Adani Group chairman Gautam Adani meets with Queensland premier Annastacia Palaszczuk at the Port of Townsville in 2016.

Adani Group chairman Gautam Adani meets with Queensland premier Annastacia Palaszczuk at the Port of Townsville in 2016. Cameron Laird

THE Queensland Government's decision to veto Adani's NAIF loan has caused them to scrap a $2 billion contract with engineering group Downer EDI for the controversial Carmichael coal mine.

Downer was set to develop and operate the mine, but both Adani and Downer released statements to say the decision to cancel the multi-billion dollar arrangement was "mutually agreed”.

Downer signed the $2b contract with Adani in 2014 to provide a range of technical services which included drilling, blasting and coal and waste haulage for the mine.

It was set to finish up at the end of March, 2018.

Queensland Premier Annastacia Palaszczuk (centre) is seen posing for a photo with workers at the Downer EDI Rail manufacturing plant in Maryborough during the Queensland Election campaign. DARREN ENGLAND

"Adani Mining announced today it will progress its Carmichael Coal Mine as an owner operator,” the Downer statement said.

"The chief executive of Downer Grant Fenn said Downer remained committed to growing its mining division and continuing to deliver outstanding service for its customers.”

Adani's mine and rail projects.

In their statement, Adani laid the blame for ending their arrangement with Downer at the feet of the newly-elected Queensland Government, who wrote to the Federal Government with its intention to veto NAIF funding for the project.

Queensland Premier Annastacia Palaszczuk made this commitment during the 2017 election campaign to "remove doubt about any perception of conflict” from the project regarding her partner PricewaterhouseCoopers infrastructure advisory director Shaun Drabsch.

Mr Drabsch assisted PWC's work for Adani as a member of its national infrastructure advisory team at a federal level.

Anti-Adani coal mine protesters invade the stage as Queensland Premier Annastacia Palaszczuk (right) delivers her speech after announcing the date of the Queensland Election at Cementco Bowls Club in Brisbane on Sunday. Darren England/AAP

"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,” the Adani spokesman said.

"Adani remains committed to develop the Carmichael project and will ensure the highest level of standards and governance.

"This will not affect our commitment or the number of local jobs across Queensland.

"This is simply a change in management structure and ensures that the mine will ultimately be run out of our Adani Australia offices in Townsville.”

Adani Australia said they were currently employing over 800 people and has invested over $3.3b in Queensland, which was the biggest investment by an Indian company in Australia.

Michele Landry, Federal Member for Capricornia, Jeyakumar Janakaraj, CEO Adani Australia, and Sen Matt Canavan, celebrate Adani's announcement that Rockhampton would become a FIFO hub for the Carmichael Mine.

The decision to end the Downer arrangement came at a time when the Indian group is struggling to secure funding for the first stage of the Carmichael project.

After pressure from environmental groups and activists, a number of Chinese lenders and Australia's big four banks had ruled out financial support for the controversial Carmichael coal mine.

Earlier this month Adani said it remained in negotiation with Chinese lenders.

Their deadline to obtain finance is at the end of the Indian financial year; the end of March 2018.

It's not all doom and gloom according to Newscorp analyst John McCarthy who said Adani had shown its ability to raise funds by recently refinancing hundreds of millions of dollars in debt for the Abbott Point coal port - showing investor faith in the port's viability.

Rockhampton Mayor Margaret Stelow with Adani Australia CEO Jeyakumar Janakaraj sign the MOU regarding the Charmichael Mine FIFO hub. Chris Ison ROK051017cadani3

"It can sell a stake in its project and there have been rumours of international investment funds willing to take up that option,” Mr McCarthy said.

"It can sell its Abbott Point coal port, which could raise more than the $2 billion it paid for it.”

Mr McCarthy said Adani also had the option of cutting about $2 billion from its cost base and letting Aurizon build its alternative rail line from the Galilee Basin mine site to the Abbot Point port.

An Adani Australia spokesperson said earlier in the month that the move to veto by the Premier would not alter its plans, which was one of the biggest investments by an Indian company in Australia.

"Adani Australia will now fully consider and adjust to the constraints the veto of funding brings,” they said.

"Adani Australia is 100 per cent committed to Queensland, we have a strong regional Queensland presence. This will not change.

"We would not be investing our time, money and energy in this manner if our projects were not viable and if we were not serious about delivering our projects which will ultimately generate more than 10,000 direct and indirect jobs across all of our projects.”

The Queensland Premier's office has been approached for comment.