HomeEnergy MineralsIndia steps up coal search in SA

India steps up coal search in SA

Coal “’ India sets
its sights on
SA mines
Mumbai, India — MININGREVIEW.COM — 10 March 2010 – Indian steam coal end-users have stepped up their hunt for South African junior coal mines in a bid to secure a greater supply from this year if possible, but they are finding attractive assets to be scarce.

Reuters reports from here that Indian companies “’ including the Jindal Group, Essar and a host of traders “’ have looked at every junior coal producer with a view to buying during the past three years. They have also scoured Indonesia, Australia and the U.S. for likely coal assets.

The report adds that the desire to acquire mine assets has become more urgent because Indian coal demand is set to more than double in a few short years. The reliable delivery, relatively high energy-content and low ash content of South African coal have made it a preferred choice of many Indian end-users.

“Our coal demand for power plants will be 10 million tonnes by the end of 2010, and double that again by 2014,” said one executive who asked to remain anonymous. “We intend to be a coal producer.”

Having become accustomed to the quality of South African coal, but often squeezed by strong international prices, Indian end-users have decided to enter mining.

“South African cash costs are only USD$35 a tonne compared with market prices of $82-$85 a tonne FOB Richards Bay,” another end-user said. “Obviously it makes sense, and it is cheaper, to supply coal from your own mines,” he said. “We are looking at every South African coal company of a small to medium size, but we want mines with good rail logistics and costs,” he added.

India took over 18 million tonnes of coal out of South Africa’s 61 million tonnes of  exports in 2009 “’ a percentage which is set to rise this year. Several Indian companies have opened offices in Johannesburg to try and accelerate the purchase of coal assets, and more are likely to do so.