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.
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Aiming to become one of the largest stainless steel makers in the world, Jindal Stainless plans to spend Rs 6,000 crore over the next two years to expand its manufacturing capacity which would take the total capacity to 2.5 million tonne by 2012. The company has already spent Rs 2,250 crore for 0.8 million tonnes capacity in phase-I at Jajpur. With new capacity being planned in two phases of 0.8 million tonnes each in Orissa, the total capacity of the company would be 2.5 million tonnes by 2012, making Jindal one of the largest integrated stainless steel manufacturers in the world.
Jindal Stainless Ltd also plans to set up an independent power project and a foray into the logistics sector. The company is setting up a separate firm named Jindal Infrastructure & Utility Ltd, under which both the power and infrastructure divisions will function. It will also provide stainless steel designs for projects such as airport up gradation.
Additionally, Jindal Stainless also plans to invest $100 million in a wholly owned mining and metal subsidiary in Singapore for buying mineral resources. In order to strengthen raw material supplies, it would be looking for chrome, nickel, manganese, coking and thermal coalmines. The Singapore subsidiary would be the holding company for the special purpose vehicles formed for acquiring mining assets.
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Power ministry is planning to establish three more ultra mega power projects (UMPPs), with a capacity to produce 4,000 MW of electricity each, in Orissa, in addition to the nine projects already being planned. There are coal blocks in Orissa, where the projects were to come up on direct bidding. These projects could be stretched further through a special purpose vehicle to be promoted by the Power Finance Corporation.
UMPPs are projects with a capacity of 4,000 mw or more. Three UMPPs have already been awarded on the basis of competitive bidding. The contract for the Mundra UMPP in Gujarat has been awarded to Tata Power while the Sasan contract in Madhya Pradesh and Krishnapatnam contract in Andhra Pradesh have been awarded to Reliance Power. Each UMPP is estimated to cost Rs 15,000 crore. The cost of generation per unit is estimated at under Rs 2.
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