The agreement could lead to export of coal reserves including GVK Hancock’s Alpha, Kevin's Corner and Alpha West coal mines and a process to support the next phase of coal growth in the Bowen Basin.

Collectively, the proposed development of the rail and port infrastructure is expected to deliver export capacity of 60 million tonnes per annum.

Following completion of the transaction, Aurizon would gain the rights to operate and jointly manage with GVK the rail infrastructure and to exclusively provide above rail haulage from GVK Hancock’s Alpha and Kevin’s Corner mines.

Under the proposed framework, Aurizon would acquire a majority (51%) interest in Hancock Coal Infrastructure (HCI), which owns GVK Hancock's rail and port projects, and invest through upfront consideration at completion of the transaction and deferred consideration at financial close of each phase of the projects.

Chairman of GVK, Dr G.V Krishna Reddy, said the development would create one of the largest integrated coal development projects globally.

“This is one of the most significant deals in Queensland’s coal history,” he said.

“The development …will be a win-win relationship leveraging on each other’s strengths in project development and operation.

"The proposed relationship with Aurizon would allow us to jointly develop the most cost and time-efficient rail and port solution for the Galilee Basin. At full capacity, the proposed arrangement is intended to provide sufficient equity and debt funding for the projects to reach financial close.”

GVK vice-chairman G.V Sanjay Reddy said the parties would jointly leverage the work already completed by GVK, the significant potential for ECA financing and Aurizon’s experience and capacity to undertake major projects.

The projects comprise a greenfield rail project and a development right for a coal terminal at Abbot Point. GVK Hancock received the primary state and commonwealth environmental approvals for its greenfield rail project in May and August.

GVK Hancock’s port project received commonwealth environmental approval in October.

The decision means the Queensland government’s preference for consolidation of rail corridors from the Galilee Basin is more likely, with the two companies assessing the optimum rail solution based on the two corridors already announced, according to Queensland Deputy Premier Jeff Seeney.

He said the government had encouraged corporations proposing coal and rail projects in the Galilee Basin to work together.

“We have sought to find a balance between the interests of all parties involved, including project proponents, landholders and communities,” Seeney said.

“We want sensible, incremental infrastructure development. Today’s announcement is a welcome step in achieving our aims.

“It is a commercial arrangement that requires further negotiations, but those negotiations have the potential to progress our strategy of seeing consolidated multi-use rail corridors that have the least impact on local communities and landholders.

“By coming together the companies could deliver the optimum rail solution for all parties.”

Seeney said GVK Hancock’s north-south rail project and Aurizon’s east-west proposal had been declared as co-ordinated projects previously by the Queensland Coordinator-General.

Aurizon managing director Lance Hockridge said the proposed Aurizon-GVK Hancock arrangement was a significant milestone because it brought together two advanced, large-scale players in the mine-rail-port space for the Galilee.

“Aurizon has always believed that realising Galilee Basin coal exports would require a consolidated rail and port solution that delivers a staged, commercially sensible solution for producers,” he said.

“This solution could also provide significant opportunity for new and existing Bowen Basin producers to utilise elements of this infrastructure.”

Aurizon and GVK Hancock would jointly manage the proposed rail and port projects. Aurizon and GVK Hancock would also jointly determine the optimum rail solution that may include a combination of GVK Hancock’s rail project and Aurizon’s Central Queensland Integrated Rail Project (CQIRP) that would ultimately connect with the proposed T3 coal terminal at Abbot Point.