Vedanta, the $11.4 billion non-ferrous metals conglomerate, is now venturing into coal and is looking at acquisitions of mines in Colombia and Australia.
“We are looking for mines which are already producing between two to three million tones per annum of coal and which we can buy and ramp up output to between 20-25 million tonnes per annum. We have looked at deals in Colombia and Australia though none has fructified so far,” a top Sterlite Industries official told Financial Chronicle.
Earlier on Saturday, chairman of Vedanta group Anil Agarwal said in a news conference, “We need coal in our portfolio. When the Indian government auctions coal blocks we will participate in the bids. Balco, in which we own 51 per cent has a coal block which will be developed this year as a high quality resource. We are also looking at Latin America for coal assets.”
Vedanta diversified into iron ore in 2007 by acquiring Sesa Goa from Japan’s Mitsui and into the oil and gas sector by acquiring Cairn India last year.
Bhavesh Chauhan, an analyst with Angel Broking said, “Most of the metal companies like Tata Steel, JSW Steel, Nalco, among others, are all scouting for coal mines to integrate their raw material supply and bring down costs. The metal companies are scouting for coal mines as there is huge demand for it. Also coal prices are on the higher side.”
Chauhan added that Australian mines have higher calorific value coal that is considered superior in quality. Calorific value refers to the amount of heat energy that is released by burning coal.
“Indonesia is almost over as all the mines worth buying have been taken up, so we are not looking there. We are interested in Colombia as the gross calorific value of the coal there is very high, making it a high quality output,” said the top Sterlite official. Indonesian coal tends to have a high moisture content which leads to it commanding a slightly power price. Coal in India too is generally considered to be low quality due to a high percentage of impurities.
While Tatas bought stakes in one of Indonesia’s largest coal exporters, Anil Ambani has bought some mines in Indonesia’s East Kalimantan province. Tatas had also bought stake in a mine in Mozambique while Adani, India’s largest coal trader cum importer, has bought mines in Australia.
Ownership of coal blocks by Vedanta could provide energy security to Sterlite Energy as it supplies power to group companies and sells part in the open market on a merchant power basis.
Sterlite Energy has a 2400 mw independent power plant at Jharsuguda district in Orissa that sells power to Gridco, Vedanta Aluminium and also on merchant power basis. Sterlite Energy is also developing a 1980 mw thermal power plant in Punjab, which will sell its output to Punjab State Electricity Board. According to a company presentation, Sterlite Energy is in the process of expanding its capacity to 8,600 mw.
Navin Agarwal, deputy chairman at Vedanta group said on Saturday that all fresh acquisitions would be undertaken by Sesa Sterlite (the merged entity) as it was in a very comfortable position and “had no concerns whatsoever in servicing debt at all”.
“We expect the Ebitda of Sesa Sterlite to touch between $8-19 billion in around two years time,” said Tarun Jain, group director finance at Vedanta group.
“We are looking for mines which are already producing between two to three million tones per annum of coal and which we can buy and ramp up output to between 20-25 million tonnes per annum. We have looked at deals in Colombia and Australia though none has fructified so far,” a top Sterlite Industries official told Financial Chronicle.
Earlier on Saturday, chairman of Vedanta group Anil Agarwal said in a news conference, “We need coal in our portfolio. When the Indian government auctions coal blocks we will participate in the bids. Balco, in which we own 51 per cent has a coal block which will be developed this year as a high quality resource. We are also looking at Latin America for coal assets.”
Vedanta diversified into iron ore in 2007 by acquiring Sesa Goa from Japan’s Mitsui and into the oil and gas sector by acquiring Cairn India last year.
Bhavesh Chauhan, an analyst with Angel Broking said, “Most of the metal companies like Tata Steel, JSW Steel, Nalco, among others, are all scouting for coal mines to integrate their raw material supply and bring down costs. The metal companies are scouting for coal mines as there is huge demand for it. Also coal prices are on the higher side.”
Chauhan added that Australian mines have higher calorific value coal that is considered superior in quality. Calorific value refers to the amount of heat energy that is released by burning coal.
“Indonesia is almost over as all the mines worth buying have been taken up, so we are not looking there. We are interested in Colombia as the gross calorific value of the coal there is very high, making it a high quality output,” said the top Sterlite official. Indonesian coal tends to have a high moisture content which leads to it commanding a slightly power price. Coal in India too is generally considered to be low quality due to a high percentage of impurities.
While Tatas bought stakes in one of Indonesia’s largest coal exporters, Anil Ambani has bought some mines in Indonesia’s East Kalimantan province. Tatas had also bought stake in a mine in Mozambique while Adani, India’s largest coal trader cum importer, has bought mines in Australia.
Ownership of coal blocks by Vedanta could provide energy security to Sterlite Energy as it supplies power to group companies and sells part in the open market on a merchant power basis.
Sterlite Energy has a 2400 mw independent power plant at Jharsuguda district in Orissa that sells power to Gridco, Vedanta Aluminium and also on merchant power basis. Sterlite Energy is also developing a 1980 mw thermal power plant in Punjab, which will sell its output to Punjab State Electricity Board. According to a company presentation, Sterlite Energy is in the process of expanding its capacity to 8,600 mw.
Navin Agarwal, deputy chairman at Vedanta group said on Saturday that all fresh acquisitions would be undertaken by Sesa Sterlite (the merged entity) as it was in a very comfortable position and “had no concerns whatsoever in servicing debt at all”.
“We expect the Ebitda of Sesa Sterlite to touch between $8-19 billion in around two years time,” said Tarun Jain, group director finance at Vedanta group.
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