Hanson set to buy Costain coal interests

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HANSON, the industrial conglomerate, is expected to acquire the Australian coal mining interests of Costain, the debt-laden construction group, for about pounds 130m in the next few days.

The company, which launched a pounds 780m cash bid for Ranks Hovis McDougall two weeks ago, confirmed that it was in talks to buy the coal interests. The purchase would be made by Peabody, Hanson's big US coal subsidiary.

However, Christopher Collins, a Hanson director, declined to say whether the move was part of the company's expansion into Far Eastern markets.

Total production from Costain's Australian mines - located in New South Wales - amounted to 7.5 million tonnes last year, up 8 per cent on 1990. Its total reserves are put at about 650 million tonnes of mostly low-sulphur ore, making it one of Australia's biggest miners.

The business exports a substantial part of its output to countries on the Pacific Rim as well as supplying electricity utilities in New South Wales under long-term supply contracts.

Costain's expected disposal is in line with its strategy to exit from its mining business. Apart from Australia, it has a significant coal business in the US. The combined mining interests made operating profits of pounds 44m last year.

Proceeds from the sale will be used to reduce the group's net debts of about pounds 290m, compared with assets of pounds 315m at the end of last year.

The company reported a taxable loss of almost pounds 70m last year due to a collapse in the UK building and property sector. The final dividend was passed. It has already sold its UK property portfolio for about pounds 100m.

Costain first revealed it had received approaches for the coal interests last month. It had earlier planned to float about 49 per cent of the division on the Australian stock market.

Hanson said that it was not interested 'at this stage' in acquiring any mining interests of British Coal. 'When British Coal is privatised, Hanson, in accordance with its normal routine, will review any opportunities in the UK,' Mr Collins said.

The company is expected to publish its RHM offer document later this week.

Hanson shares rose 1.25p to 220.25p while Costain were unchanged at 25p.