Aurizon teams up with GVK Hancock in Australia's Galilee Basin

Last Updated: Mon, Mar 11, 2013 04:40 hrs

PERTH, March 11 (Reuters) - Aurizon Holdings Ltd will partner GVK Hancock to develop rail and port infrastructure with a capacity to handle 60 million tonnes per year in the undeveloped Galilee coal basin in eastern Australia, Aurizon said on Monday.

As part of a non-binding agreement, Aurizon plans to acquire a 51 percent interest in Hancock Coal Infrastructure, which owns GVK Hancock's rail and port projects.

"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," G V Krishna Reddy, chairman of GVK, said in a statement to the Australian stock exchange.

Aurizon Holdings, formerly QR National, is an Australian rail haulage company. The statement did not say how much Aurizon will pay for the 51 percent stake.

The announcement comes despite many Australian miners putting the brakes on large new projects as prices decline and demand, especially from top coal consumer China, remains weak.

Even GVK Hancock, a joint venture between India's GVK Power and Infrastructure Ltd and Australian mining magnate Gina Rinehart's Hancock Coal, has had to delay its $10 billion Alpha Coal project by one year to 2016.

Australian coal prices have dropped about 15 percent in the last year to around $90 per tonne and are down 30 percent from two years ago when they reached around $130 per tonne.

The Galilee Basin in Australia's Queensland state could make Australia the world's top thermal coal exporter if developed, but the chances that it will be developed in the short run have been viewed as slim.

"It is a long way west -- there is absolutely nothing between the coast and that basin, so there are very high risks in proceeding with these projects," UBS analyst Tom Price said.

(Reporting by Rebekah Kebede; Additional reporting by Bangalore Newsroom; Editing by Muralikumar Anantharaman)

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