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Court favors GVK over Australian coal mine

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The Supreme Court in Australia’s Queensland state rejected an appeal led by conservation group Coast and Country to overturn environmental approval for the Alpha coal project, which is projected to become one of the world’s biggest coal mines used for power generation.

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Conservationists have failed in an attempt to block the development of a large new coal mine by India’s GVK and Australia’s richest woman, Gina Rinehart.

Indian conglomerate GVK and Ms. Rinehart’s Hancock Prospecting will now seek to secure a mining lease for the project, said Josh Euler, a spokesman for the joint venture.

“We are pleased the court has clearly ruled that our project has continued to follow and comply with all regulatory and legal processes,” he said in a statement. The conservation group will have 28 days to appeal the court’s decision.

Lobbyists had argued that the mine would have a detrimental impact on local groundwater, hurting nearby farmers.

“Today, I feel like we’ve been failed,” said Bruce Currie, one of the three farmers involved in legal action against the development of the mine. Mr. Currie urged the government to intervene.

Australia’s conservative government is a strong supporter of the country’s coal industry and is eager to encourage investment in the resources sector, especially at a time when the economy is being squeezed by fading mining investment.

An open climate-change skeptic, Prime Minister Tony Abbott has also accused green groups of undermining Australia’s national interest through anti-mining campaigns such as this.

GVK bought a 79% stake in the Alpha coal project in the relatively undeveloped Galilee Basin from Hancock for US$1.26 billion, in what was one of the sector’s biggest deals in 2011.

Spanning an area of more than 247,000 square kilometers, the Galilee Basin is bigger than the U.K.

The proposed Alpha mine is targeted to produce 32 million tons of coal annually over at least 30 years. But developing the Galilee Basin’s resources still faces big challenges.

The region is remote and lacks infrastructure to transport coal from proposed pits to ports along the coastline. The Alpha development is also planned at a time when coal prices are languishing at multiyear lows amid waning demand from China.

Still, Indian demand is projected to rise as the country invests heavily in new power-generating capacity to meet rising energy demands.

Mr. Euler said GVK Hancock would aim to set up supply agreements with customers and finalize financing for the project once it obtains a mining lease. It didn’t specify when it expects to begin construction on the mine.

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