Aditya Birla made an offer on Nov. 25, one of the people said, declining to be identified as the information is private. Tata Group’s power and steel units and JSW Steel Ltd. (JSTL) decided not to bid, two other people said. Talks are on with “several” potential bidders following indicative takeover proposals, New Hope, which has market value of A$4.9 billion ($5 billion), said yesterday in a statement.
Buying New Hope, which has no debt and A$1.6 billion in cash, would give the purchaser control of the Acland thermal coal mine and an export terminal in Queensland as demand for the fuel rises in China and India. A buyout of New Hope could be the largest coal deal since U.S.-based Alpha Natural Resources Inc. (ANR) agreed to buy Massey Energy Co. for about $7.1 billion in January.
“Companies are looking for overseas reserves because India’s coal assets are not well-utilized and it takes a long time to get access to mines,” said Sumant Sinha, chairman of SaVant Advisers, a Mumbai-based financial advisory and consulting company. “Given that Indonesia has increased export duties, Australia is an attractive destination.”
A spokesman for New Hope, based in Ipswich, Queensland, wasn’t immediately available for comment. New Hope rose as much as 1.7 percent to A$6 and traded at A$5.95 as of 3:17 p.m. in Sydney trading, compared with a 2.7 percent gain in the benchmark S&P/ASX 200 Index.
Aditya Birla spokeswoman Pragnya Ram and Tata Power spokeswoman Shalini Singh declined to comment. JSW Steel spokesman Manish Kalghatgi couldn’t be immediately reached on his mobile phone.
Indian companies have been scouting for coal assets overseas to fuel their power plants as supplies in the domestic market deplete. More than half the 89 thermal-power stations in India, the world’s third-largest user of coal, had less than seven days’ supplies as of Nov. 27, according to the Central Electricity Authority.
New Hope is 60 percent-owned by Washington H. Soul Pattinson & Co., while Tokyo-based Mitsubishi Materials Corp. has an 11 percent stake, according to data compiled by Bloomberg.
Tata, India’s largest business group, may bid for the miner to secure thermal-coal mines, three people familiar with the plan said on Nov. 5. JSW Steel, India’s third-largest producer, may also make an offer, two people with knowledge of the plan said on Oct. 24.
Yanzhou Coal Mining Co., China’s fourth-biggest producer of the fuel, bought Australia’s Felix Resources Ltd. for A$3.1 billion in 2009 and in September agreed to buy Wesfarmers Ltd. (WES)’s Premier coal mine in Western Australia for A$297 million. Yancoal Australia Ltd., a unit of the Chinese company, said in September it may spend more than $1 billion buying mines in Australia as the global market turmoil makes assets cheaper.
Aditya Birla, which has copper mines in Australia, also made an offer to buy Aquila Resources Ltd.’s Washpool coking coal mine in Australia, two people familiar with the matter said last month. Coking coal is used in steelmaking.