Reuters – Goldcorp said on Monday that the Quebec government has given the green light to its Eleonore project, allowing Canada’s second largest gold producer to start full construction at the mine in Northern Quebec.

The project, which is located in the James Bay region of Quebec, is expected to boost Goldcorp’s output by 600,000 ounces of gold a year, with cash costs under $400 per ounce.

Eleonore will be one of the largest underground mines in Canada and is expected to cost $1.4 billion to build. First production is slated for late 2014.

The certificate of authorization comes after the Vancouver-based company reached a collaborative agreement with local First Nations communities.

It allows for a second shaft to be sunk at the site and for the construction of related infrastructure, including a processing facility, an access road and a power plant.

Shares of Goldcorp, which owns projects throughout the Americas, were down 1.67% at $53.67 on Monday on the Toronto Stock Exchange, as the spot price for gold slipped slightly to $1,778 an ounce on a stronger U.S. dollar.

National Post – Global gold production may have hit a record last year, but that doesn’t mean the stuff is getting easier to find. Clarus Securities analyst Laurie Curtis wrote that the growing difficulties in finding gold suggest that high-grade deposits will command a stronger premium over time.

Citing data from the Society of Economic Geologists, Mr. Curtis noted that the number of deposits and total ounces found peaked in the 1980s “and have been steadily declining ever since.”

Additionally, the cost of discovery has increased from US$10 per ounce in the 1980s to more than US$47 an ounce in 2009, and there has been a decline in the average gold mining grade from 10 grams per tonne (in 1965-1975) to less than one gram in 2008, according to the data.

“Successful gold discovery is becoming more challenging, and over the long term is not sustainable at current rates of demand,” Mr. Curtis wrote.

“Fundamental trends point to a lowering grade curve [driven by increasing gold prices] as the only way to sustain supply. Higher capital costs and lower grades are going to be intrinsic to future resource development, resulting in a game of risk management.”

In that kind of environment, Mr. Curtis believes that deposits with a potential of more than one million ounces and/or grades higher than three grams per tonne will be more and more valuable. Some of Clarus’s gold mining recommendations include Dalradian Resources Inc., Orvana Minerals Corp., Chalice Gold Mines Ltd., Colossus Minerals Inc., and Continental Gold Ltd.

SAN FRANCISCO (MarketWatch) — Silver futures led a recovery in the precious metals sector Monday and gold topped $1,500 an ounce as investors tested the waters for price stability in a still-cautious market after commodities’ plunge last week.

Silver futures for July delivery SIN11 +5.89% rose $2.25, or 6.4%, to $37.54 an ounce on the Comex division of the New York Mercantile Exchange after tapping a high of $37.98 overnight.

The contract skidded $2.63, or 1%, on Friday to complete its worst week in more than three decades. The metal was still down more than 20% so far in May. Read about Friday’s action in metals.

June gold futures GCM11 +0.93% , meanwhile, rose $18.10, or 1.2%, to $1,509.70 an ounce, extending its $10.20, or 0.7%, increase on Friday. Prices are still more than 3% lower month to date.

For the precious metals, “volatility is likely to remain high in the coming sessions, with traders and investors cautious of another bout of long selling, particularly in silver,” analysts at TheBullionDesk.com said in an early morning note to clients.

“While the corrections are likely to entice fresh demand from physical and investment sources buyers, may hold-off until some price stability emerges with the metals still vulnerable to downside pressure,” they said. Read about investors pulling money from commodity-sector funds.

The precious-metals complex may be seeing some support from political unrest over the weekend in Syria, Egypt and Bahrain, according to Ben Potter, markets strategist at IG Markets in Melbourne.

Several protestors were reportedly killed in Syria over the weekend in clashes with government forces, while the Los Angeles Times reported 12 deaths in Egypt in the wake of violent riots between Muslims and Christians.

Bigger picture

Overall, there is some price risk for the precious metals from a possible rebound in the dollar when the U.S. Federal Reserve’s second round of quantitative easing is diminished, said Richard Hastings, a macro strategist at Global Hunter Securities.

