Vedanta seeks coal mines overseas, to participate in India auction

 

 

"We are looking at coal assets subject to government policy. India has ample coal reserves. We will look at the coal blocks that are put up for auction first," said S K Roongta, managing director of Vedanta Aluminium, an associate company of the globally diversified metals and mining group, Vedanta Resources.

 

 

Adding that coal could be mined in India "as low as $10 per tonne through surface mining, and $35 per tonne through underground mining", Roongta said: "These are still the cheapest rates. If we import coal, companies have to pay for the ocean freight, port handling charges and inland transportation. This model is not sustainable in the long run for most companies".

 

 

The Indian government has been looking at policy options such as auctioning captive coal blocks and Vedanta said it was ready to bid for those once the policy was in place. Earlier, the Indian government had allotted over 210 blocks to firms (private and state owned), out of which a mere 24 blocks have begun coal production. The Coal Ministry stopped allocating coal mines and fresh allocation is only set to begin when the competitive bidding process is in place.

 

 

Officials said coal blocks with over 18,600 million tonnes of reserves are expected to go up for auction soon. The blocks lie in the coal belts of seven states - Chhattisgarh, Jharkhand, Maharashtra, West Bengal, Orissa, Madhya Pradesh and Andhra Pradesh.

 

 

Of the big blocks, Vedanta could be particularly interested in Deocha-Pachami in West Bengal that has reserves of 2,000 million tonne, or Tentuloi in Orissa that has 1,200 million tonne.

 

 

Vendanta is currently implementing plans to scale up the group's total aluminium production capacity. Vedanta Aluminium hopes to complete its ambitious $11,667 million (Rs 60,000 crore) smelting capacity expansion project by the next fiscal. The smelting capacity is to be raised to 2.5 million tonnes per annum, from around 1.6 million tonnes at present.

 

 

"We have already invested 75% of the total investment. We hope to complete all the pending works soon and enhance smelting capacity by next fiscal (2012-13)," Roongta said.

 

 

All the three major Indian aluminium producers - Hindalco, Nalco and the London listed Vedanta, have been banking on the government's nod to allocate coal blocks, which could make aluminium production profitable.

 

 

All the three firms have lined up ambitious expansion plans, expecting India, together with China, to lead in aluminium production in the next decade. The aluminium growth rate in India is expected to be 11% till 2016, higher than that of China pegged at 10%.