GVK Power pays $1.3 bn for stake in Australia's Hancock

GVK Power & Infrastructure has said it will pay $1.26 billion for a majority stake in three Australian coal mines and a port and rail project owned by heiress Gina Rinehart's Hancock Group.

The Indian infrastructure group will acquire a 79 percent stake in the Alpha and Alpha West coal mines in the Galilee Basin, and will buy Kevin's Corner coal mine and the rail and port project connecting the coal mines outright, it said in a statement late on Friday.

[caption id="attachment_86122" align="alignleft" width="380" caption="The first phase of production, scheduled to start in 2014, is expected bring in more than 30 million tonnes per year of thermal coal. Reuters"][/caption]

The deal ends months of talks which began in February and have been extended through the year.

"At full production the three coal projects are together expected to supply about 84 million tonnes per annum to the global sea-borne coal market," GVK said in a statement. Most of the coal from the project is intended for Asian markets.

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The first phase of production, scheduled to start in 2014, is expected bring in more than 30 million tonnes per year of thermal coal, it said.

GVK will pay $500 million initially to Hancock, $200 million after one year, and the remainder on financial close of the project, which is expected to be 2012, it said.

Indian energy firms have been scouting for coal assets overseas to feed power plants at home.

India holds 10 percent of the world's coal reserves, but local supplies are falling short as the country builds more power plants and as domestic coal projects run into environmental and land acquisition delays.

Reuters