Lanco chief cuts loose cash-strapped Griffin
Lanco Infratech looks set to end its tortuous reign over Griffin Coal after the Indian infrastructure giant's chairman flagged the sale of the Collie miner within a year.
Lagadapati Madhusudhan Rao, whose family controls nearly two-thirds of Lanco, says Griffin is no longer part of his group's "strategic plans".
Mr Rao's comments, to Indian newspaper the Economic Times, put an end to months of speculation over Lanco's ownership of the financially troubled miner.
Bought for about $800 million from the ashes of former coal tycoon Ric Stowe's business empire in 2010, Griffin has lurched from crisis to crisis as it grapples with high costs and low prices.
Twice this year alone, Griffin has been forced to suspend mining operations after its mining contractor, Carna Civil and Mining, withdrew its workforce, claiming it had not been paid by Lanco.
Mr Rao said Lanco's long-term plans to export Griffin coal were no longer viable.
Under Lanco's plans, it wanted to increase Griffin's production capacity from about four million tonnes a year to 15mtpa and upgrade rail and port capacity at Bunbury to export coal to India.
The proposal, which would have cost more than $1 billion and has already gained State environmental approval, would have seen Collie coal used to fuel Lanco's power stations on the subcontinent.
However, Mr Rao alluded to changes in India that had made imported coal less economical as a reason for the decision to seemingly abandon the plan.
He said the changes, along with Lanco's own financial problems at home, had made it too difficult to properly invest in Griffin and the group's focus was now on getting it ready to sell by the end of 2015.
He did not say what price Lanco hoped to get for the miner.
"Griffin does not fit into my strategic plans today," Mr Rao told the Economic Times.
"We couldn't sink in dollars that we need to set right things.
"Our approach now is to ensure that we make this asset ready in terms of showing its value so that there is interest from the strategic partners."
Despite the decision, Mr Rao insisted that Griffin had "very strong intrinsic value", noting it was still only one of two major suppliers to the domestic coal market and had known reserves of one billion tonnes.
Collie Labor MP Mick Murray said Griffin's struggles had more to do with Lanco's management style rather than fundamental problems with the industry. He welcomed the news that Lanco aimed to sell, saying he hoped it would pave the way for a more secure arrangement at the miner, one of Collie's biggest employers.
