Key Findings
Despite claiming to be a leading global infrastructure owner, manager and operator” GVKPIL has no experience operating any business outside of India. It has never successfully built and operated a coal mine – in India or otherwise.
Building Australia’s largest black thermal coal mine in the untapped Galilee Basin would challenge experienced operators, but the combination of an inexperienced developer, slack demand globally for thermal coal and a deteriorating cost of production scenario in Australia moves the project beyond speculative.
Executive Summary
In 2011, GVK Coal Developers (Singapore) Pte Limited (GVK Coal) bought the Alpha Coal Project (the project) from Hancock Prospecting in a US$1.26bn deal for which GVK Group’s Chairman, Dr GVK Reddy was awarded “Asia Deal of the Year”. Less than two years later, the US$10billion project is struggling with little prospect of financial viability.
The project timelines have been shown to be unrealistic, and further delays are likely due to the unprecedented ambition and complexity of an Indian company with no track record of building mines in Australia, building what would be by far the country’s largest black thermal coal mine in an area with little water, power, or other service infrastructure. The project could require almost 500km of new rail infrastructure, across floodplains and through important farmland, to a new export terminal proposed to be located in the Great Barrier Reef World Heritage Area. This at a time when most major coal producers are seeking to sell or downscale production due to a weakening global outlook for thermal coal.
Please view full report PDF for references and sources.
Press release: Press Release- Investor Alert: GVK’S US$10 billion Australian coal project uneconomic, an unacceptable risk
