After sealing Australian port deal, Adanis eye upping coal handling capacity

The Adani Group-promoted Mundra Port and SEZ Ltd (MPSEZL), which completed the acquisition of Abbot Point X 50 Coal Terminal (APCT) in Australia on Wednesday, said it plans to expand its coal handling capacity from the current 50 million tonnes per annum (mtpa) to 80 mtpa and a decision will be taken in this regard in the next few months.

Once commenced, this fresh expansion is expected to be completed in three to four years by when the Adanis' Linc Energy mines in Australia would also start coal production, thus synergising production and transportation.

Investment details

Details of investments in this expansion would be worked out in the next few months. The Group's flagship company, Adani Enterprises Ltd (AEL), India's largest coal importer, had bought the Linc Energy coal assets, having 7.9 billion tonnes of reserves, for Rs 12,600 crore in a cash and royalty deal in August 2010. AEL would be mining nearly 100 mtpa from this asset.

APCT, operated so far by APCT#1 Pty Ltd, has three fully-mechanised coal terminals, whose coal handling capacity was expanded from 21 mtpa to 50 mtpa recently.

It received its first vessel just 10 days ago after the recent expansion. This capacity would be further expanded to 80 mtpa with two additional berths, said Mr B. Ravi, Chief Financial Officer, MPSEZL, here on Wednesday.

new management

The current capacity of 50 mtpa is fully booked with nine local Australian companies. For now, MPSEZL would be only the owner of APCT, which has now been renamed as Adani Abbot Point Coal Terminal (AAPCT). APCT will continue to be operated by the existing operator, Xtrata, for the remainder of its five-year period of concession.

Thereafter, it will be run by Mundra Port Pty Ltd.

Mr Gautam Adani, Chairman and Managing Director, MPSEZL, said the entire deal from selection of bidder from global competitive bidding (May 3) to completion of acquisition was done within 28 days.

MPSEZL on Wednesday paid the full amount of A$1,829 billion (nearly Rs 8,600 crore or $1.9 billion) to Queensland, taking over ownership of APCT.

The all-cash deal was funded by State Bank of India and Standard Chartered Bank through a bridge-loan.

“The management team from Mundra has taken over the ownership and oversight of the operations of APCT effective Wednesday (June 1). The company's nominated directors have also come on the board of the Australian company,” said Mr Ravi.

APCT, which commenced operations in 1984, currently handles 20 mtpa of coal. Abbot Point is the northern most coal export port in Queensland and was owned by North Queensland Bulk Ports Corporation Ltd (NQBP).

Queensland had structured the sale of APCT through a 99-year lease of existing coal terminal facilities and associated infrastructure.

The deal takes MPSEZL into the top league with its asset base of $100 million increasing to over $3 billion in 10 years. From a 2.5-mtpa port in 2001, MPSEZL has now risen to cargo handling capacities of over 200 mtpa.

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