GVK, Aurizon to develop Oz basin infrastructure

Aussie firm to buy 51% in company's rail, port projects to free mineral reserves

GVK Coal Infrastructure (Singapore) Pte Limited (GVK Hancock) and Aurizon, Australia's largest rail freight company, have signed an agreement on joint development of rail and port infrastructure to unlock the Galilee Basin reserves in that country, 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 today, Aurizon would acquire a majority (51 per cent) interest in Hancock Coal Infrastructure, which owns GVK Hancock's rail and port projects. It would invest through an upfront consideration at completion of the transaction and deferred consideration at the 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.

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.

Projects planned comprise a new 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.

Collectively, the proposed development of the rail and port infrastructure, expected to deliver export capacity of 60 mtpa, could represent an investment for the state of Queensland of $6 billion, the staement said.

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.

"The proposed relationship with Aurizon would allow us to jointly develop the most cost and time-efficient rail and port solutions for the Galilee Basin. At full capacity, the proposed arrangement is intended to provide sufficient equity and debt funding for the projects to reach financial close," said G V Sanjay Reddy, vice-chairman of GVK.