GVK expects financial closure for Alpha coal project next year

2 JUL, 2012, ET BUREAU
HYDERABAD: Power-to-port developer GVK Group said its coal, railway and port projects in Australia would achieve financial closure by March 2013.

After tying up finances, the company intends to start production at the mines and start shipping coal to India and other Southeast Asian nation by 2016, GV Sanjay Reddy, vicechairman of GVK said.

The Indian infrastructure conglomerate that intends to spend $10 billion in developing the mines, a railway line and a port is talking to several banks to fund these projects. The three projects would be developed largely in two phases. The first phase, involving a $6.5 billion capital expenditure would lead to constructing a 500 km railway line to carry 60 million tonne per annum (mtpa) of coal, a port to ferry 30 mtpa of coal to be exported and a mine close to 17 mtpa.

The group had acquired 79% stake in Alpha Coal and Alpha West Coal mines and bought out the Kevin's Corner mines completely in October last year for a consideration of $1.26 billion from Georgina Rinehart, a miner and Australia's richest woman. The mines have a combined resource capacity of eight billion tonne of coal and will cater to the growing power needs of many neighbouring nations that face a power crisis due to a paucity of thermal coal.

Sanjay Reddy said: "Our bankers see it as a qualitative project. We are going to be raising much of our debt through External Commercial Agencies (ECAs) as these agencies can fund projects for over 15 years compared to other international banks that would want companies to re-finance their debt after a period of five years."

All three projects would be ramped up and expanded subsequently by 2018 as part of the second phase of development. The total equity requirement for $10 billion project would be $2.2 billion and the balance would be debt. GVK has appointed Australia and New Zealand bank to tie up debt with the ECAs and banks. Currently, the coal project is awaiting an environmental clearance from Australia's federal government post which the production at the mines will begin.

The environmental approval that was first granted by the Queensland state government was put on hold by the federal government following a report by an arm of the United Nations.