AusRAIL, Market Sectors

Aurizon, GVK Hancock to team up for $6bn Galilee link

<span class="" id="parent-fieldname-description"> Aurizon has agreed in principal to work with miner GVK Hancock in its quest to export coal from Queensland’s Galilee Basin. </span> <p>Under the agreement, Aurizon would acquire a 51% share of Hancock Coal Infrastructure, which owns GVK Hancock’s rail and port projects, and together the two companies would build a 500km heavy gauge rail link from a proposed coal terminal at Abbot Point, following a north-south route to the Galilee Basin.</p><p>“This is one of the most significant deals in Queensland’s coal history,” GVK chairman Dr G V Krishna Reddy said when the deal was announced last week.</p><p>“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.”</p><p>Queensland’s minister for state development, infrastructure and planning Jeff Seeney expressed enthusiasm at Aurizon and GVK Hancock’s news.</p><p>“We want sensible, incremental infrastructure development,” he said. “Today’s announcement is a welcome step in achieving our aims.”</p><p>“It is a commercial arrangement that requires further negotiations, but those negotiations have the potential to progress our strategy of seeing consolidated multi-use rail corridors that have the least impact on communities and landholders.</p><p>“By coming together the companies could deliver the optimum rail solution for all parties,” he added.</p><p>Indeed, GVK Hancock and Aurizon expressed their desire to stay in line with the government’s requests.</p><p>“The proposed new rail solution would be located within the Queensland Government’s preferred rail corridors for the development of the Galilee Basin as defined under Queensland Government policy announced in June 2012,” the companies said in a release. “[The Galilee link] is intended to align with government policy on shared infrastructure and open access.”</p><p>After a number of conflicting rail proposals were put forward to link new coal mines in the region, the Queensland government announced in June last year that it would recognise only two rail corridors to serve the developments.</p><p>Overall, the project would cost $6bn. But for GVK Hancock, it would be worth the cost.</p><p>GVK Hancock is a joint-venture between Gina Rinehart’s Hancock Prospecting and Indian energy conglomerate GVK, and GVK is looking to beat rival Indian energy company Adani to building a supply chain linking Galilee to Australia’s eastern coastline.</p><p>Both Indian companies hope to build rail links with at least 60mtpa capacity, linking the basin with terminals at Abbot Point.</p><p>In the Galilee Basin, GVK operates the 30mtpa Kevins Corner and 30mtpa Alpha and Alpha West projects. Gina Rinehart’s Hancock Coal owns 21% of the Alpha project.</p><p>Adani plans to link its Carmichael project in Galilee with a 185km line that runs east-west to connect with Aurizon’s existing Newlands rail link at North Goonyella.</p><p>Clive Palmer’s China First is the third Galilee hopeful, and is also developing an ambitious integrated mine, rail and port plan in the $8bn price range – but currently lags behind its rivals at this stage.</p>