The letters propose contracts valued at more than $2 billion over seven years for the provision of mining services and the construction of mine infrastructure at the Carmichael coal mine in central Queensland’s Galilee Basin.
Under the five-year mining services contract, with two additional one-year options, Downer will be responsible for statutory management and mine operations, drilling and blasting operations and the loading and haulage of both waste and coal.
Under the mine infrastructure contract, Downer will be responsible for the engineering, procurement and construction of onsite infrastructure and preparatory civil works.
Capital for a major fleet for the mining services contract will be provided by Adani.
Both letters are subject to the parties executing binding contracts followed by pre-production and planning in early 2015, with mine infrastructure construction commencing in the fourth quarter of 2015.
First mining is optimistically scheduled for the second quarter of 2016 and first coal in 2017, assuming Adani takes a positive development decision.
Adani Australia CEO Jeyakumar Janakaraj welcomed today's announcement, the latest milestone in Adani's transition from the approval to construction phase of the company's mine, rail and port projects.
"The Carmichael mine [sits] at the heart of these projects which will deliver vital export opportunities for Queensland, 10,000 jobs, $22 billion in taxes and royalties to be invested right back into frontline services across our state and crucial work opportunities for small and medium-sized businesses,” Janakaraj said.
“This partnership with Downer reflects the clear confidence that tier one firms have in Adani's projects and we welcome the chance to work with such a respected, proven partner on this critically important task.
"In selecting Downer as the mining services contractor, we are confident that not only are we well placed to meet our longstanding first coal guidance of 2017 but that we are one step closer to our goal of building a long-term future with Queensland.”
Adani's mine, rail and port projects encompass the Carmichael mine near Clermont, both the Carmichael and North Galilee Basin Rail, Queensland's first standard gauge line (which will help open up the basin by linking the mine to the port of Abbot Point) and the existing Terminal One and soon to be constructed Terminal Zero at Abbot Point, near Bowen.
“We’re very much looking forward to working with Adani at the Carmichael coal mine, which is expected to become the largest thermal coal mine in Australia,” Downer CEO Grant Fenn said.
Earlier this week Adani also signed a memorandum of understanding with South Korean steel giant POSCO for construction of a new strategic terminal at Abbot Point coal port.
Terminal Zero will be constructed at the port of Abbot Point near Bowen with capacity for 40 million tonnes per annum initially, with an expansion to 70Mtpa in its second phase.
In July, POSCO was appointed as the preferred EPC contractor for Adani’s North Galilee Basin Rail project.
Construction of the rail project is expected to start next year.
Stage one of Carmichael is expected to cost $7 billion, assuming Adani can gain the funding.
Last month the Indian conglomerate was questioned by the National Stock Exchange of India over claims that the State Bank of India had extended it a $US1 billion ($A1.2 billion) credit line to fund its $16.5 billion mega coal project.
The Indian opposition party has demanded the Reserve Bank of India intervene and question what it calls an "improper and unjustified" loan to Adani.
The SBI loan remains subject to due diligence and a number of top foreign banks have already declined to fund Adani’s project.
Adani founder Gautam Adani is a close friend of Indian Prime Minister Narendra Modi.
