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SBI under pressure for controversial Adani mine loan

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India’s largest bank has not decided to help fund an Australian coal mine amid mounting pressure from climate activists and investors, including BlackRock Inc.

Two senior executives at the State Bank of India, who asked not to be identified, said the bank was dragging its feet to extend part of a financing line of up to $ 1 billion to Adani Enterprises Ltd. , who plans to use the money for controversy. Carmichael Mine. The bank’s executive committee, which will make the final decision, has not had discussions about the loan this year, officials said.

The Carmichael mine has been the subject of environmental protests since it was proposed in 2010. SBI shareholders have joined the opposition. BlackRock and Norwegian Storebrand ASA have raised objections over the past year and Amundi SA has sold its holdings of SBI green bonds over the bank’s ties to the Carmichael mine.

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SBI Chairman Dinesh Kumar Khara, who took the helm in October, is reluctant to release the funds to Adani given opposition to the Australian plan, bank officials said. Still, no decision has yet been made on the loan, they said.

SBI shares rose 0.6% in Mumbai on Friday, the third best performance among peers on a gauge of 10 lenders down 0.5%. Adani Enterprises rose 2.4%.

Adani said in a statement that construction of the Carmichael mine is “well underway and we are on track to export” coal in 2021. The company added that its mining and rail projects are fully funded.

SBI spokespersons did not respond to emails seeking comment.

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The Adani loan has left SBI, which is majority owned by the Indian government, at a stalemate. As foreign investors increasingly limit support to companies involved in mining or consuming coal, since it is the most carbon-intensive fossil fuel, 70% of India’s electricity comes from power plants. charcoal. The bank must balance its clean energy lending policy with the country’s electricity needs, SBI leaders said.

The Carmichael mine is located in the Galilee Basin in the northeast of the province of Queensland. The mine’s license was officially approved by the Queensland government in 2019 and if fully developed, the mine could contribute to a possible doubling of Australia’s coal exports. While this may provide a further boon to the country’s economy, it would hamper efforts to limit global warming and follow a year in which Australia suffered record high temperatures and widespread forest fires.

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SBI drafted an agreement in principle with Adani in 2014 for a $ 1 billion facility and brought in several banks around the world to provide the financing as part of a consortium. The plan has gone through several iterations since then, with the project becoming more politically controversial. The memorandum of understanding between the SBI and Adani for the disbursement of the loan included several restrictive covenants covering environmental clearance, project viability and timelines.

While environmental clearance has been granted by the Queensland government, disbursement is subject to other conditions, including visibility of funding from other lenders, the two officials said.

(Except for the title, this story was not edited by UK Time News staff and is posted Platforms.)

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