UPDATE: Peabody won't sell Aussie mines to Coal India

NEWLY-listed Coal India is reportedly ready to acquire an Australian mine from Peabody Energy but this has been denied by a Peabody spokesperson.
UPDATE: Peabody won't sell Aussie mines to Coal India UPDATE: Peabody won't sell Aussie mines to Coal India UPDATE: Peabody won't sell Aussie mines to Coal India UPDATE: Peabody won't sell Aussie mines to Coal India UPDATE: Peabody won't sell Aussie mines to Coal India

Peabody Energy's Wambo North Underground in New South Wales.

Lou Caruana

"Peabody reinforces that it has no mines for sale in Australia," a Peabody spokesperson told ILN.

"Peabody continues to focus on its organic growth of all its operations and will also seek acquisition opportunities."

The spokesperson did not provide any further information about discussions with Coal India.

Coal India chairman Partha Bhattacharyya said in an interview with Bloomberg that the company was also studying a mine in the US owned by Massey Energy and another in Indonesia.

“Of the three, we are narrowing the gap of valuations with Peabody,” he reportedly said.

“We would like to invest because there are companies which want money for their mines or a market for their coal.

“We are looking at three different mines from three different companies in three different countries. We have the money and there is a big market here.”

Funds raised from Coal India's $US3.4 billion ($A3.48 billion) initial public offering could also be used to buy a stake of the coal assets in Queensland’s Galilee Basin acquired by Indian importer Adani Enterprises, as the company seeks to overcome India’s 60 million tonnes per annum thermal coal shortage.

Peabody Energy has three thermal coal operations in Australia: Wambo and Wilpinjong in New South Wales and Wilkie Creek in Queensland.

Wilpinjong mine is located 10km southeast of Ulan mine and 40km northeast of Mudgee. Mining began in late 2006 and procurement is underway for a $A90 million expansion, which is expected to increase production by 2-3Mtpa by 2012-13.

The open cut mine is operated under contract by Thiess using a truck and shovel fleet. It has an average strip ratio of less than 2.5:1bcm per ROM tonne.

Wilkie Creek mine in the Surat Basin produces 2.35Mtpa of low-sulfur, low-nitrogen, environmentally superior thermal coal. The open cut operation utilises excavators, loaders, dozers and trucks.

Product coal is railed 250km to the Port of Brisbane to be exported to Japan, Taiwan and Korea for use in the power generation industry.

Coal India has extractable coal reserves of more than 22 billion tonnes and holds 80% of India’s coal supply from 471 mines. It is larger than China giant Shenhua Energy and US-based Peabody Energy, the world's largest privately owned miner.

The rise in Indian coal demand at 10% a year is outpacing growth in domestic production, with Coal India’s output rising at only 7% because of delays over environmental issues at 17 of its projects.

Coal provides for more than 50% of India's total energy use and consumption is expected to grow exponentially as the country develops its steel and cement manufacturing industries.

Analysts are expecting Coal India to raise prices for its coal, which are at a 63% discount to global prices, a move that would make imported Australian coal more attractive.