Indonesian Coal Mines in Sumatra, Kalimantan Draw Interest From India’s NTPC
Bloomberg & Reuters
India’s top power utility NTPC is looking into purchasing stakes in two coal mines in Indonesia as it seeks access to the fuel to help end blackouts in India.
NTPC was studying two mines in Sumatra and East Kalimantan, which might together have as much as 1.8 billion metric tons of coal resources, its chairman R.S. Sharma said on Monday.
The purchase could be completed by March 2011, he said, declining to name the mines.
NTPC would seek a majority stake in the mines, Sharma said, also declining to name the current owner. The mine in East Kalimantan may have coal resources of about 1 billion tons and the one in Sumatra about 800 million tons.
The purchase had been delayed because the coal had a high moisture content and NTPC was studying ways to improve the fuel’s quality, including mixing it with dry coal to enhance the potential to generate heat, he added.
NTPC is among a number of Indian energy companies that are seeking assets across the world, specifically in Indonesia, to meet demand for electricity and petroleum products from factories and households in the world’s second-most populous country.
State-owned Coal India, the world’s largest producer, and Tata Power are among companies already looking to buy mines overseas.
Reliance Power, controlled by billionaire Anil Ambani, is considering investing $5 billion to build a railway and develop coal mines in South Sumatra, Yopie Hidayat, a spokesman for Indonesian Vice President Boediono, said in Jakarta last week.
Essar Group also bought the Aries coal mines in the Kutai region of East Kalimantan, which hold as much as 100 million tons of power-station coal, the company said in a statement on March 25.
“Domestic coal supply may not be able to keep pace with NTPC’s plans to add generation capacity,” said Rupesh Sankhe, a Mumbai-based analyst with Angel Broking. “That is sending all power companies overseas looking for mines.”
Coal demand in India, Asia’s third-largest energy consumer, might double from 2008 to 2015 to exceed 1 billion tons, energy consultant Wood Mackenzie said on July 1.
India could face a shortfall of 189 million tons a year by 2015, leading to a two-fold increase in imports, global consultancy KPMG said late last month.
India’s annual coal output of 535 million tons would fall short of demand from power generators by as much as 80 million tons by next year, Alok Perti, additional secretary for India’s coal ministry, said on July 7.
Coal is used to fire more than half of India’s current installed generation capacity, according to the Central Electricity Authority.
NTPC aims to lock-in fuel supplies to feed its rising generation capacity, currently at 32.2 gigawatts, but expects that to rise to 75 GW by 2017.
NTPC expected to import up to 15 million tons of coal in the next financial year as its annual requirement of the fuel could rise an estimated 6.5 percent to 165 million tons, Sharma said.
It is expected to import 12 million tons in the current fiscal year.
Currently, state-trading firms import coal for NTPC. “This is a stop-gap arrangement for one to two years,” Sharma said, adding that he hoped his firm could directly buy 40 percent to 60 percent of its coal imports in 2011/12.
“It is destination coal for us now,” he added. “We are working all out for that.”
NTPC planned capital expenditure of as much as 290 billion rupees ($6.19 billion) in the year ending March 2011, including for acquisitions, he said, without elaborating further.
The New Delhi-based utility would use part of its $3 billion in cash reserves and also raise debt to fund the purchase of mines in Australia, Indonesia and Mozambique that could supply as much as 10 million tons of coal a year, Sharma had said on July 14.
NTPC’s shares have declined 17 percent this year compared with a 4 percent rise in the benchmark Sensitive Index of the Bombay Stock Exchange.
They fell 0.5 percent to 195.55 rupees at 12:46 p.m. in Mumbai trading.