Monnet Ispat & Energy, flagship company of the Monnet Group, has bought a 65-million tonne coal mine in Indonesia for $24 million (Rs 290 crore). And, it is in talks to buy another coal mine, besides looking to set up power plants, in that country.
Sandeep Jajodia, vice chairman and managing director, told Business Standard on the proposed second acquisition, "We are (also) in talks with a private company for a coal mine. It's not a very huge reserve, probably under 100 million tonnes, but is a higher grade coal, at 6000k/cal."
He said this was an explored one. The company is currently negotiating with the company that owns the mine.
He said, "There are four shareholders in the mine and three are ready to sell it to us. One only is yet to be convinced and the talks are on."
He further said the company has had talks with the Indonesian government to set up two power units of 200 Mw each in the country.
"I think it is better to put up a power plant in Indonesia, as the margins in the country will be higher than in India," said Jajodia.
With the 65-mt coal mine buy in Sumatra, it has stepped into the lucrative coal trading business.
Jajodia said, "Around 70 per cent of the coal that we will mine from this 65-mt Indonesian mine will be sold in the spot market in India. The rest will be sold in countries like China, Cambodia, Vietnam, etc."
The company will be spending the next four months in exploration of the 25,000 hectares of the mine.
Currently, only 1,500 hectares has been explored and 65-mt of reserves established. Monnet expects shipments to begin in 12 months.
It is planning at 1,320-Mw coast-based power plant in India and will be using coal from this Indonesian mine once the plant is up and running.
Jajodia said, "We have a three-year window period for spot trade in coal till this power plant comes up. The plant will need 3.4 mt (annually) of coal and is expected to be commissioned by 2014-15."
He said the company had already looked at land in Tamil Nadu, Andhra Pradesh and Gujarat for the plant and would be deciding in the next three to four months.
As for the second Indonesian mine Monnet is eyeing, Jajodia said they were looking at the Korean and Japanese markets for sale.
He said, "The environmental laws in those countries are stricter and that is why they need higher grade coal. This mine has coal of 6000 k/cal and is suitable to sell to Korean and Japanese plants."
