South African firm rejects Tata Power’s coal project bid
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Exploration company Firestone Energy has rejected a bid by Tata Power for a 30% stake in a coal project in South Africa, citing a huge undervaluation of the project, a report has said.
Tata had offered 480 million rand for the stake in the Limpopo venture, which is a partnership between Firestone Energy and South Africa-based Sekoko Resources, the report by South African daily Business Day said. Tata had based its bid on a valuation of 1 billion rand, while the true value of the asset was 1.6 billion rand, Sekoko chairman Tim Tebeila told the daily.
"I was expecting (Tata Power) to come up with a good value, but it's not a major setback because we have a good asset," Tebeila said.
Work on the mine is expected to start in 2012 with a production output of two million tonnes of coal annually, with a gradual increase to 10 million tonnes within five years.
"Following consideration of the offer, the board of Firestone has decided to reject the (Tata Power) offer... materially undervalues the value built up in the project to-date," Firestone Energy said in a release.
The company had received an offer from Tata Power to invest in its joint venture with Sekoko Resources to develop a coal mine in the Waterberg area of South Africa, it said.
Queries sent to Tata Power in this regard did not elicit any reaction immediately.