GVK Hancock has signed a memorandum of understanding with Queensland company QCoal to haul 20 million tonnes of coal a year from QCoal’s operations in the Bowen Basin to Abbot Point.
GVK Hancock’s $10 billion Alpha coal project, involves two coal mines in the Galilee Basin, a 495 km standard gauge railway line as well as the port facilities at Abbot Point, approved by the QLD government in October.
“It is anticipated QCoal’s product will be transported using the infrastructure being developed by GVK Hancock, including the Galilee Basin north–south rail line, recently announced as the preferred rail corridor by the Queensland state government,” the company said in a statement.
GVK Hancock had earlier announced a delay in the project as it struggled to line up funding the for multi-billion dollar project.
The delay comes as GVK’s vice chairman said the initial target for the project had been overly ambitious and had to be pushed back due to its size and complexity, Economic Times reported.
"There was a small delay in approvals, but frankly the main reason is that the target was unrealistic, given the size and scale," Sanjay Reddy told Reuters.
GVK now expects to cut its stake to 51 percent and reach financial closure by the third quarter of 2013, Reddy said.
However, GVK says it is still committed to building the Alpha project, and the contract with QCoal shows how the company intends to offset some of the development costs by using its railway for customers.
The railway deal also means the duopoly over coal haulage in the region, currently held by Aurizon — previously QR National — and Asciano, will now be broken.