It seems to getting tougher by the day for Jindal Steel & Power Limited (JSPL), which is trying to acquire control of coking coal miner Rockland Richfield in Australia. After a muted response to its open offer which closed during July 2011, during which JSPL increased its stake to just under 28 per cent, there is now emergence of Chinese players into the picture, who can bid aggressively further to snatch away the control.
According to investment bankers who have been working closely with many of the Indian majors who are trying to acquire coal mines in Australia did indicate that there has been emergence of Chinese players for this asset, even after one of the Chinese company made a bid against JSPL at the initial stage. During 2009, when JSPL tried to acquire Rocklands for the first time, it was locked in a three-way battle with Essar Steel and Meijin Steel of China. While Essar bowed out early, Jindal managed to match the offer from the Chinese company.
Indian steel companies have been scouting for coal reserves across in Australia, Indonesia and South Africa as the quality of the deposits are better to fuel the increasing demand for steel in India.
JSPL finance director, Sushil Maroo, did confirm that they are also hearing about new entrants who are interested in Rockland. “We haven’t yet decided what will be our next step. We certainly have an option of going in for another open offer,” he said and offered not comment whether JSPL will be willing to sell its stake if a good offer comes it way. “Let us see how it pans out. Holding just under 28 per cent in this asset is in no way small,” he said.
During late July 2011, JSPL failed to acquire majority in Rocklands Richfield, despite a revised offer price and extended deadlines. It managed to buy 12.56 per cent stake, raising its holdings to 27.29 per cent, valuing the target at $88 million.
JSPL had said Rocklands would be a strategic fit to its coal exploration activities in Australia and a potential important feedstock for its international steel making plans. Rocklands has high grade coking coal deposits in the Bowen Basin of Queensland. It also has a 480,000-tonne per annum coking coal plant in eastern China. Rocklands Richfield has two divisions - China Coke and Chemicals and coal exploration activities in Queensland's Bowen basin. The company manufactures and sells grade 2 metallurgical coke and produces coke by-products such as tar, crude, benzene and coal gas.
