Aurizon Holdings plans to complete joint venture with GVK in mid-2014- report

December 16
8:36 AM 2013

Australia-based Aurizon Holdings Ltd is planning to conclude a deal with India-based GVK Group to construct a railroad project by mid-2014, Bloomberg reported. The railroad is for a $10 billion coal project whose owners are GVK Group and Australian billionaire Gina Rinehart.

The report quoted Aurizon Chief Executive Officer Lance Hockridge, who said in a media call, "We're talking with respect to calendar year '14, middle year and beyond to go to that next phase." In March this year, Aurizon and GVK inked an initial agreement to build and transport coal from the thermal coal projects of GVK. The projects are said to be located in the Galilee basin of Australia, found 500 kilometers from the coast. GVK purchased the assets two years ago for $1.26 billion before the prices of thermal coal fell.

The report said Aurizon will hold a 51% stake in the rail joint venture. It will also provide construction funding for its share. Hockridge said the move is part of Aurizon's push to expand the company's network that services Queensland coal mines, the report said.

Aurizon is a haulage network operator in majority of the states in Australia. This includes Queensland, the largest exporter of coal for steel manufacturing. However, the fall of coal prices has forced mining firms like Glencore Xstrata Plc to close down some mines, the report said. Last month, GVK and Aurizon also agreed to reduce the length of rail lines for the project from 300 kilometers to 300 kilometers. The rail reduction will be carried out by using a portion of the existing network of Aurizon.

The report quoted Hockridge, who said, "We have proposed to put in place rigorous financial and commercial underpinnings of any development." However, he did not specify the cost of the rail component of the $10 billion project.

A presentation on the GVK website revealed that a 21% stake of the project is owned by Gina Rinehart's Hancock Prospecting Pty, the report said.

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