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Another Coal Billion Dollar Acquisition as India’s Adani Group acquires Australian Coal Port Abbot Point

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Coal M&A is picking up at a feverish pace as the demand and price of coal shoot through the roof.Note Coal is the cheapest fossil fuel and powers most of the world’s power plants despite its disadvantages.The abundance and cheapness of coal has managed to hide its deleterious effects.Indian and Chinese companies are gobbling up coal mines and companies globally as they rush to secure raw material for the growing thermal power plant capacity.Adani Power is part of Adani Group with capacity of 1980MW.The company currently operates India’s only supercritical power plant  in Gujarat. The company is currently implementing 16500 MW at different stages of construction..The company is currently implementing thermal projects of 3300MW at Maharashtra and 1320MW  at Rajasthan.The Adani Group is one of the leading Indian private power companies setting up gigawatts of new thermal power plant capacity.Mundhra Port the Adani Flagship has been buying up coal plants,ports and building power plants to vertically integrate itself in the whole coal supply chain.It recently bought the Australian Linnc Energy’s Gaililee coal project for USD 2.7 billion.It has followed it up by buying  Abbot Point Coal Terminal from the Queensland state of Australia for 1.8 billion Australian dollars.

Arch Coal bought International Coal for $3.4 billion in one of the biggest M&A’s in America as bigger companies consolidate and smaller companies sell out at nosebleed valuations.However with coal prices expected to continue their rise upwards,the valuation may not prove to be too high for the buying companies.With this acquisition Mundra Port and Special Economic Zone will own 100 million tons of coal handling facilities both in Australia and India.Investing in Coal remains a hugely profitable proposition despite the major drawbacks of burning coal.KOL  is the only major Coal ETF listed in the US markets which provides a diversified way of investing in coal companies in US,China and other countries.Investing directly in companies in India,US,China,Indonesia is also possible though tough for small investors.


Abhishek Shah

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