Companies

GVK inks pact with Aurizon to divest 51% in Hancock Coal

| | Updated on: Mar 11, 2013
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GVK Coal Infrastructure (Singapore) Pte Ltd (GVK Hancock) and Aurizon have signed up to jointly develop rail and port infrastructure. This is to unlock Galilee Basin coal reserves including GVK Hancock’s Alpha, Kevin's Corner and Alpha West coal mines and a process to support the next phase of coal growth in the Bowen Basin.

Under the proposed framework, Aurizon would acquire a majority (51 per cent) interest in Hancock Coal Infrastructure Pty Ltd (HCI), which owns GVK Hancock's rail and port projects. It would invest through upfront consideration at completion of the transaction and deferred consideration at completion of each phase of the projects.

Both the companies will have equal management rights and an equal representation on the board and all key committees.

GVK Reddy will be chairman of the Board.

GVK had, in 2011, acquired a 79 pet cent stake in the Alpha Coal and Alpha West Coal Project and 100 per cent stake in the Kevin’s Corner Project, Queensland from Hancock Coal Pty. Ltd. These projects hold estimated reserves of about 8 billion tonne and a capacity of more than 80 million tonne per annum.

GVK also has a 100 per cent stake in the 500 km rail line and a 60 million tonne per annum port as part of the ‘pit-to-port’ logistics solution which envisages an investment of $10 billion.

Chairman GVK Reddy 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.”

G.V Sanjay Reddy, Vice Chairman said, "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. At full 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.”

“The proposed Aurizon-GVK Hancock 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 realizing 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 utilize elements of this infrastructure,” said Lance Hockridge, Aurizon Managing Director & CEO.

Published on March 12, 2018

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