Adani may buy mines in Australia

ADANI Enterprises, with investments ranging from commodities to power, is negotiating to buy coal mines from Australia’s Linc Energy to shore up fuel for its power plants as environment issues hold up local mining.The deal, if finalised, may be routed through its Singapore unit Adani Global Pte,.The coal mines, located in Queensland, have an estimated reserve of 8 billion tonnes.

For Linc Energy, a producer of cleanerburning fuels, an agreement with the Adanis would be a relief as it has been struggling to sell the mines for nearly two years. The global economic slump deterred buyers due to funds scarcity.

“We remain in detailed negotiations with a number of parties, including Adani, in relation to the sale of non-core Queensland coal tenements,” a Linc Energy spokesman told . “Linc energy confirms that at this stage it has not concluded any binding contract or finalised any material terms with any party.”

Adani Enterprises chairman Gautam Adani declined comment. Gautam Adani, the founder of the ports-to-power conglomerate, aims to build power plants with a capacity to generate 20,000 mega watts. He has been acquiring mines and building ports to ease imports of the fuel. Since a lot of mining areas in India fall inside sanctuaries and tiger reserves, many power companies including Tata Power and Essar are buying mines overseas.

Linc planned to sell the Teresa coal mines for as much as $1.3 billion before the credit crisis and held talks with Chinese companies such as Yanzhou Coal Mining Co and Xinwen Mining Group. But the negotiations failed for different reasons and it appointed UBS to find a new buyer. The Adanis may be paying close to $1 billion, but in tranches, one of the persons said. It may pay $435 million initially and spread the rest over a few months.

“Valuation of the mine look extremely cheap... it is attractively priced,’’ said Gaurav Dua, head of research.The company has raised Rs 1,400 crore through sale of shares to existing holders and has appointed bankers to sell shares to institutional investors. It aims to raise as much as Rs 2,500 crore in the sale to funds, said people familiar with the plans. Some of the debt funds may come from ICICI Bank, said one of the persons. Adani may produce more than 50 million tonnes of coal from the Australian mines. It may invest as much as $4 billion in the next five years to mine, build ports and rail tracks to transport coal to India.