“This should result in a brief rebound in the dollar and perhaps some pressure on some materials prices, but it will very likely be temporary,” he said in emailed comments.

In recent dealings, the U.S. dollar index DXY +0.07% , which measures the greenback against a basket of six currencies, rose to 75.042 from 74.790 late Friday after Standard & Poor’s lowered its credit rating on Greece, reviving worries that peripheral debt woes will force European officials to change the terms of its bailouts. Read about Monday’s currencies action.

“We’re seeing the DXY break through 75, but this is not enough to stop global demand for diversification,” said Hastings.

“There is also the risk that higher demand for dollars due to diminished Fed buying could result in faster cycling of dollars into non-dollar assets … so the longer-term outlook for gold remains favorable with a much longer pathway for silver to make it back above $43 and then back to $47,” he said.

Other analysts remained upbeat on silver’s outlook as well.

“Despite the sell-off the big picture trend is higher,” said Mark Leibovit, chief market strategist at VRTrader.com.”Too many people are being convinced that the recent rally was a bubble. I would bet these same people didn’t buy silver and gold when I did in 2001.

Paul Mladjenovic, author of “Precious Metals Investing for Dummies,” said that “seasoned investors and speculators understand that last week’s 34% correction in silver had nothing to do with any major changes in silver’s overall fundamentals or long-term outlook.” Read about smart money leaving silver.

“They understood that silver was temporarily over-bought and the tipping point was the unprecedented margin increases by the exchange,” he said.

In other metals trading Monday, July platinum futures PLN11 +0.39% climbed $8.60 to $1,795 an ounce and June palladium PAM11 +1.51% added $14.50 to $730.80 an ounce. July copper HGN11 +1.16% rose 6.3 cents to $4.04 a pound.

Myra Saefong is a MarketWatch reporter based in San Francisco.
Varahabhotla Phani Kumar is a reporter in MarketWatch’s Hong Kong bureau.

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Glencore has quickly flexed its new financial muscle by announcing a $3.2bn deal to buy a Kazakhstan mining group on the day it unveiled its public share offering valuing the trading group at about $60bn.

The world’s biggest commodities trader’s determination to participate in the consolidation of the natural resources industry comes as oil, copper and corn prices have surged as a result of the industrialisation of emerging economies.

Ivan Glasenberg, chief executive, told the Financial Times that the cash and shares acquisition of Kazzinc was the “first display” of the new force of the Swiss-based company following four decades of private ownership. “We have now the firepower,” he said, explaining that as a privately owned company Glencore would not have been able to buy Kazzinc.

This week, he said that Glencore could target bigger acquisitions of between $4bn and $5bn, adding that its strategy would be opportunistic and disciplined.

Miriam Hehir, at RBC Capital in London, said that Glencore’s IPO could herald a series of mergers and acquisitions. “We continue to see a combination of Glencore and Xstrata as a very likely outcome in the next 12 months and would expect equity to be the dominant funding currency,” she said.

Glencore already owns a majority stake of 34 per cent in Xstrata, the London-listed miner, and Mr Glasenberg has said he sees value in merging both companies.

In a regulatory filing on Thursday, Glencore revealed plans to sell a 15 per cent to 20 per cent stake in London and Hong Kong in mid-May worth up to $11bn. Including the so-called “greenshoe” – or overallotment option – the flotation is set to raise just above $12bn, valuing the company at between $45bn and $73bn. Glencore expects to price its IPO around May 19, becoming a public company a few days later.

The flotation will realise a massive paper profit for the 485 employees who own shares. Glencore was founded in 1974 by Marc Rich, the oil trader who was subsequently indicted for tax evasion in the US and pardoned by President Bill Clinton on his last day in the White House. Mr Rich sold Glencore to its management for $600m in 1993-94.

The IPO announcement was marred by a delay in naming a company chairman. After a few hours, Glencore disclosed it had chosen Simon Murray, the Hong Kong taipan and former French legionnaire. Tony Hayward, the former BP head who resigned after the Gulf oil spill, will join Glencore’s board as senior independent director.

