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China and India compete for Australian coal

March 23, 2011

An Indian and Chinese company have both been short listed in a bid to acquire Australian coal miner Whitehaven Coal which is seeking offers of more than US$3.5 billion.  China’s Yanzhou Coal Mining Co and India’s Aditya Birla group are among parties selected as a short list of bidders to complete due diligence in a process expected to continue for “a number of months”.

The planned bid comes as Indian and Chinese firms scramble to secure scarce coal assets to feed growing demand from the rapidly expanding power and mining sectors.  Earlier, Inchin Closer had reported on Chinese and Indian companies vying for a bid of the Mongolian Tavan Tolgoi mine which is estimated to contain at least 5- 6.5 billion metric tons of coal.

The race to secure coal has already resulted in a wave of multi billion dollar mergers and acquisitions activity globally, much of it driven by increasing consumption and rising prices in emerging economic giants China and India.

At present, the Indian deficit is being met through imports. Of the total installed power capacity of 159,398 MW in India, almost 50 percent is based on coal. Recent Indian acquisitions of coal assets include JSW Energy Ltd.’s US$422 million purchase of Canada-based CIC Energy, Monnet Ispat and Energy (MIEL) deal to acquire PT Sarwa Sembada Karya Bumi’s thermal coal mine in Sumatra, Indonesia, for just US$24 million and Lanco Infratech Ltd.’s acquisition of Australia-based Griffin Coal’s mining assets. Anglo-Australian mining giant Rio Tinto PLC has also announced plans to buy a majority stake in Riversdale Mining Ltd., which has coal assets in Mozambique.

ASX-listed Whitehaven is Australia’s leading coal producer having an interest in tenements covering approximately 427kms in the Gunnedah, Werris and Ashford Coal Basins of New South Wales.

It currently operates four open cut mines in the Gunnedah Basin, each of which produces around 1.5 million tonnes every year. Most of the coal produced from all these mines is exported.

Its Canyon mine produced 2.8Mt of saleable coal in FY2009, while its Narrabri North underground coal mine is under construction and expected to begin producing coal in early 2010.

 

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