Monnet Ispat & Energy Limited (MIEL), India's second-largest coal-based sponge iron producer and an integrated steel player, has completed the acquisition of an Indonesian coal company for $24 million in Jambi province in Sumatra.
The acquisition, made through its 100-per cent owned subsidiary, Monnet Global Ltd (MGL), gives it access of one of the largest thermal coal mines spread over 25,000 hectares.
At present, just 1,500 hectares have been explored and the company has established 65 million tonnes of coal reserves in the mine. It expects the reserves to go up substantially after completing exploration of the total land area.
MGL is one of the few Indian companies to have got a coal contract of works (CCOW) in Indonesia. This had been awarded by the Indonesian government to PT Sarwa Sembada Karya Bumi, Sumatra, which was acquired by MGL.
“The acquisition is of strategic importance for the group as the logistic of the mine is excellent,'' said Sandeep Jajodia, executive vice-chairman and managing director, Monnet group. “And being located in Sumatra, the shipping cost and low transit time to India will make the coal very cost-effective. It will also provide, low-cost fuel for our planned coast-based power projects.”
The group plans to mine more coal than required for its captive needs, selling it in the open market and ensuring a long-term source of revenue. “The worldwide coal markets are expected to do very well in the coming years and especially India and China would remain strong buyers,” adds Jajodia.
MGL, with offices in Dubai, Jakarta and Johannesburg, handles global acquisitions and mergers for the group. MIEL has manufacturing facilities in Raipur and Raigarh in Chhattisgarh and is currently implementing its ambitious 1.5 MTPA integrated steel plant at Raigarh at a cost of $1 billion.
It also plans to invest $3.2 billion in power capacity of 3,000 MW, of which 1,050 MW with a captive coal mine is coming up in Angul, Orissa. This would emerge as amongst the lowest-cost generating units in the world.
With this acquisition, MGL gets access to good grade coal, having very low sulphur content. Indonesia is toying with the idea of imposing a ban no the export of low-grade thermal coal, which could affect the supply of coal to India. India's coal requirements are huge, especially with 50 per cent of the power sector – with a total installed capacity of 160,000 MW – being coal-fired.
Coal shortage is expected to worsen next year, forcing India to import more than 140 million tonnes. Indonesia is the world's largest thermal coal exporter, and its plans to ban exports of coal under the 5,600-kcal mark will hurt many Indian power producers.
Indian companies have been investing in coal assets in Indonesia in recent years to meet the coal deficit. Tata Power has a 30 per cent stake in two of Indonesia's largest coal mines, while the Adani group, the largest coal importer in the country, is committed to building $1.6 billion mining infrastructure in Indonesia.
About 40 Indian companies are engaged in mining or exploring coal blocks in Indonesia.
The acquisition, made through its 100-per cent owned subsidiary, Monnet Global Ltd (MGL), gives it access of one of the largest thermal coal mines spread over 25,000 hectares.
At present, just 1,500 hectares have been explored and the company has established 65 million tonnes of coal reserves in the mine. It expects the reserves to go up substantially after completing exploration of the total land area.
MGL is one of the few Indian companies to have got a coal contract of works (CCOW) in Indonesia. This had been awarded by the Indonesian government to PT Sarwa Sembada Karya Bumi, Sumatra, which was acquired by MGL.
“The acquisition is of strategic importance for the group as the logistic of the mine is excellent,'' said Sandeep Jajodia, executive vice-chairman and managing director, Monnet group. “And being located in Sumatra, the shipping cost and low transit time to India will make the coal very cost-effective. It will also provide, low-cost fuel for our planned coast-based power projects.”
The group plans to mine more coal than required for its captive needs, selling it in the open market and ensuring a long-term source of revenue. “The worldwide coal markets are expected to do very well in the coming years and especially India and China would remain strong buyers,” adds Jajodia.
MGL, with offices in Dubai, Jakarta and Johannesburg, handles global acquisitions and mergers for the group. MIEL has manufacturing facilities in Raipur and Raigarh in Chhattisgarh and is currently implementing its ambitious 1.5 MTPA integrated steel plant at Raigarh at a cost of $1 billion.
It also plans to invest $3.2 billion in power capacity of 3,000 MW, of which 1,050 MW with a captive coal mine is coming up in Angul, Orissa. This would emerge as amongst the lowest-cost generating units in the world.
With this acquisition, MGL gets access to good grade coal, having very low sulphur content. Indonesia is toying with the idea of imposing a ban no the export of low-grade thermal coal, which could affect the supply of coal to India. India's coal requirements are huge, especially with 50 per cent of the power sector – with a total installed capacity of 160,000 MW – being coal-fired.
Coal shortage is expected to worsen next year, forcing India to import more than 140 million tonnes. Indonesia is the world's largest thermal coal exporter, and its plans to ban exports of coal under the 5,600-kcal mark will hurt many Indian power producers.
Indian companies have been investing in coal assets in Indonesia in recent years to meet the coal deficit. Tata Power has a 30 per cent stake in two of Indonesia's largest coal mines, while the Adani group, the largest coal importer in the country, is committed to building $1.6 billion mining infrastructure in Indonesia.
About 40 Indian companies are engaged in mining or exploring coal blocks in Indonesia.
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