ET reported that state run Coal India is close to getting the government's green light to acquire mines abroad, enabling the cash rich company to bid for properties in Australia, the US and Indonesia.

Mr Alok Perti, special secretary in the coal ministry told reporters in Kolkata that the ministries of coal and finance are expected to give the go ahead by the end of this month.

After the government approval, Coal India, which is armed with cash reserves of USD 11 billion, will be able to carry forward talks with Indonesia based Sinar Mas Group for acquiring a stake in PT Golden Energy Mines.

Coal India will also be able to take ahead the proposal to pick up 15% stake in US based Peabody Energy's USD 600 million Wilkie Creek mining project in Australia. The last date for submission of bids for PT Golden Energy Mines was extended from June to August but Coal India officials were not too optimistic because they thought the go ahead from the ministries would not come any time soon.

Golden Energy Mines holds three coal blocks, with combined reserves of more than one billion tonnes, mostly from its block at Kalimantan in the Indonesian part of Borneo. It also has two blocks in Sumatra , in northern Indonesia. Talks for picking up a 15% stake in Peabody Energy's USD 600 million Wilkie Creek mining project in Australia came to stand still after the proposal was referred to the coal ministry and finance ministry for their approval.

Last year, the government had asked Coal India to invest only in overseas companies that are listed and make sure that investments in such assets had an internal rate of return at 12%. This made the company cautious. Coal India has entered into talks for acquiring a specific asset of Peabody and although the company may be listed, the asset is not. PT Golden Energy Mines is not listed, but its parent company is. Additionally, it was not sure if the company could get an internal rate of return of 12% at least in the initial stage of takeover of these assets.

Officials estimate the deal size to be upwards of USD 120 million. The plan is to hive off the Wilkie Creek mine in Queensland, Australia, by its owner Peabody, into a separate company. Coal India will take a 15% stake in this new entity, while rest of the holding will remain with Peabody. It will help Coal India source better quality coal from this mine to meet domestic demand on a regular basis and at a discounted price over the long term.

(Sourced from ET)