Australian state approves $2 billion rail line for Adani coal project

MELBOURNE (Reuters) - Adani Mining has won state approval to build a rail line for its $15 billion Carmichael coal project in Australia, it said on Thursday, bringing it a step closer towards making a final decision on whether to go ahead with the massive scheme.

The state of Queensland approved the A$2.2 billion ($2 billion) North Galilee Basin Rail project, a 300 kilometre (186 mile) railway to connect the Carmichael mine and potentially other mines in the untapped Galilee Basin to the east coast port of Abbot Point.

Despite analysts' views that Adani's project would be unprofitable at current coal prices, the company said it remained committed to pushing ahead with it to supply coal to power stations in India.

"Adani looks forward to continuing to work with our project partners and all levels of government to see this through," Adani Mining, the Australian arm of Adani Enterprises (ADEL.NS), said in a statement.

Adani recently signed an agreement with POSCO Engineering & Construction Co Ltd to build the rail line. Costs and other details of the contract are due to be set by the end of this year.

The firm has yet to line up funding for the Carmichael mine, which could become Australia's largest coal mine at 60 million tonnes a year, as a deep slump in coal prices has scared off lenders.

It also continues to face challenges from green groups worried about carbon emissions from burning coal and damage to the Great Barrier Reef from port expansions and coal shipping.

(1 U.S. dollar = 1.0762 Australian dollar)

(Reporting by Sonali Paul; Editing by Joseph Radford)