Riches flow for Rinehart after GVK deal

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Billionaire heiress Gina Rinehart just got a lot richer thanks to the sale by Hancock Prospecting of a majority share in Queensland thermal coal assets to GVK for $1.2 billion.

The Indian conglomerate is buying up to a 79 per cent shareholding in the Alpha and Alpha west projects, and 100 per cent of the adjacent Kevin’s Corner coal project.

It is also buying 100 per cent of the proposed rail and port project needed to export the currently stranded Galilee Basin operations.

The total payment from GVK will come in several stages over a period no longer than three years, with about $500 million paid up front.

A further $200 million will be paid a year later, and another $560 million on the financial close of the project, anticipated to be in 2012.

Rinehart said in a statement the Galilee coal project was one of the largest projects undertaken by both companies.

“We are also very pleased with this strategic alliance with a country (via GVK) that needs our coal and which should help to propel these mines to successful development and on-going operations over decades,” she said.

GVK chairman GVK Reddy said the Galilee holdings were of a high quality and the company was looking forward to jointly developing them.

“These are truly world class coal assets in both quality and scale and we look forward to the opportunity of jointly developing these projects to their full potential.”

Before the Galilee Basin deposits become operational massive infrastructure developments will need to be undertaken, and GVK has put stage-one developments at a cost of $10 billion.

GVK said the $10 billion would cover full-scale mine developments as well as the cost of building a 495-kilometre rail line to the port at Abbot Point.

Earlier in the month Gina Rinehart’s daughter Hope Welker filed action against her in the NSW Supreme Court.

Details of the case are being suppressed under an arrangement the family made to protect the business from bad publicity.

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