Anglo American's thermal coal unit is keen to expand its operations in South Africa and beyond, but is waiting for price of acquisitions to come down first, the unit's head said late on Wednesday.

If you look at some of the multiples of the recent deals that have been announced, they are frightening. They are very fully valued at the moment, Norman Mbazima, the head of Anglo Thermal Coal, told Reuters on the sidelines of an African mining event.

The cycle of high prices will shortly come to an end and then we will see more activity and we hope to participate in that, he said, adding the company was looking at potential targets in South America, southern Africa, Indonesia and Australia.

Mbazima said Anglo had only marginal interest in the coal prospecting rights offered for tender by BHP Billiton. BHP said earlier this month it would divest some of its virgin coal prospecting rights in South Africa to focus on existing operations.

Anglo's coal expansion in South Africa has also been limited by the lack of adequate infrastructure leading to the coal export terminal at Richards Bay.

South Africa's logistics group Transnet has been investing heavily in upgrading its rail lines leading to the port, but the amounts it manages to ship are still far from the expanded capacity of 91 million tonnes at Richards Bay.

Transnet transported 63 million tonnes of coal to the terminal last year and said last week it could raise that to 70 million tonnes this year, which Mbazima said was feasible.

He said Transnet's recent filling of long-vacant senior positions would help further discussions on expansion of its rail line, although no major move was expected this year.

If necessary, Anglo could work on a model similar to the one it adopted in Colombia, where the company has invested in its mine, rail and port infrastructure.

We manage it all ourselves and if something goes wrong, we have only ourselves to blame. It is something that works very well for us, he said.

Mbazima expects coal prices to stay near current levels of around $115 a tonne, on the back of supply constraints given bad weather in some coal-producing nations and rising demand.

A poll of 22 analaysts showed that coal prices still had potential to rise in 2011, despite recent sharp gains and volatility.

He said Anglo was keen to discuss with power utility Eskom any possible changes in contracts that would assure better returns for the company and would incentivise Anglo and other coal producers to build new mines.

Eskom wants to re-negotiate its deals with suppliers hoping for pricing based on efficient cost and fair returns to ensure it has enough coal to power South Africa over the next 30 years.

If the mining industry gets enough incentive, they will dig new mines and there will be more than enough coal for Eskom, Mbazima said.

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