MANAMA: The United Arab Emirates’ (UAE) Middle East Coal (MEC) is in talks to buy equity stakes in India’s power plants in exchange for long-term coal supply, an executive said on Monday. MEC is joint venture between UAE investment fund RAK Minerals and Metals Investments (RMMI) and UAE-based mining company Trimex. RMMI won a license in March to build a 150 kilometer rail link carrying coal from a mine in Indonesia’s East Kalimantan province to a coal terminal.
“We are close to signing a contact with a number of Indian power plants that need to be supplied with coal over the coming 15 years, the deals will be finalized by the end of next month,” said Madu Koneru, vice chairman of MEC
“India has one of the fastest growing economies and also has a shortage of power supply so that’s why we have decided to go ahead with these deals,” he told Reuters on the sidelines of a mining conference in Bahrain.
The deals would help MEC find the $500 million in financing it needs for the project, he said. MEC would approach institutions for funding once the deals were in place, he added.
RMMI plans to provide $100 million of the initial $600 million investment. Around $500 million will come from institutions such as the World Bank. The rest would come from additional partners that the company is now seeking, Koneru said.
The project has a cost estimate of around $1 billion.
MEC plans to start shipments of 3 to 5 million tons of thermal coal via road. Once the rail project is complete, shipments would rise to 17 million tons, Koneru added.
MEC had raised its projections for how much coal it could ship as it had progressed with planning for the project, Koneru said. Earlier this year, the company said that it would ship 15 million tons of coal.
Coal production in East Kalimantan accounts for over half of Indonesia’s total coal output, forecast to reach around 230 million tons this year.
Of the 17 million tons, 10 million would be shipped to India, 7 million to China and the remaining 2 million tons to the UAE’s northern emirate of Ras al-Khaimah. – Reuters
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