(EnergyAsia, March 13 2013, Wednesday) — Australian freight operator Aurizon and India’s GVK Group have agreed to jointly develop rail and port infrastructure to open up the massive coal reserves in Queensland state’s Galilee Basin.

GVK Coal Infrastructure (Singapore) Pte Ltd signed on behalf of the group whose Australian subsidiary, GVK Hancock, owns the Alpha, Kevin’s Corner and Alpha West coal mines, and a process to support the next phase of coal growth in the Bowen Basin.

As part of the deal, Aurizon would acquire a 51% interest in Hancock Coal Infrastructure Pty Ltd (HCI), 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.

Aurizon and GVK Hancock are developing the A$6 billion rail, Abbot Point coal terminal and port infrastructure to handle 60 million tonnes of coal a year to underpin the opening up of the Galilee Basin reserves and the continued development of the Bowen Basin. (US$1=A$0.96).

G.V. Krishna Reddy, GVK’s chairman, said:

“This is one of the most significant deals in Queensland’s coal history. 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.

“The proposed relationship with Aurizon would allow us to jointly develop the most cost and time efficient rail and port solution for the Galilee Basin.

Vice-chairman G. V. Sanjay Reddy, said:

“At capacity, the proposed arrangement is intended to provide sufficient equity and debt funding for the projects to reach financial close. The parties jointly will leverage the work already completed by GVK, the significant potential for ECA financing and Aurizon’s experience and capacity to undertake major projects and capability in heavy haul rail and infrastructure.”

Lance Hockridge, Aurizon’s managing director and CEO, said:

“The proposed arrangement is a significant milestone because it brings together two advanced, large-scale players in the mine-rail-port space for the Galilee. Aurizon has always believed that realising Galilee Basin coal exports would require a consolidated rail and port solution that delivers a staged, commercially-sensible solution for producers. This solution could also provide significant opportunity for new and existing Bowen Basin producers to utilise elements of this infrastructure.”

Aurizon is Australia’s largest rail freight company with services operating across five states. In the last financial year, Aurizon transported more than 250 million tonnes of freight, including coal, iron ore, other minerals, agricultural products and general freight.

GVK is one of India’s leading business conglomerate with experience and expertise spanning diverse sectors including energy, resources, airports, transportation, hospitality and life sciences.