Societe Generale pulls out of GVK Hancock's long-delayed coal project

GVK Power & Infrastructure

08/12/2014 03:36

MELBOURNE, Dec 8 (Reuters) - Societe Generale  SOGN.PA  has 
suspended its involvement in financing a $10 billion coal mine, 
rail and port project being developed by India's GVK 
conglomerate and Australian billionaire Gina Rinehart, citing 
the project's years-long delay. 
    The French bank's decision is the latest twist for a project 
originally scheduled to produce coal from 2014, but which has 
suffered challenges from landowners and green groups, and been 
complicated by coal prices falling to more than five-year lows. 
    Developer GVK Hancock said that before seeking financing it 
is focused on finalising approvals for the project's Alpha coal 
mine in the Galilee Basin in Queensland, fighting legal disputes 
against approvals already won, and securing supply agreements. 
    "We have been working with Societe Generale on a specific 
element of the financing arrangements for our projects, but are 
not currently working on that specific work package and as such 
do not require their services at this time," GVK Hancock said in 
an emailed statement. 
    The French bank said on Twitter on Friday that, "In the 
context of the Alpha coal project's delay, Societe Generale has 
decided, in agreement with GVK-Hancock, to suspend its mandate. 
The bank has therefore no involvement with the project." (https://twitter.com/SocieteGenerale) 
    The project has been targeted by green groups opposed to 
coal use and by tourism operators in Queensland, where there are 
concerns about plans to dredge ahead of expanding a port near 
the World Heritage-listed Great Barrier Reef.  ID:nL3N0LW10C  
    Green groups, which have been pressing banks to not back 
coal projects, counted Societe Generale's withdrawal as another 
win, following similar moves by Deutsche Bank AG  DBKGn.DE , 
HSBC Holdings PLC  HSBA.L , Royal Bank of Scotland Group PLC 
 RBS.L  and JPMorgan Chase & Co  JPM.N . 
    Greenpeace France on its Facebook page called the withdrawal 
"good news". 
    A spokeswoman at Societe Generale Corporate and Investment 
Banking in Hong Kong confirmed the bank's decision. She had no 
immediate comment on whether the bank would consider lending for 
the project when GVK Hancock is ready to seek financing. 
    GVK bought 79 percent stakes in the Alpha and Alpha West 
coal projects and a 100 percent stake in another project from 
Rinehart's Hancock Prospecting for $1.26 billion at the peak of 
the coal boom in 2011, aiming to start producing in 2014. It 
still owes $560 million for the purchase.  ID:nL5N0RC2ZT  
 
 (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: STE GENERALE GVK HANCOCK/