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Nat Rothschild Outwits and Outsmarts the major Thermal Coal Players--there's a new sherrif in town.

Nat Rothschild, continuing in a long line of family investors in mining going back to the late 18th century in London and Paris, formed his company VALLAR nearly a year ago to effect a deal regarding thermal coal for Chinese industrial uses.

As of November 19, 2010, the terms of a deal which has been agreed to by various parties has been signed.

VALLAR, a cash shell looking for the right investment and with its $3 Bn will buy into and exchange stock for controlling stock in two major thermal coal companies in Indonesia, owned jointly by PT Bumi Resources and PT Berau Coal.

Why this deal? Stripped down it comes to this: China needs thermal coal in the worst way to build the 10 to 20 new cities that it has planned and thus needs thermal coal to electrify these cities and make steel for buildings and infrastructure. All said and done, the capex calculations both on depreciation and amortization and capex to sales and the cost of mining and delivering the coal is significantly less costly than say coal from Australia, South Africa and Canada.

Also, India has just begun a similar plan to build in effect each year for the next twenty years what would be equivalent to one-third of the UK's electricity demands per year and thus needs mountains of thermal coal. Indonesian coal is easily accessible. Just look at your world atlas and you'll see.

How to get involved in this deal? You might pony up $150 million. If that doesn't work, VALLAR and the new entity will be listed on the LSE FTSE 100 as an Indonesian company, a first time for Indonesia and a real coup for the LSE.

ACEMAN a Paris

Disclosure: no positions