Vale SA said that miners planning about AUD 32 billion of coal projects in Australia's Galilee Basin should build a jointly owned railway to save costs and speed development.

Mr Jason Economidis director of growth projects for Vale Australia said that "Certainly before the end of next year, we need to be well under way with a rail solution. If we don't have the port and rail solution sorted, it makes it very difficult to develop a mine."

Ms Gina Rinehart, Australia's richest person, and fellow billionaire Mr Clive Palmer are among developers planning to develop coal mines in the Galilee Basin to meet demand for coal from Asia. Vale may spend AUD 8 billion developing the 30 million tonnes a year Degulla project in the region.

Mr Economidis said that "If all providers built their own rail, that would cost north of AUD 4 billion each. Based on the low margins associated with thermal coal, individual rail corridors are very unlikely to be viable."

Ms Rinehart's Hancock Prospecting Pty is developing an AUD 10 billion project with India's GVK Power & Infrastructure Limited, that is scheduled to produce its first coal in 2015 and Palmer is planning the AUD 8.1 billion China First project. Adani Enterprises Limited, India's biggest coal importer, may spend AUD 6.5 billion on the Carmichael mine.

Mr Jignesh Derasari CEO for Adani's mining division in Australia said that Ms Rinehart and Mr Palmer are each proposing to build close to 500 kilometers of rail to ship coal to the port of Abbot Point. Adani is also exploring its own rail options.

Credit Suisse Group AG said that Australian resource companies plan AUD 430 billion of new projects to meet demand from China, the biggest consumer of the smaller nation's exports. Thermal coal prices are likely to rise over the next two years, supported by demand in Asia.

(Sourced from www.bloomberg.net)