By ROSS KELLY SYDNEY -- India's coal minister and the chairman of the country's biggest coal miner said Thursday that India is considering securing coal properties in Australia to plug projected gaps in the nation's supply of coal.
The comments indicate that the current wave of foreign investment in Australia's natural resources won't be limited to China.
"Australia is known to be a country with high quality thermal coal and metallurgical coal properties," India Minister of State for Coal Sriprakash Jaiswal told reporters. India considers Australia as an important destination to look for coal properties, he said.
As one of the world's fastest growing economies, India currently has to import coal because it doesn't produce enough to meet increasing demand.
The need to source more foreign coal is "urgent" and a failure to do so could impact the country's economic growth, Coal India Chairman Partha S Bhattacharya said.
The Indian delegation are due to meet Friday with Australia's resources and energy minister, Martin Ferguson.
Australia's massive coal resource has become the subject of a flurry of international deal activity, with China's Yanzhou Coal Mining Co. Ltd. having already launched a A$3.54 billion takeover offer for Australian coal miner Felix Resources Ltd.
Since Aug. 30, Mr. Jaiswal said he and Mr. Bhattacharya have inspected open cut and underground coal operations in the Hunter Valley in New South Wales state and the Emerald region of Queensland state.
The Indian minister said Coal India Ltd. has recently called for global expressions of interest seeking strategic partnerships with global mining majors.
"Quite a few Australian companies have also expressed their interest to work together with Coal India Ltd.," Mr. Jaiswal said.
Coal India's Mr. Bhattacharya said the company is focused on securing thermal coal resources.
Sourcing metallurgical coal, which is used in steel making, is the responsibility of International Coal Venture, a special purpose vehicle of Steel Authority of India Ltd.
Coal India, which is 100% owned by the Indian government, will consider various investment options, Mr. Bhattacharya said.
"Taking equity stakes in existing companies and in return having a coal supply agreement for a certain quantity of coal could be one format," Mr. Bhattacharya said. "The other format could be joining in mining, so the expansion programs of the existing companies, or taking absolutely greenfield properties and going ahead on doing mining."
"We can say that the response has been possibly better than what we could have expected," Coal India's chairman said.
Mr. Bhattacharya said the company, which is also investigating investment opportunities in the U.S, Indonesia and South Africa, could easily pay $1 billion to $1.5 billion on investments, and would consider spending more.
"We are a debt-free company, that's not a happy situation," he said.
Coal India increased annual thermal coal production 6.4% in the fiscal year that ended June 30 and is aiming to increase output by another 7.7% in the current fiscal year to meet growing demand, Mr. Bhattacharya said.
"But even that is not going to meet the demand in full," he said.
Australian company Linc Energy Ltd. is currently trying to sell coal tenements in Queensland state.
Waratah Coal Inc. in May struck an agreement with China Metallurgical (Group) Corp. that will involve the Chinese group arranging debt funding of up to 60% of a new US$3.1 billion Australian coal project.
Another Chinese metals company -- Hunan Valin Iron & Steel Group -- said May 8 it is considering teaming up with Fortescue Metals Group Ltd. to invest in coking coal projects in Australia. Hunan Valin became Fortescue's second-biggest shareholder earlier this year.
