BS reported that Adani Enterprises, the Gujarat based Adani group flagship firm is in discussions with the Mozambique based NCondezi Coal to acquire a minority stake in its coal assets. The deal with the AIM-listed NCondezi is expected to be in the range of USD 350 million to USD 400 million. Standard Chartered Bank is advising NCondezi on finding a partner.
According to sources in the know, Adani Enterprises is looking to become a strategic partner of NCondezi by acquiring a part of its assets. The acquisition is for its subsidiary, Adani Power which has targeted a 20,000 Mw expansion plan in the power sector by 2020.
A spokesperson of Adani Enterprises in response to an emailed questionnaire that “We do not provide comment on market speculation.”
An email sent to Mr Hanno Pengilly chief development officer, NCondezi, did not elicit any response.
The Ncondezi project is located in the Zambezi Coal Basin in Tete province one of the largest undeveloped coal regions in the world. Rio Tinto Benga mine and Vale Moatize mine are both located in the same region.
NCondezi had announced recently that feasibility studies for both the coal mine and power plant were near completion. The AIM-listed company expects to start thermal coal production from its project in the second half of 2015 and its coal resource base could be able to produce more than 10 million tonnes of the coal used in power generation over a 20 year period.
The company said recently that NCondezi planned to produce up to five million tonnes of export-quality thermal coal and seven million tonnes of domestic power plant production.
An NCondezi statement added that “The past two years have seen significant development of the export thermal market as China and India play an increasing role as importers. Ncondezi is targeting production of two export thermal coal products that are ideally suited to these markets.”
Mr Pukhraj Sethiya, manager (mining) at PricewaterhouseCoopers said Africa is emerging as a more attractive destination for coal asset acquisitions than Indonesia and Australia, given fewer regulatory challenges, though the infrastructure could pose challenges for coal offtake.
He said that “Given that, if companies can fetch good valuations for assets, acquisitions in the current scenario are good and would also help tie up financing for power projects and provide a firm supply source.”
Source - Business Standard
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