Issue 31- On Coal Mining, Jet Engines, and Chinese Apps
In today's Finshots brief, we will discuss
- The controversy behind Adani's coal mine in Australia
- Why IndiGo is looking to order more jet engines
- ByteDance's latest endeavour
What’s in a name?
Back in 2019, the Australian government gave the Indian industrial giant Adani approval to extract coal from the enormous, unexplored Carmichael coal reserve. And this led to widespread protests - not only against Adani, but also against all the companies associated with the project.
So let’s take it from the top.
The Carmichael coal mine was initially touted as Australia’s largest coal project, with an expected financial outlay of $11.5 billion and the capacity to generate around 10,000 jobs. And even though these numbers have come down drastically since then, the mine is still set to produce 10 million tonnes of thermal coal per annum.
However, the project has been staunchly opposed by environmentalists from its inception. The protesters claimed that the project would wreak havoc on Australia’s ecosystem and heritage through the destruction of ancestral lands, drastic depletion of groundwater levels, forced displacement of indigenous people, and an increase in shipping traffic through the Great Barrier Reef. And not to mention, about 4.7 billion tonnes of carbon pollutants over the project’s 60-year lifespan.
Of course, Adani insisted that they were following all regulations in terms of land ownership and taking necessary precautions to mitigate the environmental effects. They also contested that the project would bring huge economic benefits to the region by generating hundreds of jobs.
But the protesters were having none of it. United by the #StopAdani campaign, thousands of individuals and groups across the country took to the streets as well as to social media. They raised awareness against the adverse impacts of the project and staged protests against Adani and all the other companies that were linked to it. Even customers and investors were forced to rethink their partnership with Adani.
In fact, over the course of the campaign, 65 companies, including financial institutions, insurance agencies, and contractors disassociated themselves from the project. Long-time Adani contractor GHD pulled out. LG cancelled its contract to purchase coal from the company. And Samsung Securities, the electronics giant’s investment arm, stepped away from providing financial backing to the project. In 2018, Adani was forced to scale down the project to $1.3 billion dollars, and announce that it would be self-funded. They revealed that most of the coal generated would be bought by Adani in India. And they’re ready to start shipping next year.
But they’ve realized that being directly associated with the toxic brand targeted by the #StopAdani campaign can’t be good for business. And so, the company has seen fit to change its Australian unit’s name to Bravus Mining and Resources.
According to Adani, “The new name Bravus is derived from the words ‘brave’ or ‘bold’. It includes the ‘us’ suffix, highlighting the inclusive nature of us the company.”
But some people have a different take. As per a statement by Greenpeace, “‘Bravus’ is ...based on the Latin ‘barbarus’, meaning barbarian. The word itself had much of a connotation of a violent enemy of civilization.”
Oh, well!!!
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Indigo’s surprise order
The coronavirus has been far too unkind to the aviation industry. As travel amidst the pandemic remains muted and any significant recovery looks like a long way off, airlines all over the world have been forced to lay off thousands of workers and cancel orders for new aircraft. In turn, aircraft manufacturers have culled production while trying desperately to enforce their existing orders.
In this dismal scenario, India’s largest airline IndiGo seems to be doing slightly better than its competitors. The airline had about $2.4 billion of cash at the end of September. But even so, the company is doing something very surprising- they are talking about placing engine orders for about 150 new Airbus jets with Pratt & Whitney and CFM International.
Considering IndiGo’s last engine order with CFM was for 280 planes and was worth $20 billion, this new deal is expected to be worth around a whopping $10.7 billion.
But the question remains - Why are they doing this now?
Well, it may just be a way of getting more bargaining chips. As Satyendra Pandey, partner at advisory AT-TV said, “This is the perfect time to engage given the overall market conditions and state of competitors -- both of which will enable Indigo to get very lucrative deals.”
ByteDance’s Latest Gambit
You’ve probably heard about Donald Trump’s long drawn out battle against the Chinese video-sharing app TikTok. TikTok has 100 million users in the United States, and Trump feared that the app will pass along their personal data to the Chinese government. So he gave parent company ByteDance an ultimatum - Either give control of the app’s US operations to an American company or see it banned.
Well, TikTok fought tooth and nail to continue operating in America, and is now in the middle of waiting for both the US and the Chinese government to approve a stake sale to Oracle and Walmart. As part of the deal, they even agreed to a condition by which the app would have to go public on a US exchange within a year.
However, ByteDance’s main focus still lies elsewhere - China. TikTok’s Chinese version, Douyin, has gone from 400 million daily active users at the beginning of the year to 600 million in August. And Toutiao, a news app which serves smart AI based recommendations has also become a lot more popular with users. So now, the company is looking to capitalize on these assets through an initial public offering in Hong Kong.
To prepare for this, ByteDance, which is currently valued at $140 billion is speaking to a group of investors including Sequoia about securing funding that would raise its valuation to $180 billion!
Yet Another Stake Sale
Mukesh Ambani is on a relentless fundraising spree to bolster Reliance’s consumer operations. And now, Saudi Arabia’s Sovereign Fund has agreed to pick up a $1.3 billion in RIL’s retail business. Know more.
Disappearing Messages
In order to make conversations “feel lighter and more private,” WhatsApp is set to roll out messages that disappear in 7 days to its users this month. Here’s why.
No Profiteering
It looks like Starbucks has not been passing benefits from the GST cut to its customers. So now, the National Anti-Profiteering Authority has ordered the coffee company to deposit Rs 1.04 crore with 18% interest to central and state consumer welfare funds. Learn more.