KOLKATA (miningweekly.com) – The Indian government is considering pushing government-owned mining and mineral processing companies to form joint ventures (JV) to acquire strategic assets overseas.
Senior officials say that JVs will not only combine the mining expertise of these companies across various minerals, but also leverage the strong balance sheets of the companies and offer greater financial muscle in bidding for assets overseas.
The officials cite the example of the board of directors of National Aluminium Company, Hindustan Copper and Mineral Exploration Corporation forming JVs to acquire mineral assets overseas and that other companies could also be pushed to follow a similar model to accelerate the process of such Indian acquisitions.
While any proposed JVs will be given the freedom to select assets to target, the government is inclined toward such ventures focusing on acquiring minerals related to lithium-ion battery technology, including rare earth assets and lithium, given India’s 2030 electric vehicle target.
Meanwhile, in a related development, sources say that Coal India Limited’s (CIL’s) bid to acquire at least 25% equity stake in a coking coal asset in Queensland, Australia, has been put on the backburner, if not scrapped.
The sources cite a combination of a lack of suitable response from majority stakeholders in the Queensland coking coal mine and CIL’s current predominant focus on mitigating the thermal coal shortage faced by domestic power companies as reasons for the overseas acquisition falling through.
According to the sources, CIL had zeroed in on the Queensland mine in September 2017 and was in the process of appointing a merchant banker to advise on the deal, but the group’s board postponed giving approval for the go-ahead, deciding instead that increasing thermal coal supplies in the domestic market was a more pressing priority.
CIL was also not able to secure visitations to the Queensland mine, a pre-requisite to any kind of a due diligence as there was no response from the latter. Sources say that there were speculation that, given the upturn in global coking coal prices over the past months, coking coal asset holders were either having second thoughts about disinvesting or delaying on the expectation of higher valuations of their assets.