MUMBAI (Commodity Online): Indian steel giants are on prowl in South Africa to buy coal mining firms as they need to ensure proper supply to their projects.

According to media reports, Indian companies, including the Jindal Group, Essar, have been hunting for junior coal producers with a view to buying during the past three years.

These firms have also checked Indonesia, Australia and the US for likely coal assets with an intention to acquire mine assets as their coal demand is set to more than double in a few years.

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Reliable delivery, relatively high energy-content and low ash content of South African coal have made it a preferred choice for many Indian end-users.

Having become accustomed to the quality of South African coal but often squeezed by strong international prices, Indian end-users have decided to enter mining.

On the face of it Indian asset seekers have chosen the right time to make a move into South African mining because several of the junior producers are either up for sale or informally welcoming offers.

Junior miner Umcebo is to be sold via a tender process overseen by Nedbank; Black Gold executives have discussed the potential sale of their mines with Indian buyers; Xstrata is set to dispose of its old, high-cost Spitkop and Silentis mines later this year.

Gas Nacional’s stake in Kangra will also be put on the block because it does not fit the group’s core gas and power business, Indian end-users said.

However, it would not be simple for Indian firms to buy these mines. Many of them such as Kangra have pre-emptive rights attached, giving other shareholders first right to purchase.
(Source: Mineweb)

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