Coal India abandons plan to buy asset in Australia

Coal India's efforts to acquire a mid-sized virgin thermal coal block from a private party in Australia have drawn a blank.

The effort was made parallel to the company's exercise to enter into strategic partnership with global majors through the tendering process.

A total of 52 companies from Australia, the US, South Africa and Indonesia had in September submitted expressions of interest to form a strategic alliance with CIL.

According to sources, CIL withdrew from the race for acquisition of the coal asset in Australia following the due diligence carried out in September-October. "The asset quality proved much below our expectations," a source told Business Line.

On the inclusion of 'strategic partner,' the source said the evaluation of the EoIs had begun and the shortlisted companies would be invited to make presentations before CIL by end-November. The company has identified 45 of the 52 EoIs as 'sound'.

According to him, the Indian coal major is interested in overseas partnerships in three broad areas - long-term agreement to import coal at a cheaper price than the existing landed cost of contracted coal; equity participation in producing assets to get coal on a cost-plus basis and; forming equity joint ventures with overseas majors.

The CIL Chairman, Partha S. Bhattacharyya, has previously said that the company is interested in investing anything between Rs 5,000-7,500 crore through the strategic partners. The company has a free cash reserve of Rs 20,000 crore.
Taken from Business Line