GVK arm, Aurizon in pact to develop rail link at Oz port

Hyderabad: GVK Hancock, a part of city-based GVK Group, said it has reached an accord with Australia-based Aurizon to jointly develop a rail line and coal terminal at Abbot Point Port to transport coal from its mines in Galilee Basin.

"The proposed arrangement is intended to provide sufficient equity and debt funding including through third party debt finance for the projects to reach financial close," GVK Hancock said in release here.

GVK Hancock had in March this year agreed to sell 51 per cent stake in Hancock Coal Infrastructure Pty Ltd, which owns GVK Hancock's rail and port projects, for an undisclosed amount. The development would help unlock the Galilee Basin's coal resources, including GVK Hancock’s Alpha, Alpha West and Kevin's Corner coal projects.

"The proposed rail solution means that for an initial stage, only 300 km of the 500 km of new corridor and track under the original GVK Hancock proposal will be constructed before connecting into existing Aurizon infrastructure," the statement added.

This would also allow a phased development at the Abbot Point T3 terminal to match volumes and ramp-up, thereby materially reducing the initial cost of infrastructure, it added. GVK said under the proposal, the southern rail connection would be built to narrow-gauge specification to carry trains of up to 25,000 tonnes, with the option to consider an expansion to a full greenfield line, if increased tonnages later justify the additional investment.

The proposed open-access rail and port infrastructure would deliver significant benefits for regional communities by reducing the impact on agricultural land and the natural environment.

"I am delighted that we have made significant progress towards realising this project. During the last few months, we have spent a considerable amount of time with the senior management of Aurizon," said GV Krishna Reddy, Chairman, GVK Group.

This milestone symbolises our common vision and I look forward to progressing this historic infrastructure development together with Aurizon, he added.

Aurizon Managing Director and CEO, Lance Hockridge said, "There has been considerable work by both parties over recent months to better define the rail transport solution for the project, both from an engineering and a commercial perspective."

Whilst the proposal remains non-binding and with further diligence to be undertaken, the parties are aligned on these key aspects of the proposal, with drafting of definitive legal documents now being undertaken, the statement said.

Collectively, the proposed development of infrastructure was expected to attract investment worth $6 billion for Queensland and provide over 1,300 jobs during construction and around 300 long-term jobs once operational.

"This is a large and complex transaction and today we have progressed a major milestone. The teams from both sides have demonstrated a commitment to bring this project to reality and have worked well together. We now look forward to the next few months as we work on the detailed documentation and start to execute our common plan to build and develop this infrastructure,” said G V Sanjay Reddy, Vice-Chairman, GVK Group.