Rail deal to open up coal-rich Galilee Basin to mining

Adani is pushing ahead with plans to develop its $16 billion Carmichael mine in Queensland’s Galilee Basin, with Korean company Posco set to build the 388km railway needed to transport the commodity to port.

The deal is understood to be worth around $2.2 billion and will see the standard gauge railway be constructed from the Carmichael deposit in the northern part of the Galilee to already established rail lines in the Bowen Basin.

The rail infrastructure will be capable of carrying 60 million tonnes of coal per year.

The coal will then be exported through the Abbott Point coal terminal to India where the vertically integrated Adani will use it to fuel power stations.

Adani said work on the railway will begin early next year, with the company still waiting to gain final federal approval for its massive coal project.

The rail contract is being viewed as a major milestone for the coal-rich Galilee as its huge distance from any export terminals, and the logistics issues this creates, held up any mine developments for many years.

Adani said Posco will help fund the rail line by buying an equity stake in the Carmichael project.

GVK Hancock, which has plans to build the massive Alpha coal mine in the southern part of the Galilee, is targeting a similar deal with Aurizon Holdings but is yet to sign an agreement.

Adani’s owner, Indian billionaire Gautam Adani, welcomed the rail construction deal.

“The rail project will lead to the opening of the Carmichael mine project, which will deliver in excess of 10,000 jobs, and will also provide vital opportunities for Australian infrastructure development and contribute to energy security of India by lighting the lives of millions of Indians,” he said.

At 10 billion tonnes, Carmichael is considered the largest single coal tenement in the world.

The mine is expected to produce 60 million tonnes of thermal coal a year, with first production expected in 2017.

Along with GVK Hancock, Clive Palmer’s Waratah Coal is also vying to build a new coal mine in the region.

Environmentalists want the Galilee to remain undeveloped, claiming the new mines will have adverse impacts on the climate.