Aug. 30 (Bloomberg) -- NTPC Ltd., Asia’s second-largest power producer by market value, may buy stakes in two coal mines in Indonesia as it seeks access to the fuel to help end blackouts in India.
The utility is studying two mines in Sumatra and East Kalimantan, which may together have as much as 1.8 billion metric tons of coal resources, Chairman and Managing Director R.S. Sharma told reporters in New Delhi today. The purchase may be completed by March 2011, he said, declining to name the mines.
Indian energy companies are seeking assets across the world to meet demand for electricity and petroleum products from factories and households in the second-most populous country. State-owned Coal India Ltd., the world’s largest producer, and Tata Power Co. are among companies looking to buy mines overseas.
“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 Ltd. “That is sending all power companies overseas looking for mines.”
NTPC would seek a majority stake in the mines, Sharma said, 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 has been delayed because the coal has high moisture content and NTPC is studying ways to improve the fuel’s quality, including mixing it with dry coal to enhance the potential to generate heat, Sharma said.
‘Destination Coal’
“It is destination coal for us now,” Sharma said today. “We are working all out for that.” 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.
Reliance Power Ltd., controlled by billionaire Anil Ambani, may invest $5 billion to build a railway and develop coal mines in South Sumatra, Yopie Hidayat, a spokesman for Indonesia’s Vice President Boediono, said in Jakarta Aug. 24. Essar Group bought the Aries coal mines in Kutai region of East Kalimantan in Indonesia which hold as much as 100 million tons of power-station coal, the company said in a statement March 25.
Power-station coal prices at Australia’s Newcastle port, a benchmark for Asia, climbed 3.7 percent to $91.02 a ton in the week ended Aug. 27. That’s a 7 percent increase from $84.75 in the week ended Jan. 1.
Capital Expenditure
NTPC plans capital expenditure of as much as 290 billion rupees ($6.2 billion) in the year ending March 2011, including acquisitions, he said, without elaborating.
The New Delhi-based utility will 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 can supply as much as 10 million tons of coal a year, Sharma had said July 14.
Coal demand in India, Asia’s third-largest energy consumer, may double from 2008 to 2015 to exceed 1 billion tons, energy consultant Wood Mackenzie said on July 1. India’s annual coal output of 535 million tons will fall short of demand from power generators by as much as 80 million tons by next year, Alok Perti, additional secretary in the coal ministry, said July 7. Coal is used to fire more than half of
India’s current installed generation capacity, according to the Central Electricity Authority.
NTPC may burn as much as 165 million tons of the fuel in the year starting April 2011 compared with 155 million tons this fiscal year, Sharma said today. As much as 15 million tons of coal may be imported next year, he said.
The company has offered “less than 50 percent stake” in a power plant in India’s southern state of Kerala to Qatar Petroleum, the Gulf country’s state-owned energy company, in exchange for gas, Sharma said.
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