RIL Keen to Acquire Australian Coal Firm

Co to initiate due diligence on Premier Coal's assets, may submit a final bid by June-end

 India's largest company by market value, Reliance Industries (RIL), has submitted an expression of interest to buy Australia's Premier Coal, a division of ASX-listed Wesfarmers Group, said two people with knowledge of the matter said on condition of anonymity, because the transaction is in its early stages. 

RIL will initiate due diligence on the assets of Premier Coal, according to one of the people quoted above, and may submit a final bid at the end of June, if it is satisfied with the result of the due diligence exercise. 
Wesfarmers initiated a process to sell its coal mining division in April this year and is being advised by UBS and Gresham Advisory Partners. An external spokesperson for RIL declined to comment for this story. Wesfarmers did not respond to an email seeking comment. The sale process is being run as an auction and has received interest from a number of Indian and Chinese bidders, according to a person with knowledge of the process. Premier Coal has sought bids in excess of $500 million. It has proven reserves of 129 million tonnes (MT) and currently produces 4 MT of coal. Coal produced from the Premier mine is sold to customers including Australian power generation company, Verve Energy. The majority of committed sales volumes are contracted to Verve under a longterm contract. Other Indian companies, such as the Aditya Birla Group and Hyderabadbased GVK, are also looking to acquire coal mines in Australia. GVK is in talks with Hancock Coal while the Aditya Birla Group has joined a bidding process being conducted for the sale of Bandanna Energy. RIL has been scouting for coal mines to secure essential raw material for its captive power generation capacities that support many of its businesses. The company may also look at other opportunities in Australia, according to the person quoted above. 
Global demand for thermal coal and in particular, sub-bituminous and low grade coal is forecast to grow strongly over the medium term, in order to meet new coal fired power generation capacity requirement. 
Going Down Under 

• Wesfarmers initiated a 
process to sell its coal mining division in April this year and is being advised by UBS and Gresham Advisory Partners 

• The sale process is being 
run as an auction and has received interest from a number of Indian and Chinese bidders 

• Premier Coal has sought 
bids in excess of $500 m