Australia vows to work with India's GVK on mine

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Australian Prime Minister Julia Gillard has attacked Queensland officials over their handling of a massive Indian-led US$6.3 billion coal mine project, accusing them of risking investor confidence.

In a letter to state Premier Campbell Newman, Gillard expressed her 'deep concern and disappointment' at how environmental assessments for the Alpha Coal project were carried out, saying they were in breach of a national agreement.

"The Commonwealth will, as a result, work directly with Alpha Coal to complete the assessment process and resolve any remaining uncertainties for the project," the Labour leader wrote in the letter sent Tuesday.

Indian infrastructure giant GVK holds an 80 percent stake in the Galilee basin project which received environmental approval from Queensland based on a report which the federal government says is inadequate.

The mine is in the catchment of the Great Barrier Reef and Gillard said the Queensland assessment, among other faults, failed to note its impact on green turtles, dugongs and dolphins in some areas of the world's biggest reef.

"I would urge you to reconsider the approach taken to the Alpha Coal project," Gillard wrote to Newman.

"Rather than fast-track and streamline environmental approvals, the Queensland government's current approach will only serve to undermine confidence, delay approvals and increase uncertainty for project proponents, outcomes which are at odds with our commitments."

Australia is riding an unprecedented mining boom driven by strong demand from Asia and is seeking to fast track developments of its rich mineral and gas wealth while commodity prices remain high.

Environment Minister Tony Burke said on Tuesday he did not want to delay the Alpha Coal project but was unable to sign off on what he described as Queensland's 'shambolic' environmental assessment.

Newman, a conservative who recently ousted a long-standing Labour government in Queensland, weighed into the war-of-words.

He claimed there was a comprehensive, four-year environmental assessment conducted on the development which is expected to generate 3,600 jobs during construction.

"I call on the prime minister to get this rogue minister into line," he said late Tuesday in reference to Burke.

The political row could impact other projects planned for coal-rich Queensland, with Burke threatening to take back control of major environmental approvals from the state government.