Indian suitors eye Australia's Premier Coal

With Lanco looking to build on its recent Griffin Coal purchase, a new turf war is set to emerge between Indian suitors and some Chinese firms for the $500m assets of Premier Coal.

Mar18, 2011
By Shivom Seth

MUMBAI - Following Lanco Infratech $830 million for Griffin Coal's adjacent mines last year, Premier coal mine, which supplies Western Australia's electricity network, is up for grabs.

In 2007, UBS valued Premier Coal at $500m. Officials at Lanco, who are also said to be eyeing Premier Coal, said that owning both the mines ``made perfect sense'' as the company could ensure efficiencies of scale.

The mine is located near Collie, 200 km south of Perth. India's GVK Power is also said to be amongst the forerunners in the bid.

A reliable company official said that since GVK has lost out to Lanco in the Griffin auction race, it was very keen to ``hold on to this prize catch''.

Reports indicated that last year, the Perth-based Wesfarmers considered adding Premier Coal to the Griffin Coal pitch, but certain circumstances had ensured that the company pulled out of the bidding process in September.

Wesfarmers executives were reportedly shocked at how much Lanco was willing to pay for Griffin. Now, with Lanco looking to build on its recent purchase, a new turf war may emerge between Indian suitors and some Chinese firms.

Although the world's second-largest economy is at a strategic inflection point in terms of its commitment to become more energy efficient and reduce the carbon intensity of its economy, coal will continue to play an important part, analysts said and market sources indicate that several Chinese firms have shown interest in the project

Though China's new five-year plan proposes to cap the country's energy use at 4 billion tonnes of coal equivalent a year by 2015 (up from 3.25 billion in 2010), companies are scouting Australian shores.

Wesfarmer officials have been quoted as saying that they fielded enquiries from both Chinese and Indian firms.

Interestingly, three Indian corporates have thrown their hats into the ring for the coal assets of one of Australia's largest thermal coal explorers, Bandanna Energy.

In a deal reportedly valued at $1.5 billion, GVK, state-owned consortium ICVL and Reliance Power are said to have bid for the assets. Analysts said that the Bandanna Energy is estimated to have reserves of over 1.3 billion tonnes of thermal coal.

Bandanna Energy had initiated an auction process to sell the assets and had mandated UBS to advise it. The last date for submission of bids is March 31, 2011. By then, it will be action stations. (sourced :mineweb)