Coal India, Alpha Resources, ArcelorMittal in race for Massey Energy

21 Dec 2010

Coal India Ltd (CIL), the world's largest coal producer, Alpha Natural Resources, the fourth-largest coal producer in the US and ArcelorMittal, the world's largest steel producer, are in the race to buy assets in part or whole of Massey Energy, the sixth-largest coal producer in the US.

While Alpha, also the largest metallurgical coal producer in the US, has already submitted its bid last month for Massey, CIL this week put in a $1-billion bid for Richmond, Virginia-based Massey's Sydney complex located in Central Appalachia, which has eight coal mines.

Luxembourg-based ArcelorMittal, which started initial stage discussions on a possible takeover deal, a few months ago, is currently planning to bid for Massey. (See: ArcelorMittal eye US coal miner Massey Energy)

With two bids already on the table, the board of Massey has not decided to start a formal auction process since it is yet to reach a consensus on whether to sell itself or remain independent.

Armed with about Rs39,000 crore in cash and Rs6,000 crore for overseas acquisitions, CIL, has been in talks with US-based coal miners Peabody Energy, Massey Energy and Drummond Co, as also Sinar Mas of Indonesia to buy their coalmines in order to meet the country's demand for both thermal and metallurgical coal. (See: Coal India in talks with Peabody, Massey for coal mines)

It has been conducting negotiations and due diligence since the past two months with Peabody for 15 per cent stake for its Wilkie Creek mine in Australia and Massey's assets, while, earlier this year, it submitted a $5 billion bid for the Colombian mines of Drummond and a $1 billion bid this week for Sydney complex mines of Massey.