Good article in the...

Good article in the Australian.

http://www.theaustralian.news.com.au/business/story/0,28124,26040396-36418,00.html


INDIA'S hunt for Australian coal is gathering momentum, as engineering company Larsen & Toubro chases mine stakes worth up to $2 billion.

Spurred by government plans to boost power capacity by 2012 and warnings of a coal shortage, Mumbai's Larsen is understood to be chasing thermal and coking coal mines in Australia.

The Larsen acquisition team has been told to consider purchases of up to $2bn.

State-owned Coal India, the world's biggest coal miner, received 15 expressions of interest recently from Australian miners, including Rio Tinto and Hancock Prospecting, when it announced it needed to make rapid acquisitions to plug an expected 200million tonne Indian coal demand gap that could open up in the next three years.

Larsen supplies power stations with equipment and has previously said it planned to move into power generation.

India's current five-year development plan aims to provide all villages and houses that are below the poverty line with power and to boost economic growth to 10 per cent by 2011-12.

India's Economic Times reported yesterday that Larsen was in talks on buying Queensland thermal coal ground for between $US250 million ($292m) and $US300m.

The ground, near Brisbane, had 250million tonnes of coal reserves, according to the report.

Larsen is understood to have been searching for acquisitions in Australia, Indonesia, South Africa and the US for the past two to three months.

The Economic Times reported that Australian-based but Indian-run company Hindustan Global Resources was acting as a consultant for Larsen and was in talks on conducting post-acquisition mining and exploration work should the purchase be successful.

At present, India buys only a small amount of Australia's thermal coal, getting most of its imports from Indonesia, which is closer but has inferior coal.

Coal India chairman Partha Bhattacharya was in Australia last week to investigate investment opportunities.

He said India's need for more foreign coal was urgent and the country's economic growth was at risk if it could not be sourced.

Coal India could pay more than $US1.5bn for mine stakes, Mr Bhattacharya said.

Shares in coal junior Rey Resources, which is targeting India for its West Australian coal reserves, jumped 4.5c to 28c yesterday on speculation a higher offer would emerge after Crosby Capital made a bid for the company last week.

Hong Kong-based Crosby offered 19.5c a share in a $43.3m bid for Rey, which was more than double the price being offered by Indian-controlled Gujarat NRE Minerals.