India's GVK in Australian coal deal
India’s GVK in Australian coal dealIndia's GVK has joined forces with Aurizon, Australia's largest rail freight company, to build the infrastructure needed for the development of the Galilee Basin in central Queensland.
In a statement, GVK said GVK Coal Infrastructure (Singapore) Pte Limited (GVK Hancock) and Aurizon, the company previously known as QR National, had signed an "non-binding agreement" on joint development of rail and port infrastructure to "unlock Galilee Basin coal reserves", including GVK Hancock's Alpha, Kevin's Corner and Alpha West coal mines.
The agreement also envisages a process to "support the next phase of coal growth in the Bowen Basin", which contains the largest coal reserves in Australia.
According to a GVK statement, Aurizon would acquire a majority (51 percent) interest in Hancock Coal Infrastructure, which owns GVK Hancock's rail and port projects and "would invest through upfront consideration at completion of the transaction and deferred consideration at financial close of each phase of the projects".
Both companies will have equal management rights and an equal representation on the board of all key committees. The chairman of the board will be G V K Reddy.
"This is one of the most significant deals in Queensland's coal history," Reddy said. "The development of the rail and port infrastructure will unlock the Galilee Basin and see the development of Alpha, Kevin's Corner and Alpha West, creating one of the largest integrated coal development projects globally. I am sure it will be a win‐win relationship leveraging on each other's strengths in project development and operation."
GVK Hancock and Aurizon are seeking development of a potential 60 mtpa (million tonne per annum) port and rail project to underpin the opening of reserves in the Galilee Basin and continued growth of the Bowen Basin.
The plans comprise a greenfield rail project and development rights for a coal terminal at Abbot Point. GVK Hancock received the primary state and federal environmental approvals for the rail project in May and August 2012, respectively. GVK Hancock's port project received federal environmental approval in October 2012.
On completion of the transaction, Aurizon would gain the rights to operate and jointly manage with GVK the rail infrastructure and to exclusively provide the above rail haulage from GVK Hancock's Alpha and Kevin's Corner mines for up to 60 mtpa of coal.
GVK is an Indian multinational conglomerate. In 2011, it acquired a 79 percent stake in the Alpha Coal and Alpha West Coal Project and 100 percent stake in the Kevin's Corner Project. The projects hold estimated reserves of about eight billion tonne and a capacity of more than 80 million tonne per annum.
Image: © Courtesy of Aurizon.com.au
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