India's Aditya Birla mulls bid for Australia's New Hope-sources

Thu Nov 3, 2011

* Group expects to appoint adviser for bidding soon-sources
* New Hope has market value of $5.2 bln
* Birla group needs thermal coal for aluminium, cement units
By Sumeet Chatterjee

MUMBAI (Reuters) - India's diversified Aditya Birla Group is considering bidding for Australia's New Hope Corp , a $5 billion coal miner that put itself up for auction last month, sources with direct knowledge said on Wednesday.

The group, a telecoms-to-cement conglomerate, requires thermal coal for group companies Hindalco Industries , India's top aluminium producer, and UltraTech Cement , the country's largest cement producer.

The group is expected to appoint an adviser for the bidding process soon, two sources with direct knowledge of the situation told Reuters. They declined to be named as the information is not public yet.

Tuhin Mukherjee, managing director of Aditya Birla Natural Resources, declined to comment.

New Hope is considering a break-up and asset sales amid interest from global resource companies, sources said last month.

Among those interested in the Queensland-based thermal coal producer are India's No.3 steelmaker, JSW Steel , China's Yanzhou Coal Mining Co Ltd and London-listed Xstrata , the sources had said.

Aditya Birla Group, a $35 billion conglomerate that gets 60 percent of its revenue from its overseas operations, is unlikely to face a problem in financing a possible deal, the sources said .

New Hope is among the last few major coal companies left in resource-rich Australia after a flurry of recent takeovers consolidated the industry.

The Australian miner's New Acland mine, west of Brisbane, produces thermal coal used in power plants. New Hope sells about 65 percent of its coal overseas and the remaining to the domestic market.

New Hope's wholly owned port facility makes it attractive to potential suitors, but the sale process is complicated by its ownership structure and the high price tag, bankers and analysts had said last month.

India holds 10 percent 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.

Indian energy firms have been scouting for coal assets overseas to feed power plants at home, and have been raising funds for potential overseas acquisitions and expanding facilities.

The energy-hungry nation aims to halve a near-14 percent peak-hour power deficit within two years .

India's GVK Power & Infrastructure said in September it would pay $1.26 billion for a majority stake in three Australian coal mines and a port and rail project owned by heiress Gina Rinehart's Hancock Group.

In August, GMR Infrastructure , with interests in airports, energy and highways, said its unit has entered into a pact to acquire a 30 percent stake in Indonesia's Golden Energy Mines for $450 million to $550 million in cash.

(sourced Reuters)