Galilee Basin coal test pit

Alpha test pit. Photo by Andrew Quilty.

The Alpha Coal project proposal includes a 32 million tonne per annum open-cut coal mine in the southern Galilee Basin (38 km north-west of Alpha), a rail corridor from the mine site to the port of Abbot Point and the T3 terminal at Abbot Point (25 km north of Bowen)1.  The project is proposed by GVK Hancock Coal, a partnership between Indian company GVK (79%) and Gina Rinehart’s Hancock Prospecting (21%).

The Alpha Coal project will mine thermal coal for export and has an expected life of 30 plus years. The mine would directly impact 20,618 ha of woodland and grazing land2.

When the project was first acquired by GVK in September 2011, the company expected first coal production in 2014, but has so far been delayed by four years3. While the project received all necessary environmental approvals, the granting of a mining licence for the project was challenged in the Queensland Land and Environment Court by local landholders and a conservation group4.  The Land Court ruled that the project be rejected, or approved only if certain conditions were imposed5. The Supreme Court recently ruled that the Queensland government’s overruling of these recommendations in granting the Alpha mine an approval was lawful.

A major concern of landholders objecting to the mine is impacts on groundwater, with the mine expected to extract 176 billion litres over its 30 year lifetime6.

Financing for the project has not yet been secured. GVK Hancock Coal is in negotiations with Aurizon regarding a joint venture.  The signing of the final agreement was expected in the second half of 2014, but has been delayed until at least early 20157.

GVK purchased the Alpha Coal project from Hancock Prospecting for $US1.26 billion at the peak of the coal boom in 2011.  GVK did not make the final payment of $US560 million for this purchase to Hancock, due in September 2014.  Hancock reportedly gave GVK an open-ended extension on the payment and has since written off the debt due “primarily to the lack of anticipated payments”8.

An independent financial analysis of the Alpha Coal project found it to be “financially unviable”9 while a study by academics from Oxford University found that coal projects in the Galilee Basin were at risk of becoming stranded assets10.

Further information:

  1. Alpha Coal Project, Department of State Development, Infrastructure and Planning 

  2. Alpha Coal Project SEIS EPBC Report, Hancock Prospecting 

  3. Hancock extends deadline for GVK on Galilee Basin purchase, Fairfax 

  4. Land Court urges Queensland Government reject Alpha Coal project or impose new conditions, ABC 

  5. Court recommends Queensland Government reject Alpha Coal Project, ABC 

  6. Battle to Stop Alpha Coal, Brisbane Times 

  7. Aurizon profit falls 43 percent, Sydney Morning Herald 

  8. Gina Rinehart’s Hancock takes a $641 million coal asset writedown, Bloomberg 

  9. Stranded: Alpha Coal Project in Australia’s Galilee Basin, IEEFA 

  10. Stranded Down Under, Smith School of Enterprise and the Environment