Sajjan Jindal-owned JSW Energy, Hyderabad?based GVK Energy and Ruias-controlled Essar Group may jointly bid for Australia-based Hancock?s two coal mines worth $2 billion. This is at a time when valuations of overseas coal assets have become too high for them to buy these assets individually.
The three companies?all with big plans in the energy sector?are also encouraged by the Chinese firms? success in gaining foothold in mineral-rich Australia.
The companies might forge a special purpose vehicle (SPV) for acquiring Hancock?s assets which are up for sale, a person in the know of the development said. In the last three months, all three companies have been in separate talks for acquiring Hancock mines, but all have dropped out of the race as the price was too high for them to afford individually, he added.
Indian firms are eyeing coal assets overseas to fire up power plants in India and benefit from the government?s aim to halve its nearly 14% peak-hour power deficit within two years. Some Chinese companies which were earlier a part of the bid have backed out, leaving Indian companies as major contenders for the assets.
While an email query sent to JSW spokesperson did not elicit any response, GVK offered ?no comment?. An Essar spokesperson said, ?As a policy, we would not like to comment on speculation.?
Hancock Coal is seeking a buyer for two of its coal mines?Alpha Coal and Kevin’s Corner? which are located in Galilee Basin in the coal-rich Queensland. The combined reserves of both coal mines can be as high as 7.6 billion tonne of thermal coal which was used to produce electricity.
As for JSW, if the bid goes through, this would be the second such coal mine acquisition for JSW Energy which has signed an agreement to acquire Toronto-listed CIC Energy. The company has mining cum power complex in Botswana, Africa, for which the company has agreed to pay $418 million (R1,895 crore).
The Alpha Coal project, bigger of the two mines, is an open cut coal mine. Alpha alone has 3.6 billion tonnes of measured, indicated and inferred compliant resources that have been vetted by the Joint Ore Resources Committee.
Kevin?s Corner, which is currently under development, has the capacity to produce 30 million tonnes per annum. However, it is a tough coal block to mine. Construction in this mine was expected to start this year and production was expected to start during the later part of 2013.
Australia has recently become a preferred destination for many Indian companies. In December last year, Lanco Infratech acquired Griffin Coal mine ? located in Collie in Western Australia ? for $750 million (R3,375 crore).
The mine has reserves to the tune of 1.1 billion tonnes and currently produces over four mtpa of coal, which can be ramped up to over 15 mpta in the near term, post-development of evacuation infrastructure. The company said it would be spending around $900 million (R4,050 crore) as capex towards mine and infrastructure development. International Coal Ventures, the joint venture of SAIL and Coal India, haven’t managed to acquire any major assets overseas so far.