The development of Northern Energy’s Elimatta project received a boost yesterday with the State Government’s decision to allow the development of a $1 billion railway out of the coal-rich Surat Basin.

The decision means Northern Energy will have access to a rail line to transport its coal from Elimatta, located at Wandoan, to Gladstone Port.

“This is a another significant move in progressing the railway which will open the coal-rich Surat Basin, with a new 207km rail line from Wandoan to Banana allowing access to the Port of Gladstone,” NEC managing director Keith Barker said.

“For our Elimatta project at Wandoan access to such infrastructure is vitally important in the development of our coal resource.”

The rail line will be built by consortium partners Australian Transport and Energy Corridor, Dawson Valley Railway, Industry Funds Management, Queensland Rail, Xstrata Coal and Anglo Coal.

Northern Energy recently announced a 70% increase of its Elimatta resource to 222 million tonnes, comprising 200Mt of inferred resource and 22Mt of indicated resource.

Barker said Xstrata’s recent approval of a pre-feasibility study into developing its own Wandoan project, which would be the largest coal mine in Australia, improved prospects of the rail line going ahead.

“This rail project will provide the global electricity sector access to good quality thermal coal, suitable for the latest efficient power generating technologies,” Barker said.

He said the proposed railway would greatly increase capacity and efficiency when compared with the existing rail network servicing southern Queensland.

“I am pleased that the Government has confirmed the railway will be an open access line with sufficient capacity to meet demand for coal and other freight users. This link should provide all companies, which are developing isolated coal deposits across the Surat Basin, with access to export markets,” he said.

“Development of a rail link between Wandoan and Gladstone will also further enhance the potential for the eventual development of a rail link along the eastern seaboard from Gladstone, where a major expansion of coal export facilities is underway, right through to Melbourne.”

Northern Energy was trading at 85c this morning.