Mining Journal > Production and Markets > ArcelorMittal, Rio Tinto, 8 others vie for Coal India mines

Production and Markets

Coal India Ltd short-listed ArcelorMittal, Rio Tinto and eight other companies to develop its abandoned mines to help ease a shortage of coal used in power plants in Asia’s third-biggest economy.

State-owned Coal India is offering 18 of its abandoned mines for development, Chairman Partha S. Bhattacharyya said, confirming a report in the Business Standard newspaper. The offered mines hold combined reserves of 1,600Mt, Bhattacharyya said.

Finding partners may help the country’s monopoly miner increase production by 29% within three years and allow the nation to avoid costly imports. India aims to add 13,000MW of new power capacity every year, President Pratibha Patil told parliament on June 4. Coal fuels half of India’s power- generation capacity.

“We are amongst the companies considering” the mines, Ian Head, a spokesman for Rio Tinto, said in an e-mail today.

Rio Tinto, JSW Steel Ltd., GVK Power & Infrastructure Ltd and Essar Mineral Resources Ltd were short-listed, according to the Business Standard report.

“Steel producers have captive power plants and if they can get mines that can assure coal supplies, they would be interested,” said Pawan Burde, an analyst at Angel Broking Ltd
in Mumbai. “Secondary steel producers use sponge iron where they need thermal coal and they may be trying to secure coal for future expansion plans.”

Steel demand growth may almost double the pace previously estimated with the government planning to spend US$8.95 billion to build networks of roads, telephones, electricity and irrigation.

Coal India aims to complete the bidding process by the year-end, Bhattacharyya said. The company invited separate bids for the mines, owned by three of its units, he said.

“Our portion of the equity will largely be the mines,” Bhattacharyya said. “The partners can have 50% of the coal provided they have customers in the country.”

Coal India produced 403.7Mt in the year that ended March, according to data on the company’s Web site. The company signed a 20-year agreement on May 29 to supply the fuel to the coal-fired plants of NTPC Ltd, the country’s biggest power producer.

India’s coal shortage will be about 228Mt by the year ending March 2012, J. Goel, chief general manager of sales and marketing at Coal India, said on Feb. 24. Demand may reach
731Mt a year by then, government estimates show.

June 30 (Bloomberg)