In addition, it announced that non-executive directors joining the board would be Peter Coates, until last week chairman of Australian miner Minara; Leonhard Fischer, chief executive of merchant bank RHJ International; William Macaulay, chief executive of US private equity house First Reserve; and Li Ning, executive director of Hong Kong-based property developer Henderson Land Development.

Glencore said it expected to become only the third company – and the first in 25 years – to enter the FTSE 100 index on its first day of trading under the so-called “fast entry rule”, which allows a company to join if its full market capitalisation amounts to 1 per cent or more of the full capitalisation of the FTSE All-Share index.

The sale is set to become the largest in London and the third largest in Europe, after the flotation in the late 1990s of Deutsche Telekom and Enel of Italy.

Glencore mandated Citigroup, Credit Suisse and Morgan Stanley as global co-ordinators and joint bookrunners for its offer. Bank of America-Merill Lynch, BNP Paribas were appointed joint bookrunners, Barclays Capital, Société Générale and UBS were appointed co-bookrunners and Liberum Capital was also appointed to the syndicate. The trader said that Linklaters was its legal adviser, while Clifford Chance was advising the bank’s syndicate.

Globe & Mail – It didn’t take investors long to decide that the Japan earthquake was going to shake up the world’s commodity markets. But just how will it impact those markets? That might take a little longer to sort out.

Prices have risen pretty much across the board since the March 11 earthquake, on the assumption that Japan – already a major consumer of mined commodities – was going to need even more of them to rebuild from the quake and subsequent tsunami. Analysts at Deutsche Bank Securities noted that the estimated cost of the damages, at $310-billion (U.S.), is more than half of China’s massive $586-billion infrastructure stimulus program launched in 2008 – which they credited with helping fuel the global commodity recovery.

“We believe the amount of dollars [yen] is meaningful, and could provide support to commodity markets at a time when China is decelerating,” they said.

Japan demand in perspective

Japan accounted for about 7 per cent of the world’s spending on metals and seaborne bulk commodities (such as coal and iron ore) in 2010. That’s a fraction of the appetite of China, whose global share was roughly 42 per cent last year. At least for some metals, the knee-jerk price increases since the quake may have overstated Japan’s role in the market.

But Japan is the world’s dominant importer of coal. It consumes nearly a quarter of the world’s metallurgical coal (used in making steel) and nearly a fifth of its thermal coal (used in power generation).

It’s in thermal coal, the Deutsche Bank analysts said, that the earthquake may prove to have its biggest impact – due to the Fukushima nuclear-plant crisis stemming from the quake.

“Thermal coal appears to be the key beneficiary of the nuclear crisis in Japan, as the future of nuclear energy is put to the test,” they wrote. “[Deutsche Bank] anticipates that demand for coal will increase, even in areas such as Europe which were previously thought to be in structural decline.”

Taking stock of coal

The stock market has already been reflecting this. Coal companies have been the biggest gainers, with U.S. coal stocks up 12 per cent since the quake.

But while the quake may have improved prospects for thermal coal, it has somewhat clouded the market for metallurgical coal.

Japan’s steel production has been considerably curtailed by the quake’s damage and disruption of industrial activity. As a result, prices for met coal could head down in the near term, hurting major met coal producers such as Canada’s Teck Resources Ltd.

But in the longer term, the analysts said, Japan will need to re-build stockpiles of metallurgical coal that were damaged in the quake, and will need lots of steel for the rebuild.

TORONTO (AP) – Inmet Mining Corp. and Lundin Mining Corp. said Wednesday they are combining to form a new copper company, Symterra Corp., with a market value of about 9 billion Canadian dollars ($9.12 billion).

The new company will have five mines in Europe as well as two large copper development projects in Panama and in the Democratic Republic of Congo.

For each share held, Inmet shareholders will get 3.4918 shares of Symterra, and Lundin shareholders will get 0.3333 shares of Symterra. The bid offers no premium, the Toronto-based companies said.

