Friday, May 29, 2009

R-Power in talks for coal JV with Oz cos ...........

R-Power in talks for coal JV with Oz cos
Pradeep Pandey & Piyush Pandey MUMBAI

ANIL Ambani-promoted Reliance Power is in talks with Australian mining firms BHP Billiton and Rio Tinto for setting up a coal mining joint venture that will develop the mines allocated to the company and supply coal to its power plants. The company plans to spend close to Rs 5,000 crore in developing coal mines, said a person familiar with the development. A company spokesman confirmed that R-Power is in talks with foreign firms for a JV, but refused to divulge names. “We continue to evaluate various options in our businesses. However, we don’t comment on specific opportunities or transactions,” he said. The firm may form a JV with one or more global mining firms for developing mines. Firms, such as Vale of Brazil, Peabody Energy of the US, Xstrata and Anglo American of the UK, are believed to have expressed interest in partnering with R-Power. R-Power has coal reserves of two billion tonnes, which will be enough to generate over 16,000 megawatts of power for the next 25 years. These reserves are in six coal blocks allocated to the company by the coal ministry. These blocks include Moher, Moher-Amlohri extension and Chhatrasal for the Sasan ultra mega power project in Madhya Pradesh and Kerandari B and C blocks for the Tialiya project in Jharkhand. It also has two coal blocks in Orissa. “A capital expenditure for the development of the proposed coal blocks would vary between Rs 4,000 and 6,000 crore depending upon the methedology used,” said an RPower executive. At Sasan, where R-Power has already started developing the block in line with the upcoming power project, the company has a planned expenditure of around Rs 2,500 crore. The first block is likely to start production by 2011, he added. Globally, coal mining companies are valued on the basis of their reserves. Pure coal mining firms are valued between $2 and $6 per tonne, depending on the quality of the coal.

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