Adani, which this week opened its Australian headquarters in Brisbane and is exploring a 500-kilometre rail link to ports with Hancock Coal, has been reported as being in talks with Coal India for a long-term supply agreement that could include equity participation in its Australian projects.

Times of India reported that sources close to the development say a long-term pricing agreement will be worked out for outright purchase of coal. As per the arrangement, coal will be supplied using Adani infrastructure – shipping and ports.

The initial public offer for 10% of the Coal India state monopoly will close today oversubscribed. Coal India is the world’s biggest coal miner with extractable coal reserves of more than 22 billion tonnes and 80% of India’s coal supply from 471 mines.

The rise in Indian coal demand at 10% a year is outpacing growth in domestic production, with production by Coal India rising at only 7% because of delays over environmental issues at 17 of its projects.

Adani, which is India’s largest coal importer, earlier this year purchased Linc Energy’s exploration projects containing 7.8 billion tonnes of thermal coal in the Galilee Basin from Linc Energy in a $750 million deal, and other Indian players are keen to secure assets there.

Adani’s total Galilee mine, rail and port project is expected to cost $A7 billion, produce 60 million tonnes a year of thermal coal, and employ 5000 people during construction and operation.

India’s insatiable need for power means that companies like Adani – which has a combined market capitalisation of $30 billion – regard Queensland as offering strategic value.

It is prepared to develop and own a dedicated coal terminal at Dudgeon Point, near Dalrymple Bay, rather than lease out capacity at the Queensland government-owned Abbot Point.