GVK could pay $854 million in environmental guarantees

MEGA projects planned for the Galilee Basin west of Rockhampton could cost Indian owners GVK Hancock $854 million as they guarantee that any damage done to environment will one day be repaired.

Its planned Alpha and Kevin's Corner coal mines - worth a combined $7.6 billion to develop - will require a total workforce of 5700 to build and eventually operate.

This does not include funds GVK will need to spend on railway and port infrastructure.

The side-by-side behemoths will be developed to export 30 million tonnes of energy coal per year, roughly 50% more than BHP Billiton Mitsubishi Alliance's Goonyella Riverside near Moranbah.

The Queensland Government holds $267 million of BMA's funds as security measure should Goonyella Riverside ever be abandoned.

So far, GVK has paid $1.09 million in financial assurances to the Queensland Government for preliminary work at the sites, north of the Alpha township.

The final amount will not be worked out until the state delivers GVK's licence to start mining, but based on what BMA has paid, Kevin's Corner and Alpha projects could owe the government $427 million each

This does not take into account any bonds required for GVK's planned 495km railway that will link the isolated project to the Abbot Point terminal north of Mackay.

The enormous sum demanded by the state has done little to dampen the Indian miner's confidence about the project, even as peers Anglo American and BMA shut down small aspects of operations to save money.

GVK was yet to secure funding for the gigantic mines but a spokeswoman said its plans were very appealing for investors.

"Obviously, discussions regarding funding are confidential, however, we continue in discussions and are confident of achieving a fully financed outcome," she said.

"Our Galilee projects, even at current coal prices, have very strong fundamentals and have a very competitive position on the global cost curve."

"Investors take a long-term view of the market and long-term market fundamentals remain strong.

"There is a flight of capital to good quality projects and GVK Hancock's projects are viable in this market."

GVK's Alpha project was given Commonwealth approval on August 23 last year and its Kevin's Corner development was given state approval on May 30.

Construction is due to begin on the Alpha project from 2014, with first coal expected by early 2017.


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