Coal India scouts for mines in Australia

A CIL Board sub-committee on foreign acquisition has already vetted the proposal

Coal India Ltd. is currently examining a few properties in Australia, Indonesia and Colombia for a likely acquisition. The properties mainly hold thermal coal, but some also have coking coal reserves.

A CIL Board sub-committee on foreign acquisition has already vetted the proposal. The seven-member sub-committee is headed by an independent director.

Sources said that these were running properties, with the Australian ones having a total deposit of about 30 million tonnes per annum, with scope for expansion. CIL officials have already been given access to the data room of the Australian mines. The properties are in East Australia, and one of them is valued at $2.5 billion. The mines are privately-owned. Sources don’t rule out the formation of an equal joint venture. CIL is also simultaneously checking out some properties in Indonesia and Colombia.

Ad hoc provision

CIL has already made an ad hoc provision of Rs. 4000 crore this fiscal for acquisition of overseas coal assets and for development of the coal block acquired in Mozambique in 2009.

The demand-supply gap in coal (including coking coal) has been projected at 265.5 million tonnes for the terminal year of this plan. While coal imports are being resorted to as a short-term measure, CIL has been trying to acquire assets in order to supplement its resource base. India imported 137 million tonnes equivalent of coal in 2012-13, of which the maximum quantity came from Indonesia followed by Australia and South Africa.

While officials declined to name any potential acquisition targets , at least one multi-national company is known to have shown interest in divesting its holding in a few properties as tight international market conditions are making it difficult to meet increasing costs and raise finances for plough-back. CIL, on the contrary, is ready with cash reserves of Rs. 17,520 crore. In 2012, CIL had zeroed in on two companies — PeaBody Energy and Massey Energy — for a stake acquisition. However, the deals fell through amid a policy haze as reservations were expressed by the government, as well as independent directors, over acquiring stakes in unlisted companies.

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Printable version | Jun 1, 2020 11:52:34 AM |

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