Coal India Will Purchase Overseas Mines to Meet Import Demand

Coal India Ltd., the world's largest producer of fuel, is considering the acquisition of five mines in the U.S., Australia and Indonesia to meet the country's demand for fuel, Chairman Partha Bhattacharyya said.

The state company is exploring a mine in Australia owned by Peabody Energy Corp., one in the U.S. owned by Massey Energy Co. and another in Indonesia, Bhattacharyya said, declining to name the company of others. While Coal India has not been started due diligence on two mines in Australia, banks can appoint early to assess the bids, he said.

"We are reducing the gap in valuations with Peabody," said Bhattacharyya, 59, in an interview in New Delhi yesterday. "We like to invest, because there are companies who want money for their mines and a market for coal," he said. "We have the money and have a great market here."

The mining company based in Calcutta 380 500 000 000 rupees (8.3 billion) in cash for acquisitions as consumption increases in the largest energy consumer in Asia's second largest. annual coal demand in India will exceed production by 100 million tonnes by Coal India four years and aims to meet half the deficit of the mines abroad, the president said.

"It is absolutely critical not only for the company but also for the country," said Jagannadham Thunuguntla, chief strategist at SMC Global Securities Ltd. in New Delhi. "From the macroeconomic point of view, it is very important for India to have control over natural resources and Coal India is a trump card for the government."

Indonesia risk

Bhattacharyya said Coal India may also start talks with the government of Indonesia in January on a proposal from the state mining company PT Tambang Bukit Asam Batubara.

At the last meeting of a group of Indonesia and India to work "that had suggested Bukit Asam is a company owned, and whether certain blocks can be operated jointly by the formation of a company," he said. "They have said that the next meeting will be something. That is likely to be in January."

Coal India fell 0.2 percent to 312.70 rupees at close in Mumbai trading as India's population declined, dragging the benchmark sensitive index of 0.9 per cent lower. The stock has risen 28 percent since the government sold a 10 percent stake in the company at 245 rupees per share last month in India's largest initial share sale.

Of the 20 analysts covering Coal India, 16 recommend buying the stock and recommended a sale.

IPO exit

The Indian Prime Minister Manmohan Singh raised 152 billion rupees from the IPO in October, providing the action at a discount to global peers. India's economy grew at its fastest pace in more than two years in the three months ended June 30, stimulate demand for energy.

Coal India and its units, representing 82 percent of domestic production of fuel, an increase of 29 percent in net profit to 40.2 billion rupees in the six months ended 30 September, the miner 23 November. The miner has 17.1 billion rupees of loans outstanding, payable through 2044.

"Prices of activated charcoal may increase in future due to growing demand from India and the environmental constraints that could hinder production," said KK Mital, a fund manager at New Delhi with the Capital Market Globo SA Therefore, now is the time to Coal India to make such acquisitions, if they come at a fair price. "

India's government has pledged to supply electricity to the national level by 2012 and needs to increase the installed generating capacity of 200,000 megawatts to support economic growth, the ministry of energy. More than half the current capacity of 167,278 MW is supplied by coal.

Coal demand in India could triple over the next two years to 2 million metric tons of carbon Minister Sriprakash Jaiswal, said Sept. 24. India produces 530 million tons of coal per year and imports about 67 million tons, said the minister.

Coal India has proven reserves of 52.55 billion tonnes, of which 21.75 billion can be extracted, according to the initial public offering document.