Lundin Chairman Lukas Lundin, who said in October that he planned to retired in the first half of 2011, will become non-executive chairman of the new company. Current Inmet President and CEO Jochen Tilk will hold the same titles at Symterra.

“The long-term fundamentals for copper are compelling,” Lundin chairman Lukas Lundin said in a statement. “Symterra provides one of the best growth profiles for copper amongst major mining companies, combined with attractive exposure to zinc and other metals.”

Tilk said the deal will diversify the companies’ production base and strengthen earnings.

“Symterra will have a series of long-life, low-cost mines in favorable mining jurisdictions,” he said.

The deal requires approval by two-thirds of the shareholders of both companies. Shareholder votes are expected to be held in March. The board of the new company will initially include 10 directors, five each from Lundin and Inmet.

Inmet shareholders are expected to hold 53 percent of the stock in the new company, with Lundin shareholders holding the remaining 47 percent.

The largest shareholders and directors of each company have agreed to support the deal and each company has agreed to pay the other a $120 million break-up fee in certain circumstances, and granted the other a right to match any competing offer.

Leucadia National Corp., the largest shareholder of Inmet, holds a 17.94 per cent stake, while Lukas Lundin and his family trusts hold a 12.32 percent stake in Lundin.

A deal that would have seen Lundin acquired by HudBay Minerals fell apart in 2009. That deal was opposed by HudBay shareholders because it would have significantly diluted the company’s stock.

Inmet has interests in four mines, including the Cayeli mine in Turkey, Las Cruces in Spain, Pyhasalmi in Finland and Ok Tedi in Papua New Guinea as well as the Cobre Panama project in Panama.

Lundin has operations in Portugal, Spain and Sweden, producing copper, nickel, lead and zinc as well as an equity stake in the Tenke Fungurume copper-cobalt project in the Democratic Republic of Congo.

NY Times – BAISHAZHEN, China — The elderly rice farmer was leading three outsiders into an illegal quarry to show them the gangster-run mine that has poisoned his village’s fields and streams.

Liang Caozu, right, and a neighbor near a well they say is unusable due to pollution from an illegal mine in Baishazen, China.
Suddenly, a blue Hyundai sport utility vehicle sped up to them in a cloud of red dust. A Toyota pickup pulled up behind, its windows tinted too dark to see how many people might be inside.

“Shove off!” the Hyundai driver screamed at the old man and his visitors, who included an American reporter. “We’re going to carve all of you up, slaughter all of you and burn your car!”

The stooped farmer, Song Zuokai, 81, grunted and began shuffling out of the quarry with his jittery guests.

Such threats are all too common in this region of southern China, long plagued by gangsters who illegally mine some of the world’s most sought-after industrial metals. The gangs reap profits that can rival drug money, while leaving pollution and violence in their wake.

What is new are efforts by China’s national and provincial governments to crack down on the illegal mines, to which local authorities have long turned a blind eye. The efforts coincide with a decision by Beijing to reduce legal exports as well, including an announcement by China’s commerce ministry on Tuesday that export quotas for all rare earth metals will be 35 percent lower in the early months of next year than in the first half of this year.

Rogue operations in southern China produce an estimated half of the world’s supply of heavy rare earths, which are the most valuable kinds of rare earth metals. Heavy rare earths are increasingly vital to the global manufacture of a range of high-technology products — including iPhones, BlackBerrys, flat-panel televisions, lasers, hybrid cars and wind-power turbines, as well as a lot of military hardware.

China mines 99 percent of the global supply of heavy rare earths, with legal, state-owned mines mainly accounting for the rest of China’s output. That means the Chinese government’s only effective competitors in producing these valuable commodities are the crime rings within the country’s borders.

And so Beijing, intent on maintaining its global chokehold on all rare earths, has begun an energetic campaign to crush the crime syndicates that dominate the open-pit mines in this part of Guangdong Province, home to most of southern China’s mining areas for heavy rare earths.

Whatever dent the crackdown may make in pollution and violence, industry executives say the effort is already putting additional crimps in global supplies of rare earths — whose exports Beijing has jealously controlled and whose prices have soared in response to rising industrial demand and a dearth of supply alternatives to China.

