By: Ajoy K Das
29th August 2012
KOLKATA (Mining Weekly) - Indian major Coal India Limited (CIL) was banking on India-South Africa bilateral economic relations to yield government-to-government deals to acquire coal assets to improve its tardy record in establishing a global footprint.
“From an Indian perspective, a South African focus held more potential since the market was not prone to regulatory changes like Indonesia and Australia. The coal ministry has taken the initiative for a broaching government-to-government agreement on coal assets at appropriate India-South Africa trade and investment forums,” a Coal Ministry official said.
It was pointed out that while Indonesia had linked coal prices to the spot market, and Australia imposed a 30% carbon tax, coal imports from South Africa was still price competitive.
“My focus on overseas acquisition was on government-to-government deals. Acquisition of coal assets of big companies could be highly overvalued though at the same time I do not want to say no to them,” CIL chairperson, S Narsing Rao, was quoted in a local media.
It was against the backdrop of shift of focus that CIL, the world’s largest coal miner, last week sought offers from South Africa-based consultants to assist it to float a wholly-owned subsidiary in that country by end 2012, ensure compliance with local laws and regulatory requirements and also scout for potential assets for acquisition.
“The appointment of a consultant for CIL in South Africa was just a first step. Its role in identifying coal assets too would be supportive of bi-lateral talks between the governments of two countries,” Coal Ministry official said.
“Negotiations on asset acquisition from a large company could be faster but support of respective government through bi-lateral talks in acquiring a coal block has several long term positives,” he added.
CIL only current foreign assets were two coal blocks in Mozambique, which resulted from bilateral talks between the governments of India and Mozambique to promote Indian investments in the African continent.
An independent analyst who was previously associated with CIL, however, said that a government-to-government deal for coal assets in South Africa could be the best option.
The government-owned miner, despite having a free cash reserve of $11-billion and earmarking $6.4-billion for overseas acquisition, had failed to clinch any deal, even at a time when CIL was struggling to meet rising domestic demand and make supply agreements with thermal power generators.
Since 2010, CIL had protracted negotiations with Massey Energy, US, Peabody Energy US and Sinar Mas, Indonesia for coal assets in US, Australia and Indonesia but none could be taken to a logical conclusion.
Edited by: Esmarie Swanepoel
29th August 2012
KOLKATA (Mining Weekly) - Indian major Coal India Limited (CIL) was banking on India-South Africa bilateral economic relations to yield government-to-government deals to acquire coal assets to improve its tardy record in establishing a global footprint.
“From an Indian perspective, a South African focus held more potential since the market was not prone to regulatory changes like Indonesia and Australia. The coal ministry has taken the initiative for a broaching government-to-government agreement on coal assets at appropriate India-South Africa trade and investment forums,” a Coal Ministry official said.
It was pointed out that while Indonesia had linked coal prices to the spot market, and Australia imposed a 30% carbon tax, coal imports from South Africa was still price competitive.
“My focus on overseas acquisition was on government-to-government deals. Acquisition of coal assets of big companies could be highly overvalued though at the same time I do not want to say no to them,” CIL chairperson, S Narsing Rao, was quoted in a local media.
It was against the backdrop of shift of focus that CIL, the world’s largest coal miner, last week sought offers from South Africa-based consultants to assist it to float a wholly-owned subsidiary in that country by end 2012, ensure compliance with local laws and regulatory requirements and also scout for potential assets for acquisition.
“The appointment of a consultant for CIL in South Africa was just a first step. Its role in identifying coal assets too would be supportive of bi-lateral talks between the governments of two countries,” Coal Ministry official said.
“Negotiations on asset acquisition from a large company could be faster but support of respective government through bi-lateral talks in acquiring a coal block has several long term positives,” he added.
CIL only current foreign assets were two coal blocks in Mozambique, which resulted from bilateral talks between the governments of India and Mozambique to promote Indian investments in the African continent.
An independent analyst who was previously associated with CIL, however, said that a government-to-government deal for coal assets in South Africa could be the best option.
The government-owned miner, despite having a free cash reserve of $11-billion and earmarking $6.4-billion for overseas acquisition, had failed to clinch any deal, even at a time when CIL was struggling to meet rising domestic demand and make supply agreements with thermal power generators.
Since 2010, CIL had protracted negotiations with Massey Energy, US, Peabody Energy US and Sinar Mas, Indonesia for coal assets in US, Australia and Indonesia but none could be taken to a logical conclusion.
Edited by: Esmarie Swanepoel
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