Top China coal miner to buy Indonesia's No. 2
Updated: 2007-11-26 15:23
China Shenhua Energy shares rose more than five percent on Monday after a newspaper reported China's top coal producer was considering a US$4 billion bid for control of Indonesia's No. 2 producer of the hydrocarbon.
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Shenhua, which raised US$8.9 billion via a September Shanghai listing, is pondering buying a controlling stake in unlisted PT Adaro Indonesia,controlled by the Soeryadjaya family and 36 percent-owned by investors including Goldman Sachs and Citigroup, the South China Morning Post said.
It cited unidentified sources as saying Shenhua had not been content with merely buying a small slice of the firm via Adaro's US$750 million IPO, to be launched in Jakarta in 2008.
Instead, it could either take a controlling stake and scrap the stock sale, or buy out existing shareholders at the time of the IPO, the newspaper said without elaborating.
Shenhua's stock hit a session high of HK$43 before steadying at HK$42.85, up 5.28 percent around midday, near a 5.61 percent rise on the index for Chinese companies listed in Hong Kong.
However,Adaro marketing manager Alastair Grant, who was cited in the report, said earlier on Monday he was not aware of any approach by Shenhua to its shareholders. Shenhua executives declined comment.
"Adaro has a diverse shareholding and there may have been some contacts, but there is nothing we have heard of."
State-owned Shenhua is scouring the globe for resources to power the world's fourth largest economy.
"Indonesia is an ideal location, since it is closer to China," said an analyst with a major European bank, who declined to be named.
Rising freight rates have become a significant portion of cost for coal imports to China, the world's top consumer of coal, where demand for the hydrocarbon has nearly doubled in the past five years.
Adaro has mining operations in four deposits in Indonesia's South Kalimantan province with a total reserve of three billion tonnes of low-sulphur coal, the newspaper said.
Adaro said in August it was on track to churn out 36 million tonnes of coal in 2008.
Shenhua Chairman Chen Biting said in October that "we want to carefully and selectively buy foreign assets, focusing on assets that have potential and fit with the company".
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