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Ruias to buy Indonesian coal mine for $208 mn

26 Mar 2010, 0216 hrs IST, ET Bureau

MUMBAI: The Essar Group on Thursday said it has agreed to acquire a 64-million tonne (mt) coal mine from an unnamed private company in Indonesia as
part of its efforts to secure raw material supplies for its proposed thermal power projects in India.

The Ruias-controlled Essar Group didnt want to name the closely-held Indonesian company citing confidentiality clauses and did not provide any financial detail. A group official said the transaction could be around $208 million (about Rs 956 crore as per current rates), basing his estimate on the recent acquisition of US-based Trinity Coal.

We bought Trinity, which has reserves of 200 mt of thermal and coking coal, for $650 million, said the official asking not to be named. However, a strict comparison cant be made, because the acquisition price is a quality factor of the coal and the ash content in the commodity; the higher the ash content, the lower the quality and hence, lower price. The Aries coal mines are located in the Kutai region of East Kalimantan in Indonesia and are high-quality bituminous coal, with low ash and low moisture. Such categories of coal are suitable for power plants.

The acquisition would benefit Essar Power, an unlisted unit of the group, with access to an estimated resource base of 100 mt of thermal coal and mineable reserves of 64 mt, said the Essar statement. The transaction is expected to be closed by April 10, the statement added.

Essar Power is currently building six power projects in India, raising its power generation capacity from 1,220 mw to 6,100 mw by 12. We are a vertically integrated power producer, with ownership and access to the raw materials needed to run the business, said Essar Power director Anshuman Ruia. The Indonesian mines are an excellent addition to our growing portfolio of coal assets. This acquisition adds another 100 mt to our existing thermal coal resource base of about 275 mt in India.




Posted by glen 14/3/10
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http://www.businessweek.com/news/2010-03-10/india-is-seeking-coal-deals-in-australia-anz-says-update1-.html

Coal India Ltd., the nation?s monopoly producer, is looking at 10 proposals in Indonesia, Australia and the U.S. for strategic coal alliances, which could include taking equity stakes in mines, A.K. Sarkar, director of marketing, said today in an interview.

?Nothing will deter us from acquiring any strategic asset of any kind in order to continue to be the biggest supplier of coal,? Sarkar said. ?We?ve been a producer of coal but now we?ll have to become an importer. We see this as an opportunity to increase our profits.?