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Essar to Buy Aries Coal Mines in Indonesia

03/26/2010 - The Essar Group signs agreement to purchase Aries coal mines in Indonesia, representing an estimated resource base of 100 million tonnes of thermal coal and mineable reserves of 64 million tonnes.

The Essar Group has signed a definitive agreement to purchase Aries coal mines in Indonesia, giving its Essar Power subsidiary access to an estimated resource base of 100 million tonnes of thermal coal and mineable reserves of 64 million tonnes.
 
Located in the Kutai region of East Kalimantan in Indonesia, the Aries coal mines offer high-quality bituminous coal with Gross Calorific Value of 6,000, low ash and low moisture that is suitable for power plants. Production from the Indonesian mine is expected to start within a year. 
 
The transaction is part of Essar Power’s strategy to continue to achieve backward integration and to secure raw material needs for its operations. Essar Power is currently building six power projects in India, ramping up its power generation capacity from 1220 to 6100 MW by 2012.
 
 “We are a vertically integrated power producer, with ownership and access to the raw materials needed to run the business,” said Anshuman Ruia, Director, Essar Group, commenting on the deal. “The Indonesia mines are an excellent addition to our growing portfolio of coal assets. This acquisition adds another 100 million tonnes to our existing thermal coal resource base of about 275 million tonnes in India.”
 
 “This is a major step forward in Essar’s strategy of securing long-term fuel linkages and capturing the complete value chain in all its businesses,” noted Ruia.
 
The transaction is subject to regulatory approvals and is expected to be closed by April 2010.
 
The multinational conglomerate Essar Group is a leading player in the sectors of Steel, Energy, Power, Communications, Shipping Ports & Logistics, Construction, and Minerals. With operations in more than 20 countries across five continents, the Group employs 60,000 people and has revenues of USD $15 billion.

Essar Power is India’s first independent power producer and is today the country’s second-largest power generation company in the private sector. It operates four power plants with a combined capacity of 1,220 MW in three locations. These include two gas-based plants in Hazira, a co-generation plant in Vadinar and a coke-oven gas-based plant at Algoma in Canada. This capacity is being expanded to 6,100 MW by 2012 through six projects that are currently under construction.
 
One of the lowest-cost power producers, Essar Power has an exemplary track record for safety, and has won several safety awards. It has a growing portfolio of gas, coal and liquid fuel-based power plants, and is exploring new opportunities in conventional and renewable power generation globally. It is also expanding in the transmission and distribution sectors.