Indias NTPC eyeing stakes in Indonesia coal mines

State-run NTPC Ltd , India’s top power producer, is looking to buy majority stakes in Indonesian coal mines with reserves of up to 300 million tonnes to secure supplies and manage costs, its chairman said on Monday.

Another government company, Power Trading Corp , also announced plans to buy coal mines in Indonesia, following the footsteps of private firms Tata Power and Reliance Power , which have already bought foreign coal mines.

Indian firms from steel to energy are looking overseas to buy assets and companies to get access to new technology, brands and raw material to feed their expanding capacities in Asia’s third-largest economy.

“Our priority is that we should source coal from overseas but not depend on spot markets. We seek to have majority stakes in coal mines. We have identified one or two mines in Indonesia,” NTPC Chairman R.S. Sharma told reporters.

He said rising coal prices would not deter NTPC from buying stakes in foreign mines. “Ultimately we would like to have control on production and prices,” he said.

The utility is in talks to buy stakes in mines with reserves of 200-300 million tonnes, he said, adding the firm seeks to complete the deal by March 2009.

NTPC, which consumes around a quarter of the country’s coal production, has a generation capacity of 29,144 megawatts. It plans to add 22,430 MW by 2012 and take total capacity to 75,000 MW in 2017 to meet the exploding power demand in the country.

It generates most of its power from coal and has said will need up to 130 million tonnes in the current 2008/09 fiscal year, up from 122 million tonnes a year ago.

Power Trading Corp plans to set up a firm in Singapore to buy stakes in Indonesian coal mines, Chairman and Managing Director T.N. Thakur said.

“We have identified some assets in Indonesia… we are discussing with people who hold concessions for coal mine,” he told reporters.

In March, Merrill Lynch said contract prices of thermal coal in Asia may rise by as much as 200 percent after weather-related supply disruptions in Australia, China and South Africa.

Sharma said NTPC had already appointed three merchant bankers to advise it on legal, technical and financial aspects of the proposed deal.

NTPC is also scouting for coal asset purchases in South Africa, Australia and Mozambique, he said.

NTPC will double its coal imports in the current financial year to 5 million tonnes.

This month, Reliance Power said its unit had signed an agreement to acquire three Indonesian coal mines, while Tata Power clinched a $1.3 billion deal last year to buy stakes in two coal mines of PT Bumi Resources .

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