Chinese firm also interested in assets of Rio Tinto.
By R. Chandrasekaran
CHENNAI: At least two Indian companies are trying to bid for coal assets in Australia, estimated to be valued around $3.2 billion.
Australia-based Rio Tinto is burdened with a debt of $26 billion as a result of its $38 billion acquisition of the Canadian company Alcan, just before the global financial crisis in 2007. The acquisition had led to the exit of Tm Albanese as its chief executive officer. Both the company and its current CEO Sam Walsh are engaged in offloading some of its assets to reduce its debt burn with a view to retaining its single -A credit rating from the agencies.
A sharp drop of coal prices after early 2012 and the surging costs has also forced the company to cut down its exposure in the coal sector. A Reuters report said that the Indian companies, especially Aditya Vikram Birla Group and the government-controlled Coal India Ltd., are considering bidding for some of the coal assets from Rio Tinto, which is divesting 29 percent interest in its Coal & Allied units besides selling majority interest in the Clemont mine. The company is reported to be expecting preliminary bids this week.
Birla Group has companies such as Hindalco Industries, the biggest aluminum maker in India, and Ultra Tech Cement, a leading cement producer, that need coal.
Similarly, Coal India is interested in bidding in order to meet the big appetite for coal of its power projects. Though India has the world’s fifth biggest coal reserves, there is a growing demand for coal in the country.
China’s Shenhuma Group Corp Ltd is also planning to bid for some of the Australian company’s assets. The race is likely hot up in the coming days between the Indian and Chinese companies.