GVK Hancock's $10 billion Australia coal project must meet green conditions

By James Regan

SYDNEY (Reuters) - Indian conglomerate GVK Power & Infrastructure Ltd (NSI:GVKPIL.NS - News) and Australia's richest woman on Tuesday were ordered to meet strict environmental conditions over water conservation before developing a coal mine in the arid Australian Outback estimated to cost $10 billion.

The Land Court of Queensland recommended Queensland state approve a mining lease for the Alpha thermal coal mine as long as conditions were met on addressing objections made under the Mineral Resources Act and the Environmental Protection Act.

GVK Hancock, a joint venture between GVK and mining magnate Gina Rinehart's private Hancock Prospecting, said it was ready to work with environmental regulators and landowners to meet the recommendations of the Land Court.

The partners had already gained federal clearance to develop the Alpha thermal coal mine in the remote Galilee Basin, where hundreds of million tonnes of thermal coal remain unexploited.

Farmers and other landowners in the area claim the Alpha mine and others would draw too much water away from farmland.

Collieries require large quantities of water for washing coal before its is shipped, as well as for suppressing dust.

Under the recommendations, the mine's operators will be required to make additional water available to other users and keep adequate supplies on hand.

To date, ambitious plans to introduce mining to the Galilee Basin, 500 miles from the nearest port, have been derailed not by concerns over water but rather by weak coal prices and transport challenges.

Others proposed mines in the Galilee Basin include a separate GVK project, and ones by China First and India's Adani Enterprises (NSI:ADANIENT.NS - News).

The conditional recommendation follows a six-month court challenge initiated by farmers and community groups.

"The Land Court's decision vindicates our concern about the impact on groundwater of the mega coal mines planned for the Galilee, including the Alpha mine, and the concerns of the affected landholders and farmers who were objectors to the mine in the legal challenge," said Tom Crothers, former general manager of water planning and allocation in Queensland.

(Editing by Joseph Radford)