14 JUN, 2012, ET BUREAU
KOLKATA: State-run Coal India has put on hold its initiative to acquire foreign assets and has stopped talks with all foreign companies that it had started dialogues with. It does not intend to start any fresh talks nor does it have any plans of inviting fresh expressions of interest, said people familiar with the situation.
As a result the coal mines and assets that were offered to Coal India are now being offered to other international players for possible takeover.
For instance, Coal India was in talks with Peabody Energy for acquiring its Wilkie Creek mine in Australia. But Peabody is now offering it to other foreign companies. Similarly, Massey Energy, which had also entered into talks with Coal India, was sold to Alpha Natural Resources early this year.
Sinar Mas, which had earlier expressed interest in offering a stake in its coal bearing assets at Novem/Sinarma's Borneo Inclobana and G3 mines through a joint venture with CIL, has decided to sell these two assets through a global bidding process.
"Coal India discontinued talks with foreign majors because the coal ministry asked it to make sure that it adheres to a 12% internal rate of return for all investments that it undertakes in acquiring overseas assets. The assets we were planning to overtake did not offer such returns and we were forced to discontinue talks. We do not also intend to invite fresh expressions of interest so that this 12% rate of return can be obtained," a senior CIL official said.
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