State-owned Coal India has set up a new subsidiary, Coal Videsh, to acquire 10 million tonnes per annum of coking and thermal coal assets by 2011-12, and 50Mtpa by 2020.
Heading the shopping list are Australian operations due to their high-grade resources, world-class mining expertise and stable political environment.
Coal Videsh’s Sagar Sen said the group has already tendered unsuccessfully for three Australian operations, including Austral Coal and its Tahmoor longwall mine, which was acquired by Centennial Coal early last year. It withdrew from two other bids after deciding the coal quality was not suitable for its needs.
The group is currently looking at an Xstrata thermal coal operation in the Surat Basin, Sen told MiningNews.net in Kolkata.
In Australia, Coal Videsh is primarily interested in coking coal assets and will only acquire thermal coal operations that are bundled with coking coal, Sen said.
It is targeting Indonesia for standalone thermal coal assets.
“We are looking at opportunity, which is number one metallurgical – if thermal comes along with then we are happy to do but not only thermal,” Sen said.
“Only thermal we are interested from Indonesia right now.”
India is the world’s third-largest coal producer, feeding the country’s voracious appetite for energy to sustain its 8% plus annual growth.
Coal India is the largest player in this market, producing 343Mt in 2005-06 – some 87% of national coal production – from 470 mines.
It plans to lift production to 521Mt by 2011-12. However, even at this increased level domestic demand is still expected to outstrip supply.
India imported 38Mt of coal in 2005-06 and expects to import 41Mt this year, with the figure increasing to 100Mt in 2011-12.
To address the shortfall, Coal India is also looking domestically at using contract miners, equity participation in new coal blocks, and outsourcing non-core activities such as township management.
As well as establishing Coal Videsh (Videsh is the Hindi word for “foreign”), Sen said Coal India was talking with three other state-owned steel and coal companies, SAIL, RINL and NTPC, about banding together to increase their clout at the negotiating table.
“What we thought is that if four of the people put in their heads it could be a billion-dollar company. Size matters,” Sen said.
Coal India is not the first Indian coal company to target Australian acquisitions.
Gujarat NRE Coke, the country’s largest independent producer of low ash metallurgical coal, bought the Bellambi West and Avondale collieries near Wollongong in New South Wales.
