UPDATE 2-India's GVK cleared to build Queensland coal terminal

* Clears major environmental hurdle for $10 bln coal project

* Project still needs mining lease, financing

* First coal output scheduled for early 2016

(Adds comment from GVK) By Maggie Lu Yueyang and Sonali Paul

CANBERRA, Oct 10 (Reuters) - India's GVK Power and Infrastructure cleared a major hurdle for a A$10 billion ($10.2 billion) coal project in Australia, winning federal government approval for the construction of a new export terminal in Queensland state.

The green light allows GVK and its Australian partner, the country's richest person Gina Rinehart, to expand the Port of Abbot Point for the planned Alpha coal project.

The project, now awaiting a mining lease from the state, is key to meeting the coal ambitions of GVK, a conglomerate with interests in airports, hotels and transportation. The project could help meet India's huge appetite for coal, which feeds two-thirds of the country's power production.

The Alpha project in the untapped Galilee Basin in Queensland has a mine life of more than 30 years and would produce 32 million tonnes a year, with first output targeted for early 2016.

Alpha is one of five major coal projects in the basin, together aiming to produce more than 180 million tonnes by the end of the decade and doubling Australia's thermal coal exports.

All of those projects are seen potentially at risk of being shelved or delayed due to soaring costs and a weaker outlook for coal demand in the near term.

But BGVK said in an email the group was not concerned about a demand slowdown, as Asian utilities had confirmed their requirements and willingness to enter into offtake agreements.

"From a supply viewpoint, Alpha is by far the most advanced project that will supply incremental quality coal to these utilities over the medium to long term," the email said.

Approval from Canberra for the project had been seen as a big obstacle after environmentalists expressed worries about coal burning, port dredging and ship traffic along the Great Barrier Reef.

The Labor government had rejected a rail line and port proposal for a rival project, now owned by another Australian mining magnate, Clive Palmer.

The authorities cleared the GVK plan after imposing 60 conditions to protect the Great Barrier Reef World Heritage Area and the marine area.

"We are the only coal developer in Australia to possess environmental approvals at a state and federal level that integrate the mine, rail and port ... that will significantly assist in the facilitation of opening up the Galilee Basin," GVK Vice Chairman Sanjay Reddy said in a statement.

($1 = 0.9801 Australian dollars)

(Reporting by Maggie Lu Yueyang and Sonali Paul; Editing by Ryan Woo)