GMR Infrastructure has opted out of the race to acquire Australia based Bandanna Energy's coal mines after it found that a new local law prohibited foreign companies from mining on agricultural land.
A person close to the development said that "The transaction is not working out. While doing due diligence, GMR found that the regulation would impact the mining lease.”
In June, GMR, a developer of airports, power stations and roads said that it had progressed into the second stage of the transaction process for acquiring the mines, whose valuation was expected to range between USD 850 million and USD 1.5 billion.
Other companies in the Bandanna shortlist include India's largest power producer NTPC, Jindal Power and Steel and Aditya Birla Group's Essel Mining, besides four Korean and Chinese firms.
Another person close to the transaction said that "The coal in Bandanna is largely underground and the subsequent capital expenditure of USD 2.3 to USD 3 billion on setting up 500 km of railway line and other infrastructure is also of concern to companies bidding for project.”