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Web Exclusive | July 2013

CIL eyes 3 coal mines in Australia

Coal India (CIL) plans to acquire three coal assets, with a combined production of 25 million tonne (mn t) per annum, in Australia in order to meet the fuel demand for domestic power plants.

In April, CIL entered into non-disclosure agreements with three companies in Australia. He added the equity participation being sought by the miner varies between 25 per cent and 50 per cent in the ventures.

If CIL acquires at least 25 per cent stake in each of the three mines, it may have to shell out around $375 million for the deal, reports indicate. This is assuming an average of 30 year life of the mines and the current average coal asset valuation of $2 per tonne in the international market.

This puts the combined worth of the three properties at $1.5 billion on a reserve base of 750 mn t. However, signing of non-disclosure agreements is only the first step in the negotiations involving mineral asset acquisitions and does not indicate finality of talks.

CIL has been looking abroad for the past four years, but has failed to strike a deal so far. It may be noted that CIL plans to invest Rs 6,000 crore in foreign acquisitions in 2013-14. The company is looking at importing 5-6 mn t of coal in 2013-14 to supply to power firms.

Some analysts opine that it is opportune time for overseas acquistion of mines because of fall in global coal prices and the flight of liquidity from the market.

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