Adani drops contractor for contentious Australia mega mine

Embattled Indian miner Adani plans to develop and run its contentious Carmichael mega coal project in Australia on its own after parting ways Monday with mining services giant Downer.

The massive US$16 billion mine, destined to be one of the world's largest, has been beset with problems, encountering numerous regulatory and legal hurdles, leading to seven years of delays.

A lease was finally granted last year, but environmentalists have maintained a high-profile campaign against it, claiming it will harm the nearby Great Barrier Reef, which is already threatened by climate change.

Adani has struggled to secure funding for the first stage, with a number of global banks choosing to avoid the project, given growing opposition to investment in fossil fuels.

And last week, the Queensland state government vetoed its request for a Aus$1.0 billion loan from the Northern Australia Infrastructure Facility (NAIF) to help build a rail line to connect the mine to port.

In a bid to keep costs down, Adani said it had cancelled a conditional Aus$2.0 billion contract with Downer, which was appointed in June to construct and operate the mine.

"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," it said.

"Adani and Downer have mutually agreed to cancel all Letter of Awards and Downer will provide transitional assistance until 31st March 2018."

Queensland Premier Annastacia Palaszczuk had long supported Adani's application for the loan, but reversed her position in campaigning during a state election last month after it threatened to derail her chances of retaining office.

The development proposes exporting coal to India from a massive open-cut and underground coal mine 160 kilometres (100 miles) northwest of Clermont in central Queensland, home to the reef, via a 189-kilometre rail link to port.

The conglomerate forecasts it will produce 60 million tonnes of thermal coal a year for export and estimates it will generate 10,000 direct and indirect jobs.

Opponents cite public opposition, risks to miners' health and the potential impact on the reef among reasons not to proceed.