INDIAN coal giant Adani is poised to announce the biggest single investment by an Indian company in the Australian mining sector.
It will make a $1 billion-plus purchase of coal tenements in the emerging coal area of the Galilee Basin.
India's largest coal importer and operator of its largest private port at Mundra on the country's northwest coast is seeking to shore up its raw material supplies for domestic sale and to fire several key power stations.
Adani chairman Gautam Adani travelled to Brisbane late last week to finalise the deal with Linc Energy chief executive Peter Bond. Sources familiar with the talks told The Australian that the final deal was expected to be signed tomorrow.
Adani is also believed to have concluded a deal with Queensland government owned Sunwater to supply water to the site, which is in a more remote location than current mining areas.
Start of sidebar. Skip to end of sidebar. Related Coverage Aston coal float clears final hurdle Courier Mail, 3 days ago Indian giant eyes Aussie coal The Australian, 6 days ago Linc denies progress on sale talks Adelaide Now, 10 days ago Challenge for energy retailing The Australian, 21 Jul 2010 Linc Energy shares surge 18pc The Australian, 21 Jul 2010 End of sidebar. Return to start of sidebar. The trip followed Adani raising $850 million on the Mumbai Stock Exchange in the largest share sale to institutional investors by an Indian company this year. Adani said at the time it would invest the money from the share sale in coal mining and oil and gas exploration.
While there have been investments by Indian companies in the Australian resources sector, these have all been in existing mining companies such as ArcelorMittal's stake in Macarthur Coal.
This is the first time that an Indian company has directly purchased a complete coal seam which it intends to mine.
The deal requires Foreign Investment Review Board approval but if granted, it will give Adani a reliable power supply for its coal-fired power stations in India.
Adani's Mundra port is within a special economic zone that includes a power station that will need a reliable supply of coal.
The coal capacity of Mundra is being upgraded and from next year it will be able to take 50 million tonnes annually, which is not huge, but the company is also planning a far larger coal port further down the west coast, closer to Australia.
The Indian government has given Adani the concession to construct and operate a 330 million tonne bulk coal import berth at Mormugao port at Goa, and the company plans another power station there.
Adani has been showing an interest in Australian coal mines for at least the past year and is understood to have been the second bidder for the Curragh mine in central Queensland which was sold by state government owned Stanwell Corp to Wesfarmers last year.
The company has also been named by the Queensland government as one of two companies licensed to develop plans for a new coal port in central Queensland at Dudgeon port, just north of the existing coal port of Dalrymple Bay.
But Adani has also expressed interest in seeking additional port capacity at Abbot Point in north Queensland, which the Queensland government has deemed as the exit point for coal from the Galilee Basin.
Hancock Prospecting and Clive Palmer's Waratah Coal have the two biggest holdings in the Galilee Basin, which is further inland from the existing coal areas in central Queensland.
But development of the Galilee Basin coal seams would require a railway line to Abbot Point, and the Queensland government has approved Hancock's planned rail corridor from the Galilee Basin to Abbot Point as an "infrastructure facility of significance", which means the state has the power to acquire private land for the project.
Hancock has always stressed that it is negotiating with coal companies other than Waratah about sharing the cost of infrastructure, and it is believed that Adani is planning to use the Hancock railway and try to develop its own coal-loading facilities at Abbot Point.
Linc's primary business is underground coal gasification (UCG), a sector that has been hit hard by the closure of Cougar Energy's pilot plant at Kingaroy after poison was found to have leaked from the plant.
Cougar has stopped trading on the ASX and the other UCG company, Carbon Energy, has seen its share price drop by around 7 per cent. But Linc's has remained strong because of Adani's fundraising on the Mumbai Stock Exchange. Linc closed 2c lower at $1.60 on Friday.
CWK Price at posting:
37.0¢ Sentiment: Hold Disclosure: Held
