{"id":1024,"date":"2015-10-14T01:17:20","date_gmt":"2015-10-14T01:17:20","guid":{"rendered":"http:\/\/www.southasiantimes.com.au\/?p=1024"},"modified":"2015-10-19T01:26:59","modified_gmt":"2015-10-19T01:26:59","slug":"india-seen-as-driving-next-wave-of-coal-ma-in-australia","status":"publish","type":"post","link":"http:\/\/www.southasiantimes.com.au\/?p=1024","title":{"rendered":"India seen as driving next wave of coal M&A in Australia"},"content":{"rendered":"

\"hfw\"<\/a>India’s quest to lock in sources of supply of metallurgical coal is set to drive a new wave of coal M&A in Australia just as recent acquisitions have highlighted a keen appetite for strategic investments in the sector, according to Bede Boyle at consultancy Coal Ventures Ltd.<\/p>\n

Mr Boyle pointed to an Indian government coal delegation to Sydney earlier this month, when Coal India director Pradeep\u00a0Kumar Tiwari\u200b estimated that the company would require some $US4.5 billion ($6.1 billion)\u00a0to invest in the acquisition of overseas coal assets.<\/p>\n

Mr Boyle told clients in a report that\u00a0Shri\u00a0Narendra\u00a0Singh\u00a0Tomar,\u00a0the minister of steel and mines\u00a0who led the delegation, had\u00a0said\u00a0that:\u00a0“India has scarce high-quality metallurgical coal reserves and will have a continuing dependence on Australian high-quality metallurgical coals to supply Indian steel industry.”<\/p>\n

India’s emergence as a major steel-producer is driving growth for metallurgical coal imports, while it is also expected to increase demand for higher quality, low-ash thermal coal because of a government directive that requires all new coal-fired power plants to use super-critical technology starting in\u00a02017. India’s own coal resources are typically low-energy and high-ash, used for the\u00a0sub-critical technology that dominates the Indian market at present.<\/p>\n

The forecast for increased Indian investment\u00a0in Australia’s coal sector comes as M&A activity picks up with a number of recent investments. These include\u00a0Glencore’s link-up with privately owned Bloomfield Group to buy Vale’s Integra mine in the Hunter Valley, and Stanmore Coal’s acquisition of metallurgical coal areas in Queensland’s Bowen Basin from Peabody Energy, with the intention of extending the Isaac Plains mine.<\/p>\n

Meanwhile, Mr Boyle\u00a0pointed to reports by IHS that Australian “clean coal” technology company\u00a0Exergen\u00a0is\u00a0acquiring the Wilkie Creek mine in Queensland from Peabody\u00a0for $10 million, conditional on a capital raising and on finalising port and rail haulage contracts.<\/p>\n

India has already invested heavily in Queensland’s thermal coal industry, with GVK taking 75 per cent of Hancock Prospecting’s equity in\u00a0the Alpha mine and Adani buying the Carmichael deposit.<\/p>\n

Mr Boyle expects Indian companies to buy equity in Australian metallurgical coal players as part of a strategy to gain\u00a0access to needed\u00a0resources, echoing investments made by Japanese and Korean players in Australia in the 1980s and 1990s.<\/p>\n

“I think you’re going to see some interesting strategic investments, and they will be about security\u00a0of supply,” he said.<\/p>\n

Source: SMH, HFW<\/p>\n

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