Coal India to buy into five mines overseas

With Prime Minister Manmohan Singh’s office asking the state-run behemoths to intensify their efforts to acquire overseas coal properties to feed their plants,navratna company Coal India Limited (CIL) is all set to acquire stakes in at least five coal mines in the USA,Australia and Indonesia within the next two months with an estimated investment of nearly Rs 8,000 crore.

“We have been holding meetings with a number of companies and have zeroed in on five with whom we would enter into agreements to acquire stakes through equity contracts. Of the five,two each are in Indonesia and Australia and one is in the United States. We intend to sign agreements with them within the next two months. The sub-committee of our board has approved these acquisitions,which would be at an estimated expenditure of nearly Rs 8,000 crore,” CIL chairman and managing director Partha S Bhattacharya told The Indian Express. All these mines together have estimated reserves of 280 million tonnes and CIL expects to import nearly 28 million tonnes every year for the country’s domestic needs.

The navratna PSU,which is expected to hit the market soon,has hired the services of Bank of America-Merrill Lynch,Royal Bank of Canada and Royal Bank of Scotland to help it execute these deals. Though Bhattacharya refused to name the companies,it was reliably learnt that of the five firms,two are Peabody Energy Corporation (USA) and Sinar Mas (Indonesia). CIL had already lined up a huge war chest to fulfil its overseas expansion plan and has a cash-reserve of nearly Rs 30,000 crore.

Realising that China has stolen the march in securing global mineral assets,the Prime Ministers’s Office had earlier proposed simplifying the acquisition methods. At the behest of the PMO,the National Manufacturing Competitiveness Council (NMCC) had convened a meeting of at least 12 PSU chiefs recently,including those from CIL,National Mineral Development Corporation,Rashtriya Ispat Nigam Limited and National Thermal Power Corporation,to solicit their views on securing mineral assets abroad.