Lanco Infra concludes buyout of 2 Australian coal firms - Estimated reserves of 1.2 b tonnes; 700 m tonnes extractable

Lanco Infratech Ltd has completed the buy out of two coal mining companies — Griffin Coal Mining Company Pty Ltd and Carpenter Mine Management Pty Ltd, down under, that entails a total structured investment of A$730 million, including upfront payment of A$480 million.

“The acquisition comes through amidst stiff competition from some of the companies from China and Japan. But this is a significant part of the company strategy to secure fuel supplies for the company's expansion and new projects,” Mr J. Suresh Kumar, Chief Financial Officer, Lanco Infratech, said.

Speaking to Business Line after concluding the deal and becoming the owner of the mining companies through its subsidiary Lanco Resources Australia Pty Ltd, with effect from March 1, he said the deal is structured in such a way that there is an upfront payment of about A$ 480 million. This will be followed by a payment of A$100 million after two years and A$ 150 million after four years.

Production

Mr Suresh Kumar said the funding has been arranged with ICICI Bank being the lead lender.

The deferred payment would be made through internal accruals and increase in fund flow from new capacity addition.

These companies have total estimated reserves of about 1.2 billion tonnes. And of this about 700 million tones (MT) is extractable.

At present, these mines produce about 4.5 MT per annum and this would be ramped up to 5.5 MT per annum soon. Initially, these mines would continue to supply coal to current buyers in China and Japan.

“But by 2015, we expect that these mines would be able to supply about 15 million tonnes per annum for use in India, which would be about 30 per cent of the total coal requirement for the company's power plants. We require 50 MT by 2015, by which time we would have a total installed capacity of about 13,000 MW,” he said.

These mines are located on the western coast of Australia.

Capacity addition

The company has a generation capacity of 2,082 MW and expects to have 4,000 MW by June 2011.

This includes another 600 MW unit expected to be synchronised by March 2011 at Udipi and two units of 600 MW each at Anpara and a 70 MW hydel project in northern part of the country.

“The two units of at Anpara of 600 MW each would be ready for synchronisation with the grid by March end and May 2011 respectively,” Mr. Suresh Kumar said. The company's shares closed the day at Rs 36.95, against the previous close of Rs 38.