New Delhi: A consortium of five state-run firms is considering a bid for Africa-focused Riversdale Mining , sparking a potential takeover battle for the Australian firm, already being courted by Rio Tinto .
Analysts have said Vale , Xstrata, Anglo-American and Peabody Energy could emerge as rival suitors for a company that has coking-coal projects in Mozambique and that could eventually supply 5-10% of the global market for the key steel-making material.
Last week, Riversdale confirmed media reports that Rio was talking about an offer around A$15 a share for the Australian listed company, which would value the group at A$3.5 billion ($3.5 billion). Riversdale hinted it was talking to others.
The Indian consortium, International Coal Ventures consortium (ICVL), includes Steel Authority of India and power producer NTPC .
“Indian companies need to go out and acquire overseas natural resources assets to meet the growing domestic demand, but so far they have been slower than the Chinese firms in doing deals,” said Taina Erajuuri, Helsinki-based portfolio manager at FIM India.
“For Indian companies, price of the asset will be a key factor and the valuations of natural resources assets globally are not cheap,” she said.
FIM India holds $150 million worth of Indian shares including Coal India , which is also part of the consortium along with iron ore miner NMDC and Rashtriya Ispat Nigam Ltd.
“I have been told ICVL has been asked to make all possible effort to bid for Riversdale,” NTPC chairman Arup Roy Choudhury told reporters in New Delhi.
The consortium of PSUs is likely to take a decision on the Riversdale bid by the end of this month, said a senior official of NMDC, who declined to be named as the matter was not public yet.
Business Standard newspaper had previously reported that the ICVL might bid for Riversdale. Riversdale had no immediate comment on the report. Its shares closed up 1.4% at A$16.2.
Vale is seen by some analysts as the most likely rival bidder, as it already has coal mines nearby in Mozambique.
Brazilian, Indian ownership
Riversdale’s shareholder base remains the main obstacle to a successful takeover, sources said.
Tata Steel , Riversdale’s top shareholder, with a stake of about 24%, has said it views the stake as a strategic investment.
Other major shareholders include Brazilian steelmaker CSN and US investment firm Passport Capital.
Steel Authority dhairman C.S. Verma told the newspaper a proposal had been placed with International Coal Ventures that was set up in 2009 for buying coal assets overseas to meet the needs of member firms but has met with little success so far.
India, which already has a coal supply deficit, is expected to see that deficit deepen sharply next year to 104 million tonnes in the next fiscal year to March 2012, its coal minister said earlier this month.
The deficit will force Asia’s third largest economy to import more of the fuel on which it relies for more than half of the country’s power generation capacity.
Coal India, the world’s largest coal miner, said earlier this year it was looking to buy over 10% in an asset of Australia’s Peabody and has ample funds for overseas acquisitions.