Railway track contract assessment showed the best option for an order of that size was for it to be supplied by the Arrium group.
Melbourne: Indian energy giant Adani today signed a 74 million dollar landmark deal with Australian steel group Arrium to buy steel for a 400-km rail line for its controversial Carmichael coal mine project.
Under the landmark deal, Arriums division OneSteel Manufacturing Pty Ltd will supply 54,000 tonnes of steel to build the rail line linking Adani's proposed coal mine in central Queensland with the Abbot Point port.
"This is a landmark deal for the Galilee projects," Adani Australia's Head of Country and CEO Jeyakumar Janakaraj said.
"Adani is continuing to gain momentum. The North Galilee Basin rail project is an essential open access, multi-user element to open the Galilee basin not only for the Carmichael mine but also other projects," he said.
"Our commitment to the Carmichael projects and the benefits that will flow to regional Queensland and India is clearly demonstrated by this deal. There is more work to be done, but this contract is a major step forward," he added.
The contract, which is subject to the normal commercial requirement that the Carmichael mine proceeds, involves over 54,000 tonnes of head hardened rail.
"There are many other contracts under active consideration which will benefit regional Queensland businesses and generate jobs," Janakaraj said while reassuring to source resources from regional Queensland and stressing on to create regional jobs in the region.
"However, the railway track contract assessment showed the best option for an order of that size was for it to be supplied by the Arrium group. Though it would have clearly been cheaper to source the rail from overseas, Adani values supporting Australian businesses and Australian jobs," he said.
"Australia needs a strong local steel industry just as it needs a strong coal and resources sector. Todays announcement strongly supports both," he said.
Arrium was put into voluntary administration, a precursor to bankruptcy, in April last year with debts of over four billion dollars. Earlier today, South Australian Chamber of Mines and Energy chief executive Rebecca Knol said the deal was a vital breakthrough for Arrium's administrator Korda Mentha and Whyalla city which is facing massive job losses if the steelworks close.
Adani's 16 billion dollar Carmichael mine project has been dogged by delays, facing opposition from several environmentalist groups as well as members of indigenous community.
Last month, Adani chairman Gautam Adani met Prime Minister Malcom Turnbull during his first official visit to India. Adani had sought 900 million dollars loan from Northern Australia Infrastructure fund (NAIF) for the rail line to the Abbot Point coal port. Last week, Westpac had ruled out supporting Adani's proposed mine under its new climate change action plan.
The bank's move was criticised by Australian resources Minister Matt Canavan who dubbed Westpac's position on coal as anti-Queensland and anti-growth while Prime Minister Malcolm Turnbull called the news "disappointing".
Turnbull had said, "I am disappointed that Westpac has made that decision. I think these projects should be examined on their merits....Coal has a big role to play for a very long time'.