India`s Tata Power in $1.1 bln Indonesian coal purchase

New Delhi (Antara News) - India's Tata Power said Saturday it is buying 30 percent stakes in two Indonesian coal producers for 1.1 billion dollars, giving it access to one of the world's largest exporting thermal coal mines.

Tata Power, part of India's sprawling Tata Group conglomerate, has signed agreements to purchase 30 percent 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).

The move "secures our fuel requirements in light of aggressive growth plans charted out by the company," Tata Power managing director Prasad Menon was quoted as saying by the Press Trust of India.

The deal also "opens up opportunities for Tata Power to own and operate a range of world-class, competitive and profitable electricity and energy businesses in India and overseas," Menon said in a company statement.

Tata Power will pay 1.1 billion dollars for the purchase before various financial adjustments. The acquisition would be made through an offshore Special Purpose Vehicle (SPV) to be formed.

As part of the purchase, Tata Power has signed an offtake agreement with KPC, which entitles it to purchase about 10 million tonnes of coal a year.

This purchase supports Tata Power's power projects on India's west coast enabling it to generate 7,000 megawatts over the next five years.

These projects need 21 million tonnes 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 tonnes of coal in 2006 with over 95 percent exported.

Fast-growing regional demand for thermal coal coupled with supply constraints in some exporting nations has pushed up coal prices.
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