North Queensland mining towns boosted by investment in Galilee Basin railway line

Regional towns servicing the northern Queensland mining region are likely to benefit from the announcement that freight company Aurizon will invest in the development of rail and port infrastructure servicing the coal-rich Galilee Basin.

Aurizon, formerly state-owned QR National, has agreed to acquire a majority (51%) interest in Hancock Coal Infrastructure Pty Ltd (HCI), which owns GVK Hancock's rail and port projects.

The investment will facilitate the building of multi-billion-dollar port and rail infrastructure linking the remote Galilee Basin to the Abbot Point coal terminal, 495 kilometres to the north, allowing coal to exported offshore.

The Galilee Basin is 200 kilometres west of the existing coalfields in the Bowen Basin and has been labelled "Australia's next coal precinct".

The development of a number of Gina Rinehart’s Hancock Prospecting joint venture coal mining projects with India-based GVK require the building of the rail line and port in order to proceed.

The Galilee Basin covers around 250,000 square kilometres and contains vast quantities of thermal coal, which is used to generate electricity.

Writing in The Conversation last year, Sonya Duus from the Australian National University, said while the average-sized coal mine in Queensland currently produces around 5 million tonnes (Mt) of coal every year, one of the GVK Hancock proposed mines - The Alpha Coal project would produce 30 Mt per annum, and would still not be the largest in the new basin.

GVK Hancock is hoping to export up to 60 million tonnes of coal a year.

The development of the $6 billion rail link has the potential to create thousands of jobs in the construction phase of the railway and port as well as mining jobs when the mines are operational.

This could increase demand for accommodation in regional towns to house fly-in-fly-out workers.

Property values in remote towns situated close to the proposed Galilee Basin mines including Alpha, Jericho, Hughenden, Charleville, Winton and Middleton could all rise once the mines are operational.

In a recent webinar, hotspotting.com.au's Terry Ryder picked Mackay as a potential “next Gladstone”  due to its proximity to the Bowen Basin and export port facilities.

"This is one of the most significant deals in Queensland’s coal history. The development of the rail and port infrastructure will unlock the Galilee Basin and see the development of Alpha, Kevin’s Corner and Alpha West, creating one of the largest integrated coal development projects globally," said Dr G V Krishna Reddy, chairman of GVK.

"The proposed relationship with Aurizon would allow us to jointly develop the most cost and time efficient rail and port solution for the Galilee Basin.

"At full capacity, the proposed arrangement is intended to provide sufficient equity and debt funding for the projects to reach financial close. The parties jointly will leverage the work already completed by GVK, the significant potential for ECA financing and Aurizon’s experience and capacity to undertake major projects and capability in heavy haul rail and infrastructure."

GVK Hancock received the primary state and commonwealth environmental approvals for its greenfield rail project in May and August 2012 respectively. GVK Hancock’s port project received Commonwealth environmental approval in October 2012.

Collectively the proposed development of the rail and port infrastructure – which is expected to deliver export capacity of 60 mtpa – could represent an investment for Queensland in the order of $6 billion.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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