Bloomberg News

Tata Said to Consider Bidding for Australian Miner New Hope

November 18, 2011

(Updates with comment from spokeswoman in fifth paragraph.)

Chaudhary

Nov. 4 (Bloomberg) -- Tata, India’s largest business group, may bid for New Hope Corp., the Australian company valued at A$4.9 billion ($5.1 billion), to secure thermal-coal mines, three people familiar with the plan said.

Tata Steel Ltd., India’s largest producer of the alloy, and Tata Power Ltd. may jointly make an offer for Ipswich, Queensland-based New Hope, said the people, declining to be identified because discussions are at an early stage. Both Tata Steel and Tata Power require coal to run their plants.

New Hope, which has no debt and A$1.67 billion in cash, operates the Acland coal mine and an export terminal, making it attractive for power producers in China and India. A buyout of New Hope could be the largest coal deal since U.S. based Alpha Natural Resources Inc. agreed to buy Massey Energy Co. for about $7.1 billion in January.

“There’s a rush for coal assets as companies look to hedge commodity risk and expect prices to rise sharply in the coming years,” said Alex Mathews, head of research at Geojit BNP Paribas Financial Services Ltd. in Kollam in southern India.

Shares of Tata Power, the largest non-state producer, fell 2 percent to 103.30 rupees at the close in Mumbai. Tata Steel gained 1.2 percent to 467.15 rupees.

“Tata Power has been on record to say that the company has an ongoing process to evaluate various opportunities to acquire resources including coal mines globally,” spokeswoman Shalini Singh said in an e-mailed response to questions. “No specific comment can be offered with regard to the opportunity referred in your communication as the company doesn’t comment on speculation.”

Tata Steel spokesman Prabhat Sharma declined to comment.

Coal Deals

Globally, coal deals reached $35 billion this year, against $21.8 billion in the same period last year, according to data compiled by Bloomberg. The price of thermal coal is likely to gain in the next two years because of Asian demand, Credit Suisse Group AG said last month.

JSW Steel Ltd., India’s third-largest producer of the alloy, may make an offer for New Hope, two people with knowledge of the plan said Oct. 24.

New Hope may attract interest from BHP Billiton Ltd. and Rio Tinto Group, according to Ord Minnett Ltd., as well as energy suppliers in Japan, which is facing a power shortage after the worst nuclear disaster in a quarter century. The miner said on Oct. 5 that selected groups will be invited to submit offers in a process that is likely to take months.

India, the world’s third-largest coal user, had 31 power plants with four days’, or “super critical,” stockpiles on Nov. 1, compared with 10 on Sept. 1, according to the Central Electricity Authority. The normal level should be 15 to 30 days, the state agency said. Overall, the average inventory at India’s 89 coal-based plants was six days. The average at China’s biggest plants was 20 days.

--Editors: Indranil Ghosh, Rebecca Keenan

To contact the reporters on this story: George Smith Alexander in Mumbai at galexander11@bloomberg.net; Abhishek Shanker in Mumbai at ashanker1@bloomberg.net

To contact the editors responsible for this story: Rebecca Keenan at rkeenan5@bloomberg.net; Philip Lagerkranser at lagerkranser@bloomberg.net


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