Home > Mergers & Acquisitions > India Coal JV May Bid for Riversdale Mining

India Coal JV May Bid for Riversdale Mining

December 15, 2010

“India’s steel ministry asked a joint venture of five state-run companies to consider bidding for Riversdale Mining Ltd., in what could further intensify a battle for the Australian coal miner.

Acquiring Riversdale, which has 13 billion tons in coking and thermal coal reserves in its Benga and Zambeze projects in the southern African country of Mozambique, will help the Indian companies secure coal supplies to power an expanding economy. Riversdale said earlier this month it is in talks with Rio Tinto PLC about a 3.55 billion Australian-dollar ($3.53 billion) takeover, but Rio Tinto has yet to submit a formal offer.”

Source: Wall Street Journal, December 14 2010

Observations:

  • Riversdale, listed on the Australian Stock Exchange, is active in coal mining in South Africa and Mozambique. Earlier this month plans of Rio Tinto to offer a small premium for Riversdale become public, while rumors exist that Vale, Tata and NMDC would be interested in acquiring the assets in Mozambique.
  • The Indian coal mining companies that might get involved in bidding for the assets are Coal India, International Coal Ventures Ltd. (ICVL), NTPC, NMDC, Rashtriya Ispat Nigam and Tata, which owns a strategic stake in Riversdale already.

Implications:

  • A joint bid of state controlled companies from India would be one of the first signs of the Indian government pursuing the same strategy as China in securing access to resources abroad. Like China, India has a strong domestic coals supply which is not able to keep up with growing demand.
  • A number of large resources companies have grown in India; Tata Steel, ArcelorMittal, Reliance & Vedanta being the most well-known. However, most of these companies are not state controlled and have positioned their official headquarters in Europe. With the IPO of Coal India and consolidation of other companies the Indian domestic industry gets ready to become active internationally.

©2010 | Wilfred Visser | thebusinessofmining.com

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