Kolkata, India — MININGREVIEW.COM — 04 November 2011 – South Africa is one of the countries where Coal India Limited “’ facing a drop in output for the first time in more than a decade “’ is accelerating its search for overseas assets, after its negotiations with American-based Massey Energy Company and Australian-based Peabody Energy Corporation proved unsuccessful.
Delays in land acquisitions and environmental clearances to develop projects have hindered efforts by the world’s biggest producer of the fuel to boost production, chairman N.C. Jha said in a phone interview from here. The government last month allowed state- run Coal India, which has US$9.1 billion of cash, to buy unlisted overseas companies.
“The government approval allows us to move faster,” Jha said. “We have to try every possible option including acquisitions to meet supply commitments. We’re still struggling to meet our production targets,” he admitted.
“Talks to acquire stakes in a U.S. mine of Massey Energy and an Australian mine of Peabody Energy were inconclusive because of procedural delays,” he added.
Production at Coal India, which mines more than 80% of the country’s coal, dropped 5% in the first six months of the year because of heavy rains and a one-day strike. “Should full-year production decline, it would be the company’s first since at least 1998,” Jha added.
“The kind of cash Coal India has, it makes every sense to look for acquisitions,” said Prasad Baji, an analyst at Edelweiss Capital Limited in Mumbai.
The company, which mined 431.3Mt of coal in the year ended March 31, plans to increase production by about 5% this year to meet demand. “Daily output has rebounded almost 60% from the rainy months of August and September to 1.2Mt, and is expected to go up to 1.5Mt by the end of this month,” Jha revealed.
India’s estimated coal resource is 267.2 billion tonnes, of which 105.8 billion tonnes are proven, according to the coal ministry’s website.