Ruias to buy Indonesian coal mine for $208 mn

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 didn’t 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 can’t 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. source : indiatimes.com