Coal India Ltd.'s board has approved the company's plans to consider partnering with Peabody Energy Corp. (BTU) in mining operations overseas and a final decision could be made in three months, its chairman said Wednesday.

"The board has given its approval. We will now begin the process of due diligence," Partha Bhattacharyya told Dow Jones Newswires.

Coal India will appoint merchant bankers to start the process now, he said.

Citing Coal Minister Sri Prakash Jaiswal, DNA Money newspaper reported Wednesday that Coal India regards Peabody Energy and Rio Tinto Plc. (RTP) as the key contenders for its international joint venture plans.

The report said Coal India would hold further discussions on the matter by the end of May, but Bhattacharyya told Dow Jones that the board had only approved a potential alliance with Peabody.

Coal India, which floated a tender in July seeking joint business initiatives in coal mining in Australia, the U.S., South Africa and Indonesia, has received a total of about 17 proposals to buy stakes in coal producing areas or to form joint ventures for greenfield projects.

Bhattacharyya said Coal India will do due diligence on two proposals from Peabody, including setting up a greenfield mining joint venture as well as an equity infusion with an offtake arrangement in overseas mines.

He said there was a third proposal for long term coal offtake without an equity infusion, but the board has decided not to consider it.

 
   -By Rakesh Sharma, Dow Jones Newswires; +91-11-4356-3334; rakesh.sharma@dowjones.com
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