Essel may buy coal mine in Indonesia

Essel Mining & Industries Ltd, a subsidiary of the $6.5 billion Aditya Birla Group, is looking to acquire wholly or partially a coal mine in Indonesia and has shortlisted about a dozen mines in the South East Asian country, for which it is willing to spend $80-150 million.

The company has shortlisted about 2-3 investment banks to advise it in the the acquisition process and will choose its partner in the next couple of weeks.

"The Aditya Birla group is actively seeking to acquire a coal mine in Indonesia and will appoint an investment bank to advise us in the acquisition in the next couple of weeks. We have identified about a dozen mines and the mandate to the bank would be to complete the acquisition process in the next six months," Aditya Birla group executive president and business head, Ravi Kastia told Business Standard.

"We are looking to service export markets like India, South Korea and Japan from this acquisition but a lot depends on what kind of mine we get. If it is a coking coal mine, then the opportunities are broader but if it is merely a thermal coal mine then our options may narrow down."

The Aditya Birla Group already has five entities in Indonesia that are primarily involved in the production of yarns, viscose staple fibres and carbon disulphide.

The mining company, which has operations around Barbil in the Keonjhar and Sundergarh districts of Orissa, will produce about seven million tonnes of iron ore with an Fe content in the range of 63-65 per cent in this financial year.

Of this, a little over half of the produce in the form of bulks is sold in the domestic market, while the rest, which comprise fines will be exported to China. Kastia said that the company was also in talks with trading houses in S Korea and Japan for exports of fines.

Kastia said the company would increase production of iron ore to 9 MT in the next two years with an additional investment of Rs 200 crore.

The company also plans to make its first foray into beach sand minerals soon in the coastline of Andhra Pradesh and Tamil Nadu after the Hoda Committee recommendations are passed by the cabinet.