Australia lures $21b bet on coal rebound

Coal's worst slump in seven years has failed to deter GVK Group and Adani Enterprises Ltd from pressing ahead with a $21 billion bet on Australia's Galilee Basin as other companies shelve projects amid rising costs.

GVK, controlled by India's GV Krishna Reddy, plans to have financing as early as this year for its Alpha mine in Queensland's Galilee region and is scheduled to begin exports by 2017. Coal at the Australian port of Newcastle, the Asian benchmark price, has slid 4.4 percent in 2013 to $86.65 a metric ton on May 17, extending a 19 percent slump last year, the most since 2005, according to IHS McCloskey data.

While Glencore Xstrata Plc is among miners canceling projects and cutting workers to cope with escalating production costs and slumping prices, GVK and Adani are preparing to meet Asian demand that's forecast to increase 24 percent by 2018. About 15 percent of Australian coal is extracted at a loss below $90 a ton, according to CIMB Group Holdings Bhd.