Rothschild said the combined entity aims to raise cash from the likes of Chinese sovereign wealth fund China Investment Corp. -- which bought 1.9 billion dollars of Bumi Resources' debt last year.

"This could become a global coal company, as opposed to an Indonesia-focused coal company," Rothschild told Dow Jones Newswires in an interview during a visit to Beijing.

He added: "... it's certainly institutions like CIC that we would look to involve in the future plans, because they are inextricably linked to Bumi through this debt instrument".

Rothschild designed the Bumi-Berau deal through his investment firm Vallar PLC. Vallar listed on the London Stock Exchange in July after raising about 1.1 billion dollars from investors.

It completed a "reverse takeover" deal worth three billion dollars on November 16, giving it 25 percent of Bumi Resources, Indonesia's biggest coal miner by output, and 75 percent of Berau, the fifth biggest.

Indonesia's powerful Bakrie family, which controls Bumi Resources, will own 43 percent of Vallar, and Indra Bakrie will become its chairman. The family also includes billionaire Golkar Party chief Aburizal Bakrie.

Analysts have said the move looks like a good way to take advantage of Indonesia's position as a key raw materials supplier to the booming Asian economies of India and China.

But they have also raised red flags over allegations of corruption and poor governance in Bakrie-related companies.

Rothschild said the Indonesian market was "very, very undervalued" compared to other major emerging countries like Brazil, Russia, India and China.

"And whether the naysayers like it or not, it's a democracy," he added.

Bumi Resources and Berau this year will produce about 78 million metric tons of thermal coal used in power plants in China and India.

"What I like about this industry is that you're effectively selling dirt," Rothschild told Dow Jones.

Shares in Vallar jumped more than nine percent on the London Stock Exchange on Friday, as they resumed trading for the first time since the company announced the deal.

earlier related report
Mercosur reinforces customs union plan
Foz Do Iguacu, Brazil (UPI) Dec 17, 2010 - Leaders of Latin America's Mercosur trading bloc vowed to pursue the goal of establishing a common market and customs union encompassing the member countries despite continuing squabbles over sometimes trivial issues of integration.

Mercosur has been pursuing the idea of replicating EU-style institutions since it was founded in 1991. Its two-tier membership comprises Argentina, Brazil, Paraguay and Uruguay as founding members and Bolivia, Chile, Colombia, Ecuador and Peru as associates. Venezuela is awaiting ratification as a full member.

The leaders gathered at Foz do Iguacu waterfalls resort to push for more concrete measures to make the common market a reality.

Days earlier the summit was threatened with a Paraguayan boycott in retaliation for Argentine obstruction of the land-locked nation's river transport merchandise, which was stranded at Argentine ports following protest action by Argentina's powerful maritime workers union.

In the latest development, outgoing Brazilian President Luiz Inacio Lula da Silva faced the Paraguayan industry's condemnation for failing to deliver on a promise to share electricity generated at the joint Brazilian-Paraguayan Itaipu dam.

Mercosur is in negotiations with the European Union to win agreement on a wide-ranging deal that will put Latin American agricultural produce in direct competition with European farm output, a prospect seen with skepticism by many European farmers' representations.

The cash-strapped EU is pursuing a partnership deal with Mercosur on the promise of winning new markets for European exports, services and investment products.

Mercosur also initiated steps to regulate immigration within the region. Currently, illegal outflows of labor from poor Latin American countries to relatively better performing economies are causing political and sociological problems for host countries.

In riots this month, Bolivian and Paraguayan migrant workers faced harsh treatment from Argentine police, leading to at least three deaths.

The founding four -- Argentina, Brazil, Paraguay and Uruguay -- agreed to draft common investment guarantees, anti-trust laws and a single policy on the automotive industry. Ministers from the participating countries also agreed to eliminate barriers to service industries and tariff exemptions on goods.

Most Mercosur economies are growing at an annual rate of 7.5-9 percent. Internal trade is thriving and interim figures put the current value at $42 billion. But prospective full member Venezuela, a major consumer and importer, isn't doing so well despite its oil wealth. Venezuela's economy contracted this year, unlike most of Mercosur constituents, partly the result of a severe drought, water and electricity shortage last year that curtailed production.

Delegates attending the summit said the region's overall national income growth had helped Mercosur turn back from decline or, at worst, disintegration like other ambitious regional groupings formed earlier.

In a symbolic display of unity, the leaders decided to introduce a new Mercosur automobile license plate. A bus transporting the summit leaders was chosen as the first vehicle to bear the new license plate.

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