PERTH (miningweekly.com) – The developer of the Alpha and Kevin’s Corner coal projects, in Queensland, has hit back at a report by the Institute for Energy Economics and Financial Analysis (IEEFA), which claims that these projects were uneconomical.

The IEEFA report, released earlier this week, was conceived on the basis that both projects would look at India as a viable destination for coal products, as China’s demand for coal continued to slow.

However, a spokesperson for developer GVK Hancock told Mining Weekly Online that coal from the Alpha and Kevin’s Corner projects would, in fact, be targeted at markets in South East Asia, and not India.

“We remain firmly committed to the development of our Galilee basin coal assets, and we are continuing to develop our projects to a point where construction can commence,” the spokesperson said.

In its findings, the IEEFA report stated that Galilee basin coal imported into India would need a wholesale electricity price double India’s current level to be viable. The report noted that with the extreme isolation of the proposed projects, the cost of building the required infrastructure would mean that the combined capital and operating costs of the coal mines would be uneconomical.

However, GVK Hancock pointed out on Wednesday that the volume and magnitude of the Galilee basin coal deposits were of such a scale and depth that they lent themselves to large-scale mining techniques that would otherwise not be available to smaller mines.

“The combination of these kinds of large-scale mining techniques, along with other techniques, deliver a free-on-board price that ensures our mine is comparatively immune to the volatility of cyclical coal prices,” the spokesperson said.

The proposed A$10-billion Alpha coal project was expected to produce 32-million tonnes a year from an opencut operation, over 30 years. The project holds a combined resource of eight-billion tonnes, and at peak capacity could produce 80-million tonnes a year.

The A$4.2-billion Kevin’s Corner coal project, also being developed by Indian conglomerate GVK, will produce an estimated 30-million tonnes of thermal coal a year, over a 30-year life-of-mine.

The GVK Hancock spokesperson said that the joint venture (JV) was currently in the process of finalising a transport solution for coal from the Galilee basin, in the form of a JV with rail freight transporter Aurizon.

“This JV represents a tremendous accomplishment as it will be the first time anyone has created a viable solution to get Galilee basin coal to the export markets.

“This proposed transaction with Aurizon will provide development certainty for the rail and port projects and derisks our coal mines from a logistics point of view. Further, the infrastructure solutions developed by GVK and Aurizon will result in a significant upfront capex [capital expenditure] reduction,” the spokesperson said.

He added that the transaction would also provide a pathway for sufficient equity and debt funding for the rail and port projects to reach financial close.

“Our key focus is to advance our projects to a point where construction can commence, following finalisation of the infrastructure JV with Aurizon and the granting of all major environmental approvals from state and federal regulatory bodies.

“Once the Aurizon JV is completed and the regulatory bodies have addressed litigious challenges to approvals, we will execute coal offtake agreements before finalising all financing arrangements.”