Coal India eyes three overseas acquisitions

Close on the heels of Adani Enterprises’ Australian coal asset purchase, state-run Coal India (CIL) is zeroing in on three acquisitions, spanning across major coal production geographies.

The Navratna company, slated to file its Draft Red Herring Prospectus (DRHP) by August 9, is in advanced stages of exploring the proposals: one each from Australia, Indonesia and the United States.

Top CIL officials told Business Standard that the three proposals “are looking good” and it is understood that a deal could be finalised in the next couple of months.

Although details of each proposal are hard to discern, the combined reserves of the three assets could be 800-900 million tonnes, with production estimated to be between eight-nine million tonnes per annum.

“All three (assets) are operational,” an official said, which means that CIL could start procuring coal from the mines immediately after acquisition and also that the valuation of the assets would be on the higher side.

The company has already earmarked Rs 6,000 crore for foreign acquisitions during this financial year, and is said to have roped in Bank of America-Merrill Lynch, Royal Bank of Scotland and Bank of Canada for helping with the overseas deals.

Earlier this year, CIL Chairman Partha S Bhattacharyya had said the company could also explore partnerships with foreign mining companies, either through equity infusion or joint ventures with an off-take contract, for exploiting overseas coal assets.

In April, Peabody Energy, the world’s largest private sector coal miner, had said it was “in a broad range of preliminary discussions to explore long-term coal supplies and other possible cooperative ventures” with CIL.

The CIL board, half of which now comprises independent directors, has cleared the DRHP for its initial public offering. The offer is slated to hit the market between October 18-21. “We are trying to file it (DRHP) by August 9,” an official said.

Subsequently, CIL intends to send out analysts for reaching out to investors, which is likely to be followed by roadshows starting in early September.