GVK’s Coal Play Good News for Indian Power
Hyderabad group joins long line of Indian
companies snapping up mines abroad
:: Our Bureau/New Delhi
The GVK Group had to go for it. For, coal
shortage is increasingly impeding Indian power companies from forging ahead
with their ambitious plans. The $1.36-billion deal it sealed with Australian
billionaire Gina Rinehart on Friday to buy majority stakes in three mines she
owns is expected to help the company secure long-term coal supplies for its
domestic projects—at full production, the three mines are expected to deliver
GVK 84 million tonnes of coal annually.
GVK’s deal with Australia’s richest person
follows a wave of Indian buys of foreign coal assets as domestic supplies from
state monopoly Coal India have not kept pace with rising demand, and 17,000
megawatts of domestic capacity is stranded for want of coal. Other local owners
of foreign mines include leading business houses such as the Adani group,
Essar, JSW steel and Anil Ambani’s Reliance Power.
The deal with Rinehart’s Hancock Group,
which will allow the Indian group to fuel its power plants with lowash,
low-sulphur coal, has been brewing for many months, during which the reclusive
billionaire visited Hyderabad to attend GVK Reddy’s granddaughter’s 100-crore
wedding along with a couple of Australian lawmakers.
“We will now be able to increase the capacity of
our coal power business with an assured in house supply of raw material,” GVK
Reddy has said. The Indian group is acquiring 79% in Alpha and Alpha West
projects in Queensland’s Galilee Basin and the entire holding in Kevin’s Corner
Coal Project adjacent to Alpha. It is also acquiring full ownership of the rail
and port project connecting the mines to the Abobot Point port.
“The first phase of production (of the three
projects), expected to start in 2014, envisages a total production of over 30
million tonnes per annum of high quality thermal coal,” GVK said in a
statement.
As announced, GVK will pay $1.26 billion in a
phased manner, starting with an immediate payment of $500 million, followed by
$200million after a year and the balance is expected in 2012 itself. “The
funding for the acquisition is tied up with banks.”
The group will invest about $10 billion in the
mines, railway line and port in the first phase. The majority of the output
from the mines will be delivered in Asia and the company is finalising deals
for 45 million tonnes a year with major utilities in China, Japan, Korea,
Taiwan and Vietnam.
source: ET
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