Coal India says awaits govt nod for overseas buys

Coal India says awaits govt nod for overseas buys

Mumbai: Coal India, the world’s largest coal miner, is in talks for one acquisition each in Indonesia, Australia and the United States, its chairman said on Monday, adding it would only proceed after getting the green signal from the government.

The state-owned firm, in which India sold a 10% stake last year for $3.4 billion in the country’s largest ever IPO, has been in advanced talks with Indonesia’s Golden Energy Mines to buy 30% stake in its assets, sources had told Reuters in May.

The company has also been in talks with US miners Massey Energy and Peabody Energy for coal assets in the US and Australia, according to recent media reports.

“We have flagged two issues to the government, through the coal ministry. Once these issues are clarified, we can go ahead," Coal India chairman N. C. Jha told reporters after shares in the company were included in India’s main stock index.

Coal India, which already has a large degree of financial autonomy, has asked the government for approval for overseas acquisitions even if it doesn’t meet the requirement of a minimum 12% internal rate of return in these projects and for acquisitions are in unlisted firms.

The likely size of each deal will be below Rs1,000 crore ($223.5 million), and the company has set aside 60 billion rupees for acquisitions this fiscal year, Jha said.

India holds 10% of the world’s coal reserves but local supplies are falling short of demand as the country builds more power plants, and as domestic coal projects run into environmental and land acquisition delays.

The country is likely to import 135 million tonnes of coal in the financial year that began on 1 April.

Coal India, which accounts for nearly 80% of India’s coal output, is currently in wage negotiations with its trade unions, and will effect a price hike only once the impact of higher wages is clear, Jha said.

A senior finance official, however, clarified that the company will make an additional provision of about Rs2,500 crore in this fiscal year for the wage increase.

Shares in Coal India, which the market values at $55.7 billion, were trading 0.2% higher at Rs393.50 at 11:50 am in a weak Mumbai market. The stock is up about 25% so far this year.