Coal mine acquisitions have risen sharply in India in the current year and are expected to rise further due to strong demand, as user companies in steel and power industries expand capacities and fuel the need for larger coal usage. However, the pace of acquisitions would be tempered by new regulations that will focus on the role of companies in mining and in developing adequate rehabilitation policies for displaced people , said people connected with the mining industry. "If we consider an economic outlook of over 9% GDP growth and look at the demand-supply position, then I would say the acquisition space will hot up," said CNI Research chairman Kishor P Ostwal. "However , a lot would depend on the new mining laws that stipulate profit sharing and how competitive foreign mining would be with respect to domestic mining," he added.
According to Bloomberg data, the mining industry's capital flows to the Middle East and Africa have more than doubled to $7.7 billion this year. Most of these flows are prompted by a strong demand from Indian steel and power producing companies to own raw material assets to lower costs. Coal fuels about 80% of India's energy needs. On Wednesday, Lanco Infra announced its plans to acquire Griffin Energy , that owns thermal coal mines in western Australia.
"Availability of cheaper finance is a key issue. We could be entering a phase of trading in assets from trading in coal," said Shamik Bhose, executive director of commodity, currency & interest rate futures markets at Microsec Commerze. Adani group's deal in acquiring Linc Energy's coal mines in Australia for Rs 12,600 crore in August this year, is the largest seen so far. While power companies such as Tata Power, Essar Power and JSW Energy have completed acquisition of assets in Indonesia and Canada abroad, a clutch of PSUs like Coal India, NTPC , NMDC, RINL and SAIL as well as other smaller and medium size companies are likely to join the fray.
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