Tata Power sets sights on Australian coal

After Indonesia, coal-hungry Tata Power is now looking at Australia for mine assets. India's largest private power firm is in talks with Australian miners, including Rio Tinto Coal Australia, to acquire coal mines in Queensland and New South Wales.

If successful, the acquisition will meet the entire captive coal requirements of Tata Power, which is planning to expand its capacity by five times from the current 2,400 MW.

Sources close to the development said the Tatas were in talks with Rio Tinto and two others for a majority holding in their coal blocks. The other two firms had substantial coal assets in Queensland and New South Wales, the sources added.

Analysts and investment bankers said the Tatas could spend $500-600 million for the Australian coal assets.

When contacted, a Tata Power spokesperson said the company would not comment on market speculation. However, sources close to Bombay House, headquarters of the Tata group, said two executive directors of the company, Gerald Frank Grove-White and Anil Sardana, recently visited Australia to speed up negotiations.

Rio Tinto is one of Australia's leading mining firms. Australia is the world's fourth largest producer of coal and has over 42 billion tonnes of economically recoverable reserves of black coal.

Tata Power recently acquired a 30 per cent stake in two coal mines in Indonesia owned by Bumi Resources for $1.3 billion.

The Indonesian coal will meet half the company's captive requirements.

"As coal power generation is cost efficient, the Tatas may look for more coal assets. Considering that the company intends to bid for other ultra-mega power projects and has a 30 per cent stake in Indocoal--which entitles them to sell coal in the international market--further coal asset acquisitions are expected," said a Mumbai-based analyst.

Along with its acquisition of Bumi Resources mines, Tata Power also bought a 30 per cent stake in Indocoal, a global coal trading company.

Analysts said Tata Power's dependence on oil would decline as all its new capacity uses coal. The company is setting up a 4,000 MW power project at Mundra in Orissa and another 1,500 MW facility in Maharashtra. The new plants are part of Tata Power's $4 billion expansion plan. The company will require 21 million tonnes of imported coal for its planned projects.

Indonesia will provide close to 12 million tonnes.

Source : www.hindustantimes.com