Adani Agrees to Buy Linc Energy's Australian Coal Asset for A$3 Billion

Adani Enterprises Ltd., India’s biggest coal importer, agreed to buy a coal asset in Australia for A$3 billion ($2.7 billion) from Linc Energy Ltd. as demand for the fuel increases.

Adani will pay A$500 million in cash and a royalty of $2 a ton for 20 years, or A$2.5 billion, Linc said today in a statement, describing the acquisition as the largest by an Indian company in Australia. The purchase will give full control of the Galilee coal tenement in Queensland, Adani Enterprises said in a separate release.

India’s thermal coal imports almost doubled to 60 million tons last year as the nation increased electricity generation capacity to end blackouts and sustain an economy forecast to grow more than 9 percent this fiscal year. India’s economy has grown an average 8.4 percent since 2004, straining capacities at roads, ports and factories.

“It is about securing high calorific, good quality coal for its expansion plans,” Deven Choksey, chief executive officer at K.R. Choksey Shares & Securities Pvt. that owns shares in Adani Enterprises, said before the announcement. “High quality coal helps operate power plants at higher capacities.”

Adani Power Ltd., a sister company, plans to build power plants with a combined capacity of 6,600 megawatts by 2012, director Ameet Desai, said last August.

Adani Enterprises, which advanced 43 percent this year, gained as much as 3.7 percent to 632.45 rupees and traded at 632.20 rupees as of 2:45 p.m. in Mumbai. Linc requested its shares be halted from trading in Sydney, pending an announcement on the sale. The Brisbane-based company last traded at A$1.86.

Preferred Status

The purchase gives Adani Enterprises, controlled by billionaire Gautam Adani, access to 7.8 billion metric tons of coal resources, according to its statement. The area is capable of producing as much as 60 million tons of coal a year when fully operational, according to Linc’s statement.

Adani Enterprises has been awarded a “preferred proponent status” for developing the Dudgeon Point coal terminal in Queensland, giving it a route to transport the coal, according to the company’s statement. Dudgeon Point is located near the Hay Point and Dalrymple Bay coal terminals.

“The coal from the Galilee basin would support and enable the rapid expansion of the power business of Adani Power and expand Adani Enterprises’ coal business,” the company said in the statement.

Indian thermal coal imports surged last year to a little less than 60 million tons from about 30 million tons in 2008, Macquarie Group Ltd. said in a report in March. India plans to almost double electricity generation capacity by 2012, when the shortage of coal will exceed 200 million tons.

To contact the reporters on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net; Rakteem Katakey in New Delhi at rkatakey@bloomberg.net

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