“We do believe that this source of supply is diminishing, and there is some evidence leakage over the border into Vietnam is diminishing,” said Judith Chegwidden, a managing director specializing in rare earths at Roskill Consulting Group in London.

Prices have soared for rare earth elements mined almost exclusively here in the red clay hills of southern China: dysprosium, terbium and europium.

According to a new United States Energy Department report, the most important of these for clean energy is dysprosium. Its price is now $132 a pound, compared with $6.50 a pound in 2003.

Traders say illegal refineries pay outlaw miners for semi-processed rare earth ore with sacks of cash. The rule of thumb is that a cubic foot of fresh, tightly packed 100-renminbi bills is worth about $350,000.

In the last few months, the government has deployed helicopter patrols to spot illegal mines. Teams of dozens of police officers have conducted raids into the hills of northern Guangdong and arrested at least 100 owners and managers of rare earth mines and refineries, said a Chinese mining expert who insisted on anonymity because of the issue’s political risks. Government workers equipped with blowtorches have accompanied the police to cut apart illegal mining equipment and either seize it or distribute it to peasants for sale as scrap.

Chinese officials declined requests for comment.

The gangs have terrorized villagers who dare to complain about the many tons of sulfuric acid and other chemicals being dumped into streambeds during the processing of ore. Illegal rare earth mining and chemical runoff have poisoned thousands of acres of prime farmland, according to the government of Guangdong Province, and have been blamed for many illnesses.

Besides environmental concerns, geopolitics also appears to have played a role in the crackdown. The Chinese government imposed an unannounced embargo on all shipments of raw rare earths to Japan for two months starting in mid-September, during a territorial dispute over disputed islands. Chinese customs inspectors even delayed some shipments to Europe and the United States by demanding that buyers prove they would use the rare earths for manufacturing and not resell them to Japan.

Smuggling of rare earths to Vietnam, where Japanese traders have long been active, somewhat undermined the sanctions’ effectiveness, industry officials said.

For manufacturers dependent on rare earths, any moral or ethical implications of the crackdown on illegal mines may be too diffuse to identify. It is typically impossible to trace rare earths back to the mine where they were originally produced, industry executives say, because even legal mines frequently trade raw material with illegal ones, depending on whether the legitimate operators have met their production quotas.

The picture is further blurred by various middlemen who buy rare earth products from legal and illegal refineries alike and mix them before reselling.

Steve Dowling, a spokesman for Apple, whose iPhone is among many companies’ products using rare earth components, said that his company had a code of conduct for its direct suppliers and audited them and their second-tier suppliers, and sometimes even farther up the supply chain. But he declined to comment on rare earths.

Ditlev Engel, the chief executive of Vestas of Denmark, the world’s largest manufacturer of wind turbines and a growing user of rare earths including dysprosium, said that Vestas was studying the sustainability of many materials that the company buys, including rare earths.

Along with the gangster miners, the northern Guangdong refineries that buy from them are also notorious for violent behavior.

Alan Crawley, the British chief executive of Pacific Ores Metals and Chemicals, a rare-minerals trading company in Hong Kong, recalled a grisly incident at his office a few years ago, during a $5 million business dispute with one refinery.

Someone abducted the general manager of Pacific Ores, Constant Li. The kidnappers brought Mr. Li to Mr. Crawley’s Hong Kong office one night, bound him to a chair with duct tape, gagged and blindfolded him and ripped open his throat with box cutters.

A new secretary, arriving for her first day of work the next morning, discovered Mr. Li’s body. “There was blood everywhere,” Mr. Crawley remembered. The new secretary never came back.

Mr. Crawley said that the Hong Kong police had told him of finding images of two suspects on surveillance cameras, but the suspects fled to a lawless rare earths area here in northern Guangdong. The Hong Kong police would say last week only that their investigation of the murder continued and that no arrests had been made.

Back at the quarry, as Mr. Song slowly led his guests on foot out of the pit, their menacers followed alongside in their vehicles, with the driver of the Hyundai still screaming lurid death threats.

