Monday, October31, 2011
Giant Chinese state-owned Shanxi Coal is understood to be in the running to buy Pike River Coal as part of a joint bid with New Zealand coal company Solid Energy.
Bids closed a week ago, with four players making offers, sources said.
One Indian company earlier interested in making an offer had pulled out, but another Indian company was still understood to be in the running, they said.
There has also been interest from an unnamed Australian company, but it remained unclear if it made a final bid.
Rumours have been around for a couple of weeks that a Chinese government agency was involved in a joint bid with Solid Energy for Pike.
Another industry source said if Shanxi joined Solid Energy as a partner in Pike River it could provide the financial muscle to reopen the mine and be a large customer, with Solid Energy providing the local expertise. China has a huge appetite for coal, which has been a key driver of its economic growth.
Chinese imports of coal have recently hit record levels, up 15 per cent in September to a record 19 million tonnes in a month.
There has been industry concern a Chinese or Indian company could come in with a high price and pick up the Pike River assets without the involvement of a local player.
The Pike mine remained a "technical challenge" and a player from overseas might not have the right skills to mine in what was a difficult area, a source said.
It would be surprising if the mine reopened within three to five years under new owners, sources said.
A joint-venture deal might also put Shanxi in a good position to take a stake in Solid Energy, should the Government decide to sell part of the company, an industry source said.
The Government says it plans to look at selling up to 49 per cent of three state-owned power companies, Solid Energy and reducing its holding in Air New Zealand should it be re-elected.
However, another source said a joint venture would not necessarily give Shanxi any advantage if part of Solid Energy were up for sale. Solid Energy already has a joint venture with international coal company Cargill, which bought 49 per cent of the Spring Creek underground coalmine near Greymouth four years ago.
Pike's receiver has declined to comment on the bidding.
Solid Energy has said it is interested in Pike, but it has refused to confirm or deny suggestions it will make a joint bid with a Chinese coal company.
The receivers want bidders to remain anonymous, given that a deal could be hampered if details are made public too soon.
Pike River collapsed into receivership almost a year ago, after a mine explosion that killed 29 men. It is expected the sale of the assets could take at least until Christmas to confirm, with foreign buyers facing Overseas Investment Office and other government approvals.
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A price of about $50 million would clear Pike's debts, with anything above that potentially offering some return to Pike shareholders. The Pike field holds billions of dollars of coal.
In the past year, Solid Energy posted revenues of $829m, and made an after-tax profit of $87.2m, up 29 per cent.
Shanxi Coal's website says it aims to become a "super-large" enterprise group in the next five years with a target of producing 50 million tonnes of coal a year and to handle trade of 100 million tonnes as an import-export business. Shanxi province is southwest of Beijing.
The company runs 20 coalmines and has assets of more than 13 billion remnimbi (NZ$2.5 billion) and more than 7000 staff. Shanxi Coal is one of the top 10 state-owned businesses in the province. Annual revenues were about 22 billion remnimbi, with profits of more than 1 billion remnimbi.
sourced Stuff.co.nz
Giant Chinese state-owned Shanxi Coal is understood to be in the running to buy Pike River Coal as part of a joint bid with New Zealand coal company Solid Energy.
Bids closed a week ago, with four players making offers, sources said.
One Indian company earlier interested in making an offer had pulled out, but another Indian company was still understood to be in the running, they said.
There has also been interest from an unnamed Australian company, but it remained unclear if it made a final bid.
Rumours have been around for a couple of weeks that a Chinese government agency was involved in a joint bid with Solid Energy for Pike.
Another industry source said if Shanxi joined Solid Energy as a partner in Pike River it could provide the financial muscle to reopen the mine and be a large customer, with Solid Energy providing the local expertise. China has a huge appetite for coal, which has been a key driver of its economic growth.
Chinese imports of coal have recently hit record levels, up 15 per cent in September to a record 19 million tonnes in a month.
There has been industry concern a Chinese or Indian company could come in with a high price and pick up the Pike River assets without the involvement of a local player.
The Pike mine remained a "technical challenge" and a player from overseas might not have the right skills to mine in what was a difficult area, a source said.
It would be surprising if the mine reopened within three to five years under new owners, sources said.
A joint-venture deal might also put Shanxi in a good position to take a stake in Solid Energy, should the Government decide to sell part of the company, an industry source said.
The Government says it plans to look at selling up to 49 per cent of three state-owned power companies, Solid Energy and reducing its holding in Air New Zealand should it be re-elected.
However, another source said a joint venture would not necessarily give Shanxi any advantage if part of Solid Energy were up for sale. Solid Energy already has a joint venture with international coal company Cargill, which bought 49 per cent of the Spring Creek underground coalmine near Greymouth four years ago.
Pike's receiver has declined to comment on the bidding.
Solid Energy has said it is interested in Pike, but it has refused to confirm or deny suggestions it will make a joint bid with a Chinese coal company.
The receivers want bidders to remain anonymous, given that a deal could be hampered if details are made public too soon.
Pike River collapsed into receivership almost a year ago, after a mine explosion that killed 29 men. It is expected the sale of the assets could take at least until Christmas to confirm, with foreign buyers facing Overseas Investment Office and other government approvals.
Ad Feedback
A price of about $50 million would clear Pike's debts, with anything above that potentially offering some return to Pike shareholders. The Pike field holds billions of dollars of coal.
In the past year, Solid Energy posted revenues of $829m, and made an after-tax profit of $87.2m, up 29 per cent.
Shanxi Coal's website says it aims to become a "super-large" enterprise group in the next five years with a target of producing 50 million tonnes of coal a year and to handle trade of 100 million tonnes as an import-export business. Shanxi province is southwest of Beijing.
The company runs 20 coalmines and has assets of more than 13 billion remnimbi (NZ$2.5 billion) and more than 7000 staff. Shanxi Coal is one of the top 10 state-owned businesses in the province. Annual revenues were about 22 billion remnimbi, with profits of more than 1 billion remnimbi.
sourced Stuff.co.nz
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