PERTH (miningweekly.com) – Indian conglomerate GVK on Thursday “strongly refuted” a report claiming that the $10-billion Alpha coal project, in Queensland, was uneconomic and offered investors unacceptable risk.

The report, released by the US-based Institute for Energy Economics and Financial Analysis (IEEFA), stated that the proposed Alpha project in the Galilee basin, labelled GVK a “weak investment partner”, and stated that the Alpha project was “a quagmire, not an investment”.

Report coauthor Tom Sanzillo called into question GVK’s ability to participate financially in the Alpha project, owing to the company’s decreasing stock price, overleverage, and poor track record on other projects.

"The cost side of the project is equally troubling. The impacts of the proposed export terminal on the Great Barrier Reef, the massive rail infrastructure and rising costs of mining are cost factors that will only keep increasing.”

Sanzillo noted that there was also the demand and price of coal on the global markets to consider.

“Coal markets are weak now, and a strong, sustained comeback is less likely in the face of the maturation of renewable energy, the changing nature of growth in many countries and public concern over coal’s health and environmental impacts.

“Even in the event of environmental approvals, the addition of new partners or other developments, taken together, the cumulative picture of cascading multiple risks and inevitable delays and cost blowouts around the Alpha project means that there is limited investment potential,” he added.

“No investor should take part.”

GVK cast doubt on the validity of the IEEFA report, stating that it was commissioned, sponsored, and funded by Greenpeace.

“There is a current activist-motivated media campaign under way, primarily sponsored by Greenpeace, which is envisaged to continue internationally for a number of weeks, to discredit the use of coal and to curtail the growth and development in mining, transport and other sectors where infrastructure/construction is required,” GVK told Mining Weekly Online in a statement.

The company said that the activists’ motivated focus and objective was to, unfortunately, and deliberately, misconstrue facts and mislead with inaccurate data.

“The timing of such motivated communication is to create hurdles when GVK is seeking (and is confident of getting) clearance for dredging in about a months’ time.

“We are aware that activist groups have and will continue to misrepresent the way in which the Great Barrier Reef is impacted by coal companies through port development and shipping (particularly as GVK is in the midst of finalising its last environmental approvals). 

“We continue to also have positive support from Queensland and federal government and the communities within which we would be operating. Underlying polling of the Queensland community also identifies that nearly 80% support mining and the benefits it brings.”

The Indian conglomerate added that the company’s projects were financially robust, with some of the lowest operating costs in the global coal industry, and represented a “very large” high-quality and new source of low-ash, low-sulphur, low-gas thermal coal, which is now in far higher demand.

“Adding to this demand is the recent steps China is taking to eliminate the importation of low-quality coals.  We remain extremely confident of the successful, responsible delivery of our projects with our proven, experienced Australian management team,” GVK said.

A joint venture between Hancock Prospecting and India’s GVK, the Alpha coal mine would produce some 32-million tons a year from an opencut operation over 30 years. The projects hold a combined resource of eight-billion tons, and at peak capacity could produce some 80-million tons a year.

Apart from the opencut mine, the project development would also include a railway line between the mine and the Abbot Point port.