Mr. Song laughed mirthlessly afterward, saying the man in the Hyundai was a boyhood friend of his youngest son and hated outsiders but probably would not hurt a family friend. Mr. Song volunteered that other nearby mines were also polluting streams, but his visitors declined to visit them.

Mr. Song said he was perplexed why people far from China were so eager for the golden flecks of rare earths that dot the clay of his formerly pristine valley.

“I don’t know what it is, but there’s money in it, so people come and dig it,” he said. The miners, he said, “are fierce because they have the money.”

Silver Standard Resources (NASDAQ: SSRI) is one of today’s notable stocks on the rise, up 1.2% to $22.97. The S&P is currently trading fractionally higher to 1,182 and the Dow Jones Industrial Average is trading fractionally lower to 11,127.

Silver Standard Resources is in SmarTrend’s Silver industry and this industry is currently in an Uptrend according to our research. We are monitoring many other stocks on the move within this industry.

SmarTrend is tracking trends for Silver Standard Resources and other fast-moving stocks every day. Visit our site for the latest trend data and alerts on Silver Standard Resources.

Write to Chip Brian at cbrian@tradethetrend.com

(Bloomberg) – BHP Billiton Ltd. and Rio Tinto Group abandoned a plan to create the world’s largest iron-ore exporter after regulators from Europe to Asia were concerned it would limit competition.

The changes demanded by regulators, including asset sales, were unacceptable to both companies, London-based Rio said today in a statement. Melbourne-based BHP confirmed the end of the deal to combine the two companies’ mines, railroads and ports in Australia’s remote Pilbara region in a separate statement.

BHP and Rio, the world’s largest and third-largest mining companies, will miss out on more than $10 billion in savings by dropping the plan. It’s the second time BHP Chief Executive Officer Marius Kloppers, 48, failed to consummate a deal with Rio after scrapping a hostile $66 billion takeover bid in 2008.

“Rio has got more to gain from ending this deal because they have more infrastructure alternatives,” said Tim Schroeders, who helps manage about $1 billion at Pengana Capital Ltd. in Melbourne, including BHP and Rio shares. The infrastructure “flexibility that Rio has was something that BHP wanted to leverage into in terms of fast tracking expansions. Rio now holds the winning hand.”

BHP fell 0.7 percent to A$41.35 at 12:49 p.m. in Sydney trading. Rio dropped 14 cents to A$83.06, paring the gain since the joint venture was announced on June 5, 2009, to 57 percent. BHP has risen 18 percent over the same time.

Antitrust authorities in Germany and Japan last week said they opposed the deal. The European Commission was also likely to raise formal objections, two people familiar with the plan said last week. The companies were informed of the results of the commission’s preliminary investigation on Oct. 15.

‘Substantial’ Remedies

“The full value of the synergies on offer from a 50:50 joint venture was a prize well worth pursuing,” Rio’s Chief Executive Officer Tom Albanese, 53, said today. “The regulators did not agree with us.”

BHP had agreed to pay Rio $5.8 billion to form the venture. Neither company will pay the $276 million break fee, they said. The cost of protecting Rio’s bonds from default climbed 5 basis points to 80 basis points as of 11:57 a.m. in Sydney, according to Nomura Holdings Inc. Swaps on BHP rose 2 basis points to 88 basis points.

The two companies agreed on the deal when Rio, battling high levels of debt, scrapped an investment from Aluminum Corp. of China in favor of raising $21 billion from a share sale and the joint venture. The deals allowed Rio to slash debt without selling bonds and stakes in its largest mines, defusing a backlash from shareholders and politicians.

Underestimated Opposition

“Marius Kloppers has totally underestimated how hard it would be to get these two deals done, the takeover and the joint venture,” Gavin Wendt, analyst at Mine Life Resources, said today.

BHP abandoned its hostile bid for Rio two years citing Rio’s high level of debt and economic uncertainty. A Pilbara joint venture had been studied in 1999 and was a key driver behind BHP’s hostile takeover bid for Rio, Citigroup Inc. said in a May 2009 report.

