Adani taps POSCO E&C to build rail line for $15 bln Australia coal project

GVK Power & Infrastructure

17/07/2014 14:59

MELBOURNE, July 17 (Reuters) - India's Adani Mining Pty Ltd 
 IPO-AMPL.L  on Thursday said South Korea's POSCO Engineering & 
Construction Co Ltd  025100.KS  will build the rail line for a 
long-delayed A$16.5 billion ($15 billion) coal and rail project 
in Australia. 
    The cost and other details of the contract to build a 388 
kilometre rail line for the Carmichael coal mine in the eastern 
state of Queensland will be set by the end of 2014 under a 
binding agreement signed on Thursday, Adani said. 
    POSCO E&C will help fund the rail line by buying an equity 
stake, Adani said. That could help Adani raise debt funding from 
South Korea, essential for a project that analysts have said 
would be uneconomic at current weak coal prices. 
    "The binding agreement will enable us to develop a cost 
efficient rail solution and this relationship gives Adani access 
to the Korean market, POSCO's expertise and capital," Adani 
Australia Chief Executive Jeyakumar Janakaraj said in a 
statement. 
    Adani bought the project in the untapped Galilee Basin in 
2010, aiming to start mining in 2014. But, like others in the 
area, the project has run into delays due to environmental 
opposition and funding challenges for what would be Australia's 
biggest coal mine at 60 million tonnes a year. 
    A condition of the state government's approval for the 
project was allowing open access to the rail line for other coal 
producers, including a project planned by compatriot GVK and 
Hancock Prospecting, controlled by Australia's richest woman, 
Gina Rinehart. 
    GVK Hancock, aiming to start production in 2017, is working 
with Australian rail operator Aurizon Holdings Ltd  AZJ.AX  on 
an alternative rail plan for its Alpha mine project, but has yet 
to sign a binding agreement. 
    "This is the largest EPC (engineering, procurement and 
construction) project in the region for POSCO E&C, and we will 
put in our best effort to maximise our engineering, procurement 
and financing capabilities to successfully complete the 
construction," POSCO E&C President Tae-Hyun Hwang said in a 
statement. 
    Adani and GVK Hancock still need clearance to expand the 
port of Abbot Point to export their coal. Environmentalists and 
tourist operators are fighting expansion plans involving 
dredging 3 million cubic metres of soil and dumping it near the 
Great Barrier Reef.  ID:nL3N0LW10C  
    ($1 = 1.0673 Australian Dollars) 
 
 (Reporting by Sonali Paul; Editing by Christopher Cushing) 
 ((Sonali.Paul@thomsonreuters.com)(+61 3 9286 1419)(Reuters 
Messaging: sonali.paul.thomsonreuters.com@reuters.net)) 
 
Keywords: ADANI MINING POSCO E&C/AUSTRALIA