The sharp increase in coking coal assets globally has turned the US 2.7 billion of fund that was earmarked for the newly created Coal Ventures International as too little for the purpose. Coal Ventures International is the special purpose vehicle created by five government-owned companies to buy coal mines abroad. The five companies are the Steel Authority of India Ltd, the Coal India Ltd, NTPC Ltd, Rashtriya Ispat Nigam Ltd and the National Mineral Development Corp (NMDC). These companies had contributed a total equity of $900 million to set up Coal Ventures International. The SPV also took on $1.8 billion in debt.
PK Bishnoi, chairman and managing director of RINL, heads the SPV. He has gone on record that prices of coal mines abroad have gone up by 5-6 times and their owners are sitting on cash piles. They no longer need equity joint ventures or any other form of tie up. The option before the Coal Ventures International, therefore, is to go for hostile acquisition. And any hostile acquisition will require substantial war chest.
One option before the government could be to create a wealth fund of say US $ 50 billion. Such a sovereign wealth fund could see some investment plans maturing into reality. However given various other priorities , particularly a government busy to dole out various sops linked to the electoral priorities, wealth fund does not figure among the options. Bishnoi is of the view that New Delhi should float a sovereign wealth fund or allocate something from its foreign exchange reserves to support strategic investment.
Coal Ventures head also hopes a supportive role from the country’s external affairs ministry. A pious hope indeed but given the historical track record of the ministry this will take a long time for the idea to sink in. Coal Ventures proposed that the company should opt for strategic investment in shares of listed coal companies in Australia, Canada and the US. The other option could be Private equity deals with unlisted companies, partners or owners having producing or non producing coal assets. CVI also intends to apply for prospecting mining licenses to develop coalmines.
Bisnoi told newsmen recently that 16 top investment bankers from across the globe had responded to the expression of interest (EOI) floated by CVI for a merchant banker which would help acquire the coal assets abroad. An apex committee with five independent directors has been formed to select the merchant banker. The merchant banker would scout for coal assets in the US, Canada, Australia, Zimbabwe, South Africa, Indonesia, Mozambique and New Zealand. The SPV has already identified a block in Mozambique, which could become its first acquisition. A six- member technical team had visited Mozambique in January and identified a 230 sq km block, of which a 20 sq km patch is assumed to have coal reserves. But visiting ends up as mere sight seeing unless it is backed by effective steps to proceed further.
PK Bishnoi, chairman and managing director of RINL, heads the SPV. He has gone on record that prices of coal mines abroad have gone up by 5-6 times and their owners are sitting on cash piles. They no longer need equity joint ventures or any other form of tie up. The option before the Coal Ventures International, therefore, is to go for hostile acquisition. And any hostile acquisition will require substantial war chest.
One option before the government could be to create a wealth fund of say US $ 50 billion. Such a sovereign wealth fund could see some investment plans maturing into reality. However given various other priorities , particularly a government busy to dole out various sops linked to the electoral priorities, wealth fund does not figure among the options. Bishnoi is of the view that New Delhi should float a sovereign wealth fund or allocate something from its foreign exchange reserves to support strategic investment.
Coal Ventures head also hopes a supportive role from the country’s external affairs ministry. A pious hope indeed but given the historical track record of the ministry this will take a long time for the idea to sink in. Coal Ventures proposed that the company should opt for strategic investment in shares of listed coal companies in Australia, Canada and the US. The other option could be Private equity deals with unlisted companies, partners or owners having producing or non producing coal assets. CVI also intends to apply for prospecting mining licenses to develop coalmines.
Bisnoi told newsmen recently that 16 top investment bankers from across the globe had responded to the expression of interest (EOI) floated by CVI for a merchant banker which would help acquire the coal assets abroad. An apex committee with five independent directors has been formed to select the merchant banker. The merchant banker would scout for coal assets in the US, Canada, Australia, Zimbabwe, South Africa, Indonesia, Mozambique and New Zealand. The SPV has already identified a block in Mozambique, which could become its first acquisition. A six- member technical team had visited Mozambique in January and identified a 230 sq km block, of which a 20 sq km patch is assumed to have coal reserves. But visiting ends up as mere sight seeing unless it is backed by effective steps to proceed further.
Gujarat NRE to raise coal output in Australian mines
Gujarat NRE Coke Ltd, which is increasing coal production at its mines in Australia, is planning to acquire half-a-dozen bulk carriers to bring coal to India. The company is planning to increase its production substantially from the two Australian mines it owns in the next couple of years and is evaluating plans to ramp up processing capacities in India to deal with the increase in production. Gujarat NRE Coke is aiming to garner a substantial share in the 25-million-tonne coke market globally, which is expected to triple to 75 million tonnes by 2011-12. It is the largest non-captive manufacturer of low-ash metallurgical coke in the country.
Gujarat NRE produced about nine lakh tonnes of coking coal during 2006-07, compared with six lakh tonnes the year before. The soaring coking coal prices were perceived as speculative phenomena initially but it is increasing firmly. Gujarat NRE is the first and only Indian company to own and operate coal mines in Australia. Through its listed subsidiaries in Australia, the company operates two mines in the New South Wales region, with combined resources of more than 560 million tonnes of premium quality hard coking coal and their ownership accords the company the much sought after cover against erratic supplies. Mine ownership also provides a hedge against global price fluctuations.
The company also has strategic investments in resource prospecting companies in Australia. Its subsidiary, Gujarat NRE Mineral Resources, is prospecting for petroleum derivatives in a 10,000 sq km tenement in the Canning Basin Region of Australia.
Gujarat NRE Coke Ltd, which is increasing coal production at its mines in Australia, is planning to acquire half-a-dozen bulk carriers to bring coal to India. The company is planning to increase its production substantially from the two Australian mines it owns in the next couple of years and is evaluating plans to ramp up processing capacities in India to deal with the increase in production. Gujarat NRE Coke is aiming to garner a substantial share in the 25-million-tonne coke market globally, which is expected to triple to 75 million tonnes by 2011-12. It is the largest non-captive manufacturer of low-ash metallurgical coke in the country.
Gujarat NRE produced about nine lakh tonnes of coking coal during 2006-07, compared with six lakh tonnes the year before. The soaring coking coal prices were perceived as speculative phenomena initially but it is increasing firmly. Gujarat NRE is the first and only Indian company to own and operate coal mines in Australia. Through its listed subsidiaries in Australia, the company operates two mines in the New South Wales region, with combined resources of more than 560 million tonnes of premium quality hard coking coal and their ownership accords the company the much sought after cover against erratic supplies. Mine ownership also provides a hedge against global price fluctuations.
The company also has strategic investments in resource prospecting companies in Australia. Its subsidiary, Gujarat NRE Mineral Resources, is prospecting for petroleum derivatives in a 10,000 sq km tenement in the Canning Basin Region of Australia.
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