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Mumbai - An Indian state consortium has a month to mount a possible rival bid to Rio Tinto's $3.9bn offer for Africa-focused coal miner Riversdale, the chairperson of one of the group members said on Friday.
All the companies in India's International Coal Ventures (ICVL) are financially strong enough to fund a possible bid, Partha Bhattacharyya, chairperson of the world's largest coal miner Coal India, told Reuters.
On Thursday the consortium appointed Citigroup to conduct due diligence on Riversdale, with a report to be submitted in two weeks.
"Citi's mandate is to tell us whether we should consider a bid higher than $3.9bn," Bhattacharyya said.
"The report may not be based on a technical evaluation," he said.
Bhattacharyya also said the consortium was not in formal talks with India's Tata Steel, which owns 24% of Riversdale and is its largest shareholder.
ICVL consists of utility NTPC, Steel Authority of India, iron ore miner NMDC, Coal India and steelmaker Rashtriya Ispat Nigam.
A source familiar with the matter said on Friday: "Everyone is talking to everyone," when asked whether ICVL and Tata Steel were in talks to form an alliance.
The person said the talks included the possibility of a joint bid for Riversdale, or support from Tata Steel for ICVL's bid for the miner.
Tata Steel's director on Riversdale's board abstained from voting on the Rio bid.
Analysts in India have said Tata Steel, the world's seventh-largest steelmaker, should hold on to its stake in Riversdale to assure coal supplies for its Corus unit, which does not have any captive raw material supplies.
Riversdale, with coking coal reserves in Mozambique, is an attractive asset for companies seeking to secure the commodity amid soaring Asian demand for the key steel-making ingredient.
Indian steel, power and coal companies are scouting for overseas coal mines to satisfy demand from the fast-growing Indian economy.
