In a bid to feed its upcoming steel and power projects in Gujarat, the Ruias-promoted Essar Group is scouting for iron ore and coal assets in Africa and South America for acquisition.
"Our merger and acquisition team has been mandated to look for iron ore and coal assets both abroad and in India," a company executive said.
The Essar Group is scouting for raw material assets in Africa and South America, he said, adding, "however, we are not in the race to acquire United Coal, the US-based firm that is now on the block."
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He said it may take a while to reach to a negotiation since raw material assets have become dearer and a number of companies are looking for acquisitions worldwide.
Increased demand for coal and iron ore has caused an unprecedented increase in the price levels of both commodities. Iron ore prices have shot up by 400 per cent since 2004 even as coking coal prices rose by 500 per cent during the period.
Essar has a 4.6 million-tonne per annum (mtpa) steel making facility at Hazira, Gujarat. The plant does not require coal since it produces the commodity using arc furnaces.
The group, however, has embarked on a capacity expansion programme taking it to close to 10 mtpa, in which it intends to use a combination of blast furnace, corus and arc furnace technologies. Coal would be required in the operation of the blast furnace and corus technologies.
The Essar Group is also setting up three 1,200-MW coal-fired plants in Jharkhand, Orissa and Gujarat. While the first two would be fuelled using domestic coal, the Gujarat plant would use imported coal as fuel.
Essar Power has already been alloted coal mines to fuel the proposed power plants in Jharkhand and Orissa, the company executive said.
Essar Steel has long-term contracts with state-owned miner National Mineral Development Corporation for iron ore.
The executive said that work on both the power plants and expansion of steel making capacity has begun and are expected to go on stream by 2010-11.
