July 18 (Bloomberg) -- Adani Enterprises Ltd., India’s biggest power-station coal importer, agreed to work together with a unit of South Korean steelmaker Posco to build a rail line from its $7.1 billion coal project in Australia to a port.
The details of the accord for engineering, procurement and construction of the 388 kilometer (241 mile) track between Galilee basin and Abbot Point port will be completed by December, Adani said in a statement. Construction will start early next year on the project in which Posco will take a stake and help arrange loans.
The tie-up with Posco will give Adani access to the South Korean market, Posco’s expertise and capital, according to the statement. Miners, including Adani and its Indian peer GVK Group are seeking to fund coal projects in Australia amid protests from environment groups and a slide in prices of the fuel that has made the projects unviable.
“Posco’s commitment for this project reflects the confidence the global partners have in Adani’s long-term investments, guaranteeing energy security in India and other emerging markets,” according to the statement.
Adani declined as much as 3.7 percent to 451.50 rupees in Mumbai today, the most in a week. They traded 2.2 percent lower at 441.45 rupees as of 11:04 a.m. Posco fell 1.8 percent to 302,500 won in Seoul.
The Carmichael coal project, comprising the mine, the rail link and a port terminal, will provide more than 10,000 jobs, Adani Group Chairman Gautam Adani said in the statement. The cost of the project is estimated at $7.1 billion.
The price of power-station coal at Australia’s Newcastle port, considered an Asian benchmark, was at a five-year low of $69.65 a metric ton last week, following a global supply glut.
Adani and GVK are among the last major investors looking to build export terminals at the Abbot Point port, braving dim price outlook for the fuel and environmentalists resisting a plan to dump dredging waste from the port expansion into the waters of the Great Barrier Reef Marine Park, a world heritage site.
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