India Is Seeking Coal Deals in Australia, ANZ Says (Update2)
March 10, 2010, 5:29 AM EST(Adds Coal India’s comments in sixth paragraph.)
By Madelene Pearson and Natalie Obiko Pearson
March 10 (Bloomberg) -- Indian companies are stepping up interest to secure coal resources in Indonesia and Australia to meet the power needs of the world’s second-most populous country, Australia & New Zealand Banking Group Ltd. said.
“We are seeing a lot of flow in terms of merger and acquisition interest or off-take interest from India into both Indonesia and Australia,” Glenn Porritt, executive director and head of mergers and acquisitions in Asia, said today in an interview in Mumbai.
India and China are pressuring global supplies of coal, as the world’s two fastest-growing major economies seek to power factories and homes. Essar Group this month agreed to buy Trinity Coal Corp., following Tata Power Co. and Reliance Power Ltd. in buying overseas assets to shore up supplies.
“We’ve been working on some transactions in Indonesia on thermal coal and I’m pretty surprised in terms of the number of Indian bidders,” Porritt said. “It’s down to the demand, supply gap that India has and the incredible thirst that India has in terms of generating extra energy.”
Coal demand in India could be 1.4 billion metric tons by 2020, exceeding domestic supply of 1.1 billion tons, according to Crisil Ltd., a unit of Standard & Poor’s.
Buying Assets
Coal India Ltd., the nation’s monopoly producer, is looking at 10 proposals in Indonesia, Australia and the U.S. for strategic coal alliances, which could include taking equity stakes in mines, A.K. Sarkar, director of marketing, said today in an interview.
“Nothing will deter us from acquiring any strategic asset of any kind in order to continue to be the biggest supplier of coal,” Sarkar said. “We’ve been a producer of coal but now we’ll have to become an importer. We see this as an opportunity to increase our profits.”
Coal India may consider buying shipping units to help transport coal, he said.
Essar is paying $600 million to acquire West Virginia-based Trinity to add 200 million tons of coal reserves. Reliance Power, controlled by billionaire Anil Ambani, bought three coal mines in Indonesia in 2008.
Indian coal companies will face increasing competition from rivals in China and Korea, said Adam Worthington, an analyst at Macquarie Capital Securities (Singapore) Pte.
“They’re just going to have to bid up here and pay market prices,” Worthington said in Mumbai. “It’s going to drive up asset prices.”
--Editors: Tan Hwee Ann, Indranil Ghosh.
To contact the reporters on this story: Madelene Pearson in Mumbai on mpearson1@bloomberg.net; Natalie Obiko Pearson in Mumbai at npearson7@bloomberg.net
To contact the editors responsible for this story: James Poole at jpoole4@Bloomberg.net; Clyde Russell at crussell7@bloomberg.net.
