US, Norwegian investors pressure SBI over loan to Adani mine in Australia

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India’s largest bank’s shareholders are posing questions over a planned loan to Adani Enterprises Ltd. to help finance the opening of the infamous Carmichael coal mine in northern Australia.

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, regarding the loan. According to Indian media sources, the loan’s valuation 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 notably protesting at a Nov. 27 cricket match between Australia and India in Sydney. Last month, Adani modified its trade name to Bravus Mines and Energy in Australia, likely to further dampen the uproar over the mine situated in the Galilee Basin in the province of northeastern Queensland. The initiative has been 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 COMMENT.

BlackRock, which owns both Adani and SBI securities, has spoken with the entities connected to the Carmichael project and raised its concerns because according to an individual familiar with the matter, the venture has ESG-related dangers, who refused to be named because the conversations remain private. In February, when it negotiated an 18 million euro ($21.8 million) deal to supply rail-signalling systems for the mine, BlackRock rebuked Siemens AG for similar purposes.

An SBI official who refused to be named challenged the bank’s critique, provided that the mine’s license was officially accepted last year by the government of Queensland. The press office of the bank did not respond immediately to a request for clarification 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 advocacy party. “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 disclosures in India, officials from BNP Paribas Asset Management visited their SBI counterparts on Tuesday. A BNP Paribas representative refused to share the specifics of the conference.

Amundi Asset Management has stated that if the Adani loan goes forward it will sell SBI’s green bonds. As recently as June, it kept around $21 million of bonds in its Amundi World Emerging Green One portfolio.

After around a decade of challenges from conservation activists, the Queensland government accepted a scaled-back proposal for the mine in June 2019. In 2014, SBI initially proposed a memorandum of agreement for a loan to Adani and then backed off when the proposal became more contentious politically.

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