Indian company GVK was behind the project near Alpha in central Queensland and had tied up key funding and joint venture support from Australian mining billionaire Gina Rinehart’s Hancock Coal for somewhere north of $600 million. Hancock does not appear to be part of the legal action.
In 2011, along with Adani, GVK Hancock planned a massive network of thermal coal mines in central Queensland, but ran foul of legal action by activists which delayed the granting of a mining lease. The coal market then turned savagely and the projects were shelved.
GVK’s plans were estimated at $6.9 billion and it had received environmental and co-ordinator general approvals.
Out of a group of companies, which included one owned by Clive Palmer, only Adani’s project moved ahead.
Now, GVK’s failure has turned into legal action by six India-based banks over a $US1 billion loan and a $35-million letter of credit facility given by banks in 2011 as well as a $160 million loan made in 2014.
The granting of the lease was a key milestone in the loan agreements.
The banks reportedly asked GVK in November 2020 to cancel the agreement and requested repayment. But neither GVK nor its guarantors has paid any of the sums owed, the banks claimed.
GVK has been reported in the India media as denying any breach and has instead said the loans were to provide part-funding for the acquisition of the Hancock companies in Australia to develop their assets — including the Alpha project — into working coal mines.
“The deterioration in the market for coal, the lack of third-party investment, legal challenges to the mining projects in the courts of Queensland, meant that very little progress was made to develop the mining assets,” GVK states.Jump to next article