India’s Tata Power Invests in Indonesian Coal Mines
India’s Tata Power said it is buying 30%
stakes in two Indonesian coal producers
for $1.1 billion, giving it access to one
of the world’s largest exporting thermal
coal mines, the Associated Press reported.
Tata Power, part of India’s sprawling
Tata Group conglomerate, has signed
agreements to purchase 30% equity
stakes in PT Kaltim Prima Coal (KPC)
and PT Arutmin Indonesia (Arutmin) as
well as in a related trading company
owned by PT Bumi Resources Tbk
(Bumi). Tata Power will pay $1.1 billion
for the purchase before various financial adjustments. As part of the purchase,
Tata Power has signed an offtake agreement
with KPC, which entitles it to purchase
about 10 million mt of coal a year.
This purchase supports Tata Power’s
power projects on India’s west coast
enabling it to generate 7,000 MW over
the next five years. The projects need 21
million mt of imported coal, which Tata
Power plans to secure by buying equity
stakes in coal mines and striking offtake
contract deals. The Indonesian coal
companies rank among the top three
largest exporting thermal coal mines in
the world. Together, KPC and Arutmin
produced around 53.5 million mt of coal
in 2006 with over 95% exported.