Indian conglomerate Adani Group has terminated an A$2bn ($1.53bn) contract with engineering and infrastructure management services company Downer after failing to secure funds for the A$16.5bn ($12.64bn) Carmichael coal mine in Australia.

The decision comes after the Queensland Government recently vetoed an A$900m ($689.59m) low-cost loan to Adani for the construction of a rail line in the coal mine project.

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The company applied for the loan from the Northern Australia Infrastructure Facility (NAIF) to link the mine and seaport in Queensland to be able to ship coal to India, where it has power generation infrastructure.

In a statement, Adani Group said: “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.

“Adani has decided to develop and operate the mine on an owner-operator basis.”

“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.”

The project has been facing intense opposition from environmental activists.

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In August, the Queensland Court of Appeal upheld the state government’s approval of a mining lease for the Carmichael project after being challenged in an action by activist Adrian Burragubba.

The company has reached an agreement with Downer to scrap all letter of awards. Downer then offered transitional assistance until 31 March next year.

However, Adani stated that the cancellation of the contract is not the end for the project and it intends to proceed with its development.

According to Adani, it currently has a workforce of more than 800 people and has invested in excess of A$3.3bn ($2.52bn) in Queensland.