Lanco Infratech Makes Largest Indian Investment in Australia with Acquisition of Griffin Coal

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Researched by Industrial Info Resources (Sugar Land, Texas)--Infrastructure development company Lanco Infratech Limited (BSE:532778) (Hyderabad) has made the largest investment of any kind in Australia by an Indian company with the acquisition of the Griffin Coal Mining Company Pty Limited (ASX:GRIFFN) (Perth, Australia).

Lanco acquired Griffin for an estimated figure of more than $800 million in the face of strong competition from Chinese interests, and the company intends to invest heavily to upgrade the coal mines acquired and effectively increase the export capacity from the current 4 million tons per year to 15 million tons per year.

Lanco is also reported to be interested in bidding for Griffin's Bluewaters power stations in Western Australia, which have an estimated value of almost $1.2 billion. The bidding for the power stations is expected to be fierce, with Lanco facing competition from Chinese, American and Japanese interests.

Griffin, which is part of the larger Griffin Group and was forced into receivership in January this year with debts of more than $680 million, made a successful application in October to extend it's bankruptcy protection until February next year, as final bids for the company were expected "shortly."

Griffin operates three coal mines in the Collie Basin of Western Australia, approximately 220 kilometers to the south of the state capital Perth: the Muja mine and the Ewington 1 and 2 mines. The company also had plans for a new mine at Muja South.

Lanco's plans, according to a company spokesman, Vibhu Agarwal, include the export of thermal coal from the Collie mines for use in power stations in India. The company is developing about 13,000 megawatts (MW) of power-generating projects in India.

The Griffin operations at Collie have connections to two ports at Kwinana and Bunbury. The exported coal initially will pass through Kwinana, to the south of Perth, but Lanco is expected to plan for a major expansion with the construction of a new export facility at Bunbury, some 85 kilometers from the mine operations.

Earlier this year, the administrators appointed to Griffin, KordaMentha (Melbourne, Australia), signed a deal with Perdaman Industries (Perth) for procuring up to 2.6 million tons of coal annually from the Griffin operations, for Perdaman's urea plant at Collie, which is under construction.

Lanco's chief financial officer, Suresh Kumar, said: "We need to invest into infrastructure. It's a three-to-four year timeline to ramp up operations from the current levels to higher levels, to take care of obligations to Perdaman and other consumers too."

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