Coal India to hire merchant bankers for acquiring stakes in Australian coal assets

PTI | | Updated on: Jun 09, 2019

State-owned Coal India will hire merchant bankers to carry out financial due diligence for acquiring equity stakes in identified mines and companies in Australia as part of its plan to meet the growing dry fuel demand in the country.

The state-run miner has identified coal assets in Australia for acquiring equity stakes along with off-take rights in an asset or a company, Coal India said in a notice inviting proposals from investment bankers.

“CIL intends to avail the services of internationally reputed merchant banker/investment banker to carry out financial due diligence and render transaction advisory services with respect acquisition of stakes along with off-take rights in a coal asset in Australia held by a company for the purpose for arriving at an enterprise valuation of the company and framing of a non-binding Offer initially and followed by a final and binding offer,” the world’s largest coal miner said.

“A tender is being floated for engagement of merchant banker/ investment banker for assisting CIL in acquiring coal assets in Australia,” it said.

Meeting demand

Coal India looks to acquire assets abroad as it expects that domestic production would not be sufficient to meet coking coal and high-grade fuel demand from various sectors. The demand-supply gap in India is high due to enhanced requirements from various sectors, including power and steel.

To meet the projected gap between demand and supply, while the efforts are on to enhance coal production from the indigenous sources, it will not be possible to bridge the entire gap of demand of coking coal and high-grade low ash thermal coal.

“In light of the above background Coal India Ltd...intends to set up coking coal and/or high-grade low ash thermal coal mining business overseas with a view to acquire coal resources, produce coal and import the produces to India by way of either opening new mines or equity participation in working mines on production sharing Participation Interest basis,” Coal India said.

Coal India accounts for over 80 per cent of domestic coal output. The state-run miner produced around 607 million tonnes of coal in 2018-19 against the target of 610 million tonnes (MT).

Coal supplies to the consuming sectors rose by 4.8 per cent to touch a new high at 608 MTs in 2018-19 but lower than the target of 610 MT.

India’s coal import increased by 8.8 per cent to 233.56 million tonnes in 2018-19, according to a report. Non-coking coal imports were at 164.21 MT in 2018-19, about 13.25 per cent increase over 144.99 MT recorded in 2017-18. Coking coal import was almost flat at 47.73 MT last fiscal compared to 47.22 MT in 2017-18.

Coal India is targeting more than 8 per cent growth in production at 660 million tonnes in 2019-20.

Published on June 09, 2019
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