New Hope may attract foreign investment

INDIAN companies and coal giant Xstrata could be among potential bidders interested in snatching up New Hope Corporation, says Mine Life senior resource analyst Gavin Wendt.
New Hope may attract foreign investment New Hope may attract foreign investment New Hope may attract foreign investment New Hope may attract foreign investment New Hope may attract foreign investment


Lauren Barrett

The prediction comes almost a week after NHC announced it was undertaking a formal takeover process after receiving a number of offers from interested buyers.

Wendt said India’s insatiable demand for energy and increased activity in Australia of late put the country at the top of his hit list for NHC suitors.

“There are a lot of Indian companies that are interested in Australian coal investment now that probably weren’t around six or seven years ago,” he told ILN.

Wendt also had his bids on Xstrata as a possible buyer of New Hope but ruled out Peabody Energy because of the company’s involvement with the drawn out Macarthur Coal sale.

“The field is pretty open, it could be Xstrata or it could be an Indian or a Chinese group,” he said.

While Australian coal companies were “hot property”, Wendt said there could be a pattern in the unsuccessful resolution of the Bandanna Energy and Macarthur Coal sale.

“We have seen in the coal industry in the last six to twelve months a lot of corporate interest in Australian listed coal companies but it hasn’t always meant an attractive transaction has been forthcoming,” Wendt said.

In addition to being an established coal producer, Wendt said New Hope was an attractive asset because it had port capacity via its Queensland bulk handling business.

“The key thing with New Hope is they do have significant port allocation and at the end of the day if you want to produce a large amount of coal then the key is export capacity,” he said.

The company is also targeting 6 million tonnes per annum of coal production for 2012 but is aiming to double production in the coming years due to its boosted exploration portfolio.

Wendt couldn’t speculate on a possible sale price but doubted the figure would reach past $3 billion.

“At the end of the day it’s still a tough market out there and it’s not the sort of market to be overpaying for assets,” he said.

“I couldn’t imagine a group like Xstrata overpaying.”

With overseas companies rapidly swooping up coal assets in Australia, Wendt admits the future is bleak for Australian coal producers.

“We are running out of existing producers,” he said.

“The next corporate interest will focus on the companies that aren’t yet in production but … will be in the next two to five years, such as Stanmore, Carabella and Endocoal.”

“Anything is up for grabs at the moment.”

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