Edging closer to a rail and port solution which will open up Queensland’s Galilee Basin, GVK Hancock today announced it is on the same page as Aurizon, agreeing on a draft infrastructure deal.
The proposed arrangement will see rail and coal terminal infrastructure at Abbot Point port developed with Aurizon acquiring a 51 per cent interest in Hancock Coal Infrastructure which owns GVK’s Hancock rail and port projects.
“The parties have made further progress over the last few months and have reached alignment on a rail solution and on the commercial terms for the proposed transaction such as governance, timing of milestones, funding and conditions for completion,” the companies said in a joint statement.
The development of port and rail infrastructure within the Queensland government’s preferred corridors is expected to create over 1300 jobs during construction and around 300 long-term jobs once operational.
Collectively the plan is also expected to attract $6 billion worth of investment.
“This will deliver significant benefits for regional communities by reducing the impact on agricultural land and the natural environment,” GVK and Aurizon said.
The companies said under the proposed arrangement Aurizon would invest through upfront consideration at the completion of the transaction and deferred consideration at financial close at each phase of the projects.
The proposed rail solution means that for an initial stage, only 300km of the 500km of new corridor and track under the original GVK Hancock proposal will be constructed before connecting into existing Aurizon infrastructure.
“This will also allow a phased development at the Abbot Point T3 terminal to match volumes and ramp-up, thereby materially reducing the initial cost of infrastructure,” the companies stated.
The southern rail connection will be built to narrow-gauge specification, carrying up to 25,000 tonne trains.
There is also an option to add a full greenfield line if increased tonnage needs to be added.
GVK chairman Dr G V Krishna Reddy said he is pleased with the deal’s progress.
“This milestone symbolises our common vision and I look forward to progressing this historic infrastructure development together with Aurizon,” he said.
Aurizon managing director and chief executive Lance Hockridge said a lot of work has been completed by both companies in recent months to outline the project’s scope of works.
“There’s been considerable work by both parties over recent months to better define the rail transport solution for the project, both from an engineering and a commercial perspective,” he said.
“We can see from our assessment that GVK Hancock’s coal assets are very well advanced.”
He explained the project aligns with the Queensland government’s plan to open up the Galilee Basin.
“We’re pleased this also aligns with government objectives – getting early tonnes out of the Galilee, at lower cost by tapping into existing infrastructure and consolidating tonnages onto a common corridor,” Hockridge said.
“This work not only brings us a step closer to jointly providing the primary rail and port solution for the Galilee, it brings the whole region a step closer to realising the benefits of one of the largest regional development opportunities this state has seen for decades.”
Over the next few months the companies will be developing a plan to build the infrastructure.
The proposal remains non-binding and will be subject to board approvals, with further due diligence to be undertaken before legal documents are drafted.