loan to Australia's Adani Mine
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American and Norway investors exert pressure on SBI due a loan to Australia's Adani Mine
India's largest bank's shareholders are raising questions about a planned loan to Adani Enterprises Ltd. to help finance the opening of the controversial Carmichael coal mine in northern Australia.
Carmichael Coal Mine, Queensland Photo: Cameron Laird
New York-based BlackRock Inc. and Norway's Storebrand ASA officials have approached the Indian government's State Bank of India, which is majority-owned, about the loan. According to Indian media reports, the loan's value is estimated to be as high as 50 billion rupees ($678 million).
Since it was proposed in 2010, the Carmichael mine has been the subject of environmental demonstrators, most recently protesting at a Nov. 27 cricket match between Australia and India in Sydney.
Last month, Adani changed its trade name to Bravus Mining and Resources in Australia, likely to help dampen the dispute over the mine situated in the Galilee Basin in the province of northeastern Queensland. The project has become a subject of outrage from the country's climate change advocates, who this year have seen record temperatures and widespread wildfires. "It is clearly not part of a sustainable future to finance new coal plants," Andreas Bjørbak Alnæs, Senior Sustainable Investment Advisor at Storebrand, said in an emailed statement.
BlackRock, which owns both Adani and SBI shares, has met with the companies linked to the Carmichael project and raised its objections because, according to a person familiar with the matter, the venture has ESG-related risks, who declined to be named because the
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conversations are private. In February, when it signed an 18 million euro ($21.8 million) contract to provide rail-signalling systems for the mine, BlackRock rebuked Siemens AG for similar reasons.
An SBI official who refused to be named challenged the bank's criticism, given that the mine's license was officially approved last year by the government of Queensland. The press office of the bank did not respond immediately to a request for comment on the loan.
"The State Bank of India can surely see that the time to build massive new thermal coal mines has passed for economic and climate reasons," said Pablo Brait, a campaigner for the Market Forces activist organization. "India is already struggling with the disastrous impacts of climate change, like Australia, and Adani's mega-mine is going to make climate change worse." According to stock-exchange filings in India, officials from BNP Paribas Asset Management met their SBI counterparts on Tuesday. A BNP Paribas spokesperson refused to reveal the specifics of the meeting.
Amundi Asset Management has said that if the Adani loan goes ahead, it will sell SBI's green bonds. As recently as June, it kept around $21 million of bonds in its Amundi Planet Emerging Green One portfolio.
After around a decade of challenges from environmental groups, the Queensland government approved a scaled-back proposal for the mine in June 2019. In 2014, SBI initially proposed a memorandum of understanding for a loan to Adani and then backed off as the project became more contentious politically.
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