BANGALORE/MUMBAI: The Jindals and the Reddys of the GVK Group could join hands with a third Indian company to offer a combined bid for the coal assets of Australia's Hancock Coal, which is valued at more than $2.7 billion, as a worldwide race for thermal coal spikes valuations of the mineral. The Jindals' JSW Energy has suggested to its Indian counterparts, including the Aditya Birla group , on forming a consortium similar to the strategy typically adopted by Chinese companies, to pool finances and present a formidable bid for large global assets.
"We have suggested this option and are awaiting their reaction," said a person directly involved in the negotiations. The valuations of the (Hancock) mines has become very expensive and it would be a good idea to put in a joint bid," he added.
The Aditya Birla Group, which is looking at the mines through its unlisted subsidiary Essel Mining, didn't comment on the consortium proposal. GVK Power vice- chairman Sanjay Reddy said that although his firm is keen on owning coal mines in Australia and Indonesia, he didn't elaborate on the bids. Indian state-run companies have already formed such a consortium, the International Coal Ventures Ltd that looks at bidding for coal and ore assets.
Hancock Coal is selling Kevin's Corner and Alpha Coal, both located in the Queensland province, as it expects strong valuations for the assets which are estimated to have 7.9 billion tonnes of thermal coal, according to the company's website. Thermal coal is used by power producers and although India has large deposits of the mineral, a high ash content and inadequate production by state-run major Coal India, is forcing Indian utilities to scout overseas for the coal. So far, Australia, Indonesia and countries in Africa have been common destinations for Indian power firms.
Korean firm Korya Electric and Power Company and two other Chinese bidders are also in the fray for Hancock, said the people who are aware of the negotiations with the Australian company. In the past, Chinese oil giants, including CNPC, Sinopec Group and CNOOC, have shared strengths to bid for large oil assets which are typically valued at more than $10 billion. The firms have pooled finances and technical skills and manpower to present an attractive package for the shareholders of target companies.
"While it's a convenient method to acquire large assets, varied management styles of the companies in the consortium could prove to be a handicap," said a person from a financial services company.
A delegation from Hancock is scheduled to visit India early next month for final discussions with Indian companies, said one of the persons cited earlier. The delegation is also scheduled to visit China after the India trip. Hancock does not own a captive port facility to transport coal which could have prompted several bidders to withdraw from indicative bids. The costs of building an infrastructure, like a port, would almost as that of the mine. (sourced:Economic Times)
"We have suggested this option and are awaiting their reaction," said a person directly involved in the negotiations. The valuations of the (Hancock) mines has become very expensive and it would be a good idea to put in a joint bid," he added.
The Aditya Birla Group, which is looking at the mines through its unlisted subsidiary Essel Mining, didn't comment on the consortium proposal. GVK Power vice- chairman Sanjay Reddy said that although his firm is keen on owning coal mines in Australia and Indonesia, he didn't elaborate on the bids. Indian state-run companies have already formed such a consortium, the International Coal Ventures Ltd that looks at bidding for coal and ore assets.
Hancock Coal is selling Kevin's Corner and Alpha Coal, both located in the Queensland province, as it expects strong valuations for the assets which are estimated to have 7.9 billion tonnes of thermal coal, according to the company's website. Thermal coal is used by power producers and although India has large deposits of the mineral, a high ash content and inadequate production by state-run major Coal India, is forcing Indian utilities to scout overseas for the coal. So far, Australia, Indonesia and countries in Africa have been common destinations for Indian power firms.
Korean firm Korya Electric and Power Company and two other Chinese bidders are also in the fray for Hancock, said the people who are aware of the negotiations with the Australian company. In the past, Chinese oil giants, including CNPC, Sinopec Group and CNOOC, have shared strengths to bid for large oil assets which are typically valued at more than $10 billion. The firms have pooled finances and technical skills and manpower to present an attractive package for the shareholders of target companies.
"While it's a convenient method to acquire large assets, varied management styles of the companies in the consortium could prove to be a handicap," said a person from a financial services company.
A delegation from Hancock is scheduled to visit India early next month for final discussions with Indian companies, said one of the persons cited earlier. The delegation is also scheduled to visit China after the India trip. Hancock does not own a captive port facility to transport coal which could have prompted several bidders to withdraw from indicative bids. The costs of building an infrastructure, like a port, would almost as that of the mine. (sourced:Economic Times)
Tags : CNPC, Sinopec Group, CNOOC,
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