Hyderabad: Australian mining tycoon Gina Rinehart, one of the world’s richest women, said on Sunday that she is confident the GVK Group’s Alpha Coal and Rail project, in which she is a minority stakeholder, will receive stalled environmental clearances from the Australian federal government by August.
Rinehart, chairperson of Hancock Prospecting Pty Ltd, threw her backing behind the Hyderabad-based group and even offered to increase her holding in the project, at a press conference she addressed in the city on a short visit to attend a GVK board meeting.
Her backing is crucial for the project in Queensland considering her influence in Australia’s mining industry. Her company was actively involved in the project in the early phases, including in marketing tie-ups and preparing the ground work for the first environment assessment report.
GVK got environmental clearance for the project from the Queensland government, but the approval process was halted by the federal government on 5 June on grounds that the earlier assessment lacked information including the likely impact on the Great Barrier Reef that lies off the Queensland region.
Normally, the federal government grants environmental clearances within 30 days of approvals given by a state government.
“I can’t quickly think of any other time in Australia (that) after you got a state government, you didn’t get a federal government approval. They (federal government) did ask more questions and more information has been supplied,” Rinehart said. “We should be carrying (approvals) in a few weeks now.”
Rinehart said the project is very important to Australia. “... It means some revenue, it means some jobs.”
Providing an option: Rinehart says she is open to raising her stake in the project if the need arises. Kumar/Mint
The 58-year-old Australian mining tycoon is ranked the 29th richest person in the world, with a net worth of $18.1 billion, according to the Bloomberg Billionaires Index.
GVK acquired a 79% stake each in the Alpha Coal and Alpha West Coal mines and 100% stake in Kevin’s Corner mines in Galilee basin in Central Queensland in October for $1.26 billion. Rinehart owns the remaining 21% stake in the Alpha Coal project.
The three mines together have estimated coal reserves of about 8 billion tonnes and a capacity of more than 80 million tonnes per annum (mtpa) when fully operational. GVK is also building a 495km rail line and a 60 mtpa port as part of the pit-to-port logisitics solution with a total investment outlay of $10 billion.
Rinehart said she is open to raising her stake in the project if the need arises. “I would love to be in the project more. I am very happy to have higher investment in the project. It’s most important to get the project going,” she said.
Rinehart came down heavily on Australia’s recent controversial carbon tax to tackle climate change and the equally contentious minerals resource rent tax (MRRT) to be levied on mining profits.
“This has been concerning Australia,” Rinehart said. With labour costs rising and with the carbon tax and MRRT, “Australia is losing in its cost competitiveness. Australia is not the only country with resources”, she said.
Rinehart took time off from a boardroom battle in Fairfax Media Ltd (FXJ), Australia’s second largest newspaper publisher, to be in Hyderabad. Rinehart, the biggest shareholder in Fairfax, has said she may sell her stake if she isn’t offered seats on the board.
GVK is in the process of tying up funds for the project. The company said it is in talks with several investors, banks and export credit agencies, but wouldn’t disclose their names citing the confidentiality agreements it has signed with them.
GVK has appointed Australia and New Zealand Banking Group Ltd as its financial adviser for finding suitable investors and bankers for the project.
Of the $10 billion GVK is planning to invest on developing the three mines, the railway line and the port, it will require $2-2.5 billion of equity, and expects to raise the balance $7.5-8 billion as debt.
“All the coal supply contracts will be linked to financing of the project,” said G.V. Sanjay Reddy, vice-chairman, GVK Group, at a press briefing on Sunday.
“There is good response from export credit agencies,” Reddy said. “We got responses from Korean Exim Bank, Chinese Exim Bank and US Exim Bank to fund the debt portion, if we choose contractors from those particular countries. Funds shouldn’t be a problem.”
The company expects to tie up the funds by the end of March 2013.