R-Power to acquire 100% in Indonesia coal mine

Reliance Power, has struck a deal to buy out a coalmine in Indonesia located in South Sumatra. The valuation of the coalmine, based on its reserves, is estimated to be around Rs 20,000 crore. The company is expected to announce its acquisition in a day or two.

This coalmine has resources of 2 billion tonnes and is spread over 100,000 acres. It will be the prime source of fuel for Reliance’s power project in Krishnapatnam in Andhra Pradesh. It is estimated that the Krishnapatnam ultra mega power project would require about 14 to 15 million tonnes of coal every year. Reliance Power is understood to have acquired the coalmine for about Rs 1,000 crore. It has acquired 100% interest in this coalmine. However, Reliance officials declined to comment on the development at present stage. This coalmine could be compared to one of the largest coalmines in India. The Gevera coalmine in Chhattisgarh has reserves of 1.2 billion tonnes and is producing around 35 million tonnes annually. Given that the acquired mine has resources of 2 billion tonnes, it is expected that the production from this mine should be more than the largest mine in India.

Although, the coal from this mine would be brought in for the Krishnapatnam project, it would also fuel other coal based power projects of the company. The acquisition is significant as it India is competing with energy hungry countries like China to acquire stakes in oil and coal blocks and secure energy security. Indonesia presents an attractive market for Indian companies due to its proximity to country's shores. Besides, Indonesian better in quality than Indian coal having less of ash content and higher calorific value.