Partners GVK Power of India and Hancock Coal of Australia have signed a preliminary deal with a local firm to provide third-party rail hauling services for undeveloped coal projects in Australia's Queensland state, boosting the prospects of their own proposed mine.
The agreement with privately-owned QCoal to transport 20 million tonnes annually to the Australian east coast would utilise a rail line the partners hope to lay to service their own proposed $10 billion Alpha coal project some 500 kilometres (300 miles) inland, GVK said in a statement on Tuesday.
The deal is yet to be finalised but is seen as a step in making the Alpha project more economical as miners drive further into the Australian interior in search of coal. The statement did not disclose financial details of the agreement.
The Alpha project is being run by Hancock Coal, 79 percent owned by GVK and 21 percent by Australia's richest person, Gina Rinehart. It recently cleared a major hurdle by gaining federal government approval for the construction of a new export terminal.
That approval allows the partners to expand the port of Abbot Point and ship the coal to overseas markets.
The project, now awaiting a mining lease from the state, is key to meeting the coal ambitions of GVK, a conglomerate with interests in airports, hotels and transportation. The project could also help meet India's huge appetite for coal, which feeds two-thirds of the country's power production.
Geologists estimate the Alpha project in the untapped Galilee Basin has a mine life of more than 30 years and would produce 32 million tonnes a year, with first output targeted for early 2016.
It is one of five major coal projects in the basin, together aiming to produce more than 180 million tonnes by the end of the decade and doubling Australia's thermal coal exports.
GVK said in October it faces a one-year delay in lining up funding for the project, but was determined to build the mine, railway and port.