Tuesday, August 3, 2010

Adani to buy Australian firm’s coal mines

Adani Enterprises on Tuesday said it would buy coal reserves of Australian firm Linc Energy for AUD 500 million, a move aimed at feeding its growing power business in India.

“Adani Enterprises Ltd, through its step down Australian subsidiary, Adani Mining Pty, has concluded a binding agreement with Linc Energy Ltd, to purchase a 100 per cent interest in their Galilee coal tenement in the Galilee Basin, Queensland,” the company said in a filing to the Bombay Stock Exchange.

“The purchase consideration is AUD 500 million plus a royalty payment for a twenty year period linked to production,” it added.

The Galilee tenement has estimated coal reserves of 7.8 billion tonnes, which makes it the largest single tenement in Australia in terms of coal resource, Adani said.

“The purchase has received approval of the Foreign Investment Review Board (FIRB) and the Indicative Approval of the Queensland Government,” it added.

Adani would import the coal produced from the mines to feed its coast-based power projects in India.

Adani Power, a subsidiary of Adani Enterprises, is working on 4,620-MW power project at Mundra in Gujarat.

The group has plans to set up another power project near Mundra with a capacity of 3,300 MW and has proposed a 2,640-MW project at Dahej, in Gujarat.

“The coal from the Galilee basin would support and enable the rapid expansion of the power business of Adani Power Ltd in India while also expanding Adani Enterprises Ltd’s coal business where Adani is already the largest importer of thermal coal in India,” the company said.

The diversified group said it may develop coal terminals at a port near the mines to bring the dry fuel to India.

“While multiple evacuation routes are available to the mined coast, Adani (through subsidiary Mundra Port and SEZ Ltd) has recently been awarded preferred proponent status for the development of Dudgeon Point terminal in Mackay, Queensland...,” Adani said.

It added that this entitles Adani the right, (subject to technical and commercial feasibility) to develop coal terminals of Hay Point and Dairymple Bay Coal Terminal.

In the late afternoon session, shares of the company on the Bombay Stock Exchange were trading at Rs 632 a share, up 3.68 per cent over the previous close.


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