“The imperative at the time of the deal given Rio’s balance sheet problems is not really an issue at this point in time given the strong commodity price environment,” Pengana’s Schroeders said.

The two companies have already agreed on a so-called Plan B, involving sharing infrastructure and blending ore, Sanford C. Bernstein Ltd. analyst Paul Galloway wrote in an Oct. 15 report. BHP probably has more to gain from such an arrangement, according to the report.

Ore Blending

Under a June agreement with the West Australian state government, BHP and Rio are allowed to blend product and share infrastructure. This may save the companies $5.6 billion in costs, UBS AG said Sept. 21, compared with the joint venture which may have saved $11.5 billion. Most of the savings, or about $3.4 billion would come from blending different types of iron ore, UBS said.

Gains in iron ore prices in the 16 months since the deal was proposed mean Rio may benefit more than BHP from its collapse because it produces more of the steelmaking raw material, Schroeders said.

–With assistance by Jesse Riseborough in London. Editors: Andrew Hobbs, Indranil Ghosh

To contact the reporter on this story: Rebecca Keenan in Melbourne at rkeenan5@bloomberg.net

To contact the editor responsible for this story: Andrew Hobbs at ahobbs4@bloomberg.net

NEW DELHI/MUMBAI: Coal India’s initial public offering (IPO), the nation’s biggest and priced at a discount to global peers, may attract investors and set the stage for it to become a global industry benchmark, akin to Brazil’s Vale in iron ore.

The government said investors can bid for Coal India (CIL) shares in the Rs 225-245 price band that will help it raise as much as Rs 15,200 crore, surpassing the Rs 11,600-crore record set by Reliance Power in 2008. CIL staff and retail investors will get a 5% discount to the final price.

Ten per cent of the company, or 63.16 crore shares are on sale, which if priced at the top end, could make it the seventh most-valuable firm in the country with a market capitalisation of $34 billion, behind state-run utility NTPC .

“Compared to global peers, the pricing of CIL issue is very competitive,’’ CIL chairman Partha S Bhattacharyya told ET NOW. “It will offer high gains to investors after getting listed.” ET NOW, the sister channel of this paper, was the first to break the price band news, and interview the chairman.

Analysts believe that the pricing leaves a lot on the table for investors as in past share sales by state-run companies such as Maruti Suzuki and NTPC.

“Coal India deserves to trade at a premium to global coal peers given much lower volatility of earnings and a large headroom to raise prices in a supply-deficit environment,’’ say Abhijeet Naik and Abhishek Tyagi, analysts at brokerage CLSA. Its one-year forward value is `309-324 apiece, they say, forecasting 32% gains.

At the top end of the band, CIL would be trading at 12 times the forward-year earnings forecast, compared with 14.9 times for Australia’s Gloucester Coal and 13.7 times for China’s Shenhua Energy.

If Coal India raises prices to global parity, it could boost earnings per share by 323% to Rs 84.2, potentially giving a market value of $143 billion, closer to Vale, the world’s biggest iron ore exporter that was privatised by the Brazil government in 1997.

The share sale would be investors’ vote on the Manmohan Singh government’s economic policies. The Centre plans to raise Rs 40,000 crore this year from sale of shares in state-run companies, of which about 5% has been achieved so far. Global investors have poured more than $22 billion in the Indian stock market, making it one of the best performers in the region as economic growth sustains at more than 8%.

Ten per cent of the total offer is reserved for Coal India employees, 25% for retail investors and 15% for high net worth individuals. The issue will be open between October 18 and 21 and will begin trading on November 4.

Coal India, with an output of 431 million tonnes a year, would be the world’s biggest listed coal producer. Its coal reserves are also the largest in the world with 10.6 billion tonnes compared with Peabody’s 9.3 billion tonnes and China’s Shenhua’s 7.4 billion tonnes. The capacity additions in the cement and power sectors provide opportunities for Coal India to expand mining and boost earnings per share. The possibility of shortage of the fuel could also lead to higher prices.