Linc Energy to Use Proceeds From $2.7 Billion Galilee Coal Sale to Expand

Linc Energy Ltd., which sold an Australian coal asset for A$3 billion ($2.7 billion) in cash and royalties to Adani Enterprises Ltd., will use the proceeds to fund expansions and may sell the royalty stream.

“Adani is a strong group -- numerous financial groups would buy that royalty stream off us just to get exposure to Adani,” Linc Chief Executive Officer Peter Bond said in a phone interview today from the company’s headquarters in Brisbane. A partial or complete sale of the royalties is “on the table.”

Adani, India’s biggest coal importer, today agreed to buy the Galilee coal tenement for A$500 million in cash and a royalty of $2 a metric ton for 20 years, equating to A$2.5 billion, Linc said in a statement. The acquisition is the largest by an Indian company in Australia, it said.

Linc is exploring for coal and petroleum in South Australia, as well as in Alaska, Montana, North Dakota and Wyoming, according to its website.

“We have coal, we also have gas, and we have oil that we’re pushing to develop,” said Bond, adding that the company also has underground coal gasification technology, which enables the conversion of coal into gas for chemicals production or power generation.

India has increased electricity generation capacity to end blackouts and sustain an economy forecast to grow more than 9 percent this fiscal year. The country’s imports of thermal coal, used to fuel power stations, almost doubled to 60 million tons last year. Its economy has grown an average 8.4 percent since 2004, straining transport, energy and manufacturing capacity.

To contact the reporter on this story: Elisabeth Behrmann in London at ebehrmann1@bloomberg.net

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