Indian energy firms face Chinese threat in coal mine buys abroad

Indian energy companies seeking to acquire overseas coal mines would increasingly face stiff competition from Chinese firms over the next three to five years as the latter are seen intensifying their buyout strategy, energy information provider Platts said on Wednesday.

Indian firms such as Adani Enterprises and Reliance Power have intensified efforts to acquire coal mining assets in Indonesia, Australia and South Africa to meet their growing requirements.Also, Chinese firms such as Shenhua Energy and Meijin Energy Group have sharpened their overseas buyout strategy to satisfy the growing fuel demand as China, the world's largest coal producer, has turned a net importer from a net exporter of coal in the past two years.

Biggest threat“The biggest threat that Indian firms face overseas is from Chinese companies as they would also intensify their buyouts in the next three to five years,” Mr James O'Connell, Managing Editor, Platts International Coal, told reporters here.

As a result of this, the valuation of international coal companies will continue to increase, while the consumers should be prepared to pay more for the coal, Mr O'Connell said.Indian firms such as Adani Power, Reliance Power and Essar have acquired coal assets in the recent past in countries such as Australia, Indonesia and the US. Coal India, the world's largest producer, is also in talks to acquire stakes in overseas mines.

Rising imports

Mr O'Connell said imports from India and China would continue to rise to meet the growing demand from the energy sector. Imports by China, which started buying overseas coal two years ago, were expected to touch 100 million this year as the country is expected to remain a net importer in the short term. Similarly, the Indian imports, which are currently at 73 million tonnes, were projected to reach 164 million tonnes in five years, Mr O'Connell said quoting Standard Chartered research estimates.