State-run Coal India is in advanced stages of negotiations with US-based Peabody Energy Corporation for a stake in four of its Australian mines, as well as other international assets, in a deal worth over $1 billion.

The Sydney Morning Herald reported yesterday, citing Phalguni Guha, chief general manager of Coal India's foreign-venture arm, Coal Videsh, that he expected to close the deal with Peabody in the next few months.

The deal could include mines that produce both thermal coal and metallurgical coal of Peabody in the US, Indonesia as well as Australia.
St. Louis, Missouri-based Peabody Energy had 9.0 billion tonnes of proven and probable coal reserves as of 31 December 2009 and revenues of $5.4 billion in 2009.

Peabody Pacific, the Australian subsidiary of Peabody Energy is one of Australia's largest mining companies having 10 mines in Queensland and New South Wales.

Currently Peabody, the world's largest private-sector coal company is involved in a complex $3.27-billion takeover attempt of Brisbane-based Macarthur Coal, a supplier of low-volatile pulverised injection coal to steel mills in Asia, Europe and Brazil.

But Macarthur has rejected Peabody's sweetened unsolicited bid last week, (See: Macarthur Coal rejects Peabody Energy's sweetened $3.27 billion takeover offer) and even rejected a $3.44-billion offer from fellow local coal miner New Hope Corporation. (See: Macarthur Coal becomes hot property as more buyers enter fray) 

Coal India, the world's largest coal mining company, armed with its board-approved $2 billion war chest for overseas alliances and acquisitions, had said last month that it was urgently seeking strategic alliances in the form of equity or offtake deals with major mining firms in Indonesia, Australia and the US. (See: Coal India looking for coal resources abroad to bridge supply shortfall) 

India is expected to import 35 million tons of coal in the year starting 1 April, which is set to rise to 81 million tons in 2011-12.
Indian companies are increasingly looking for coal resources in Indonesia and Australia to meet their power needs as demand for coal in the country could be 1.4 billion metric tons by 2020, exceeding domestic supply of 1.1 billion tons.

Coal India director A K Sarkar told Reuters last month on the sidelines of the Coaltrans conference in Mumbai that Coal India is looking at 10 proposals in Indonesia, Australia and the US to strike strategic coal alliances including taking equity stakes in mines.(See: Coal India looking for coal resources abroad to bridge supply shortfall)