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India Seeks Indonesian, Australian Coal Deals
Madelene Pearson & Natalie Obiko Pearson | March 11, 2010

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Indian companies are showing a renewed interest in securing coal resources in Indonesia and Australia to meet the power needs of the world’s second-most populous country, according to Australia & New Zealand Banking Group.

“We are seeing a lot of flow in terms of merger-and-acquisition interest or off-take interest from India into both Indonesia and Australia,” Glenn Porritt, executive director and head of mergers and acquisitions in Asia, said on Wednesday in Mumbai.

India and China are pressuring global supplies of coal, as the world’s two fastest-growing major economies seek to power factories and homes.

Essar Group this month agreed to buy Trinity Coal, following Tata Power and Reliance Power in buying overseas assets to shore up supplies.

“We’ve been working on some transactions in Indonesia on thermal coal and I’m pretty surprised in terms of the number of Indian bidders,” Porritt said. “It’s down to the demand, supply gap that India has and the incredible thirst that India has in terms of generating extra energy.”

Coal demand in India could be 1.4 billion metric tons by 2020, exceeding domestic supply of 1.1 billion tons, according to Crisil, a unit of Standard & Poor’s.

Coal India, the nation’s monopoly producer, is looking at 10 proposals in Indonesia, Australia and the US for strategic coal alliances, which could include taking equity stakes in mines, A.K. Sarkar, director of marketing, said on Wednesday.

“Nothing will deter us from acquiring any strategic asset of any kind in order to continue to be the biggest supplier of coal,” Sarkar said. “We’ve been a producer of coal but now we’ll have to become an importer. We see this as an opportunity to increase our profits.”

Coal India may consider buying shipping units to help transport coal, he said.

Essar is paying $600 million to acquire West Virginia-based Trinity to add 200 million tons of coal reserves. Reliance Power, controlled by billionaire Anil Ambani, bought three coal mines in Indonesia in 2008.

 

Bloomberg