India's Adani group has cancelled all contracts awarded to a major contractor for its controversial Carmichael coal mine after deciding to develop the project on its own.

Engineering group Downer EDI on Monday said it had mutually agreed with Adani to end all contracts awarded to it since 2014.

The ASX-listed group in 2014 received a $2 billion contract to provide technical services to Adani including drilling, blasting and coal and waste haulage for the mine, although the scope of work has since changed.

The decision comes at a time when the Indian group has been struggling to secure funding for the first stage of the Carmichael project, that is in the north of the Galilee Basin in Central Queensland.

Earlier in December, Chinese lenders ruled out providing finance for the Adani Carmichael coal mine, joining Australia’s big four banks in avoiding the controversial project, which has long been a target of environmental groups and activists.

Queensland’s newly-elected government has also vetoed Adani’s request for a $1 billion loan from the Northern Australia Infrastructure Facility.

“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 said in a statement.

Downer said it will provide Adani transitional assistance until March 31, 2018, while India business reiterated its commitment to develop the Carmichael mine and rail line.

By Prashant Mehra