India's GVK buys stake in Australian mines for $1.26bn
- 19 September 2011
- From the section Business
Indian infrastructure giant GVK said it will pay $1.26bn (£802m) to buy a majority stake in coal assets owned by Australia's Hancock Group.
GVK will take a 79% stake in two mines and own a third, as well as a port and rail project, the company said in a statement.
The deal comes after months of negotiations that began in February.
Indian energy firms have been snapping up coal assets in other countries to supply their power plants.
Hyderabad-based GVK, controlled by Indian billionaire GV Krishna Reddy, owns airports, power plants and other infrastructure projects in India.
It said it will take a 79% stake in the Alpha and Alpha West coal mines in the Galilee Basin in Queensland, Australia.
The company will also have full ownership of Kevin's Corner coal mine and the rail and port project connecting the three mines.
Production is due to start in 2014 and is expected to bring in more than 30 million tons per year of thermal coal, according to GVK.
"This acquisition builds strong resource business for GVK," said Mr Reddy in a statement emailed to AFP news agency.
"We will now be able to increase the capacity of our coal power business with an assured in-house supply of raw material."
The company said that at full production the mines are expected to produce about 84 million tons per year.
India depends on coal for its power generation needs. Insufficient supplies at home have lead many companies to look to Africa, Indonesia and Australia for the necessary fuel.
Last year, Adani Enterprise bought coal assets from Australia's Linc Energy for $2.7bn.
India's high-profile conglomerates such as Tata and Reliance have also made purchases to supply coal to their power plants in recent years.