Adani buys Aussie mine | business | Hindustan Times
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Adani buys Aussie mine

business Updated: Aug 03, 2010 20:46 IST
HT Correspondent
HT Correspondent
Hindustan Times
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Domestic infrastructure major Adani Group, led by Gautam Adani, on Tuesday bought Australia's Linc Energy's Galilee coal tenement (output contract) for $2.74 billion (Rs 12,604 crore). This is the largest investment by an Indian firm in the metals and minerals sector in Australia.

According to the deal, Adani will pay $456 million (Rs 2,098 crore) in cash to the Australian miner and $1.8 per tonne (Rs 83) of coal produced as royalty for the first 20 years.

The deal will give Adani not necessarily cheap but assured supply of coal, a prime raw material in power generation —an area where the group has major expansion plans (see box).

Given the acute scarcity of thermal coal in India and the power needs in the country, this deal may spur more investments into Australia.

"Acquisition of mine is a part of long-term strategy for Adani Enterprises, which is the largest importer of coal in India," said Devang Desai, CFO, Adani Group. "The acquisition will also help to maintain our position as a prominent coal supplier in coming years to energy starved country."

Indian thermal coal imports surged last year to a little less than 60 mt (million tonne) from about 30 mt in 2008. India plans to almost double electricity generation capacity by 2012, when the shortage of coal will exceed 200 mt.