Coal India bets on domestic growth to meet demand

NEW DELHI Mon Dec 24, 2012 6:54pm IST

Labourers load coal on trucks at Bari Brahamina on the outskirts of Jammu March 16, 2012. REUTERS/Mukesh Gupta

Labourers load coal on trucks at Bari Brahamina on the outskirts of Jammu March 16, 2012.

Credit: Reuters/Mukesh Gupta

Related Topics

Stocks

   

NEW DELHI (Reuters) - Coal India Ltd(COAL.NS) said it prefers to pursue a production increase at home over securing coal assets overseas as it seeks to meet rising demand from India's fuel-starved power plants.

"Our unrelenting focus should be on domestic production," Coal India Chairman S. Narsing Rao said in an interview.

"Just because we have some money, (we) shouldn't really be focusing on something else (overseas acquisition). I simply have no time to even think about that."

The state-run miner, which supplies about 80 percent of India's coal, has been under immense pressure from its industrial customers and the government to increase output quickly after stagnation in the past two years has left many power plants running below capacity.

Coal India is on course to meet its annual output target of 470 million tonnes in the year to March 2013 and 487 million tonnes in 2013/14, Rao said. "(The) number is sacrosanct."

Rao, who took over as chairman of the world's biggest coal miner nine months ago, outlined a strategy that includes producing more from existing mines, opening new "mega" mines, improving operational efficiency and deploying smart underground mining technologies.

India took 15 years to achieve an incremental production of 180 million tonnes, Rao said.

"Now the next 180 (million tonnes) has to come in five years, so you can see the magnitude of the challenge."

Opening new mines has been difficult for Coal India due to slow environmental clearances and politically sensitive land acquisition.

The company will invest in setting up a logistics facility at each existing mine to transport more coal and deploy bigger and more efficient equipment, Rao said.

When it comes to securing overseas coal assets, the miner is risk-averse, he said. "The public-sector DNA is very conservative."

Over the next six months, Coal India will identify coal assets in Africa and persuade the Indian government to negotiate deals to secure energy resources there, Rao said.

A negotiated deal by the government would bring in a safety net, given the resource nationalism in many countries, and the asset could also be procured cheap as it would not be competitively bid, Rao said.

Mature mining markets such as Australia and the United States, which have little scope for government-led deals, would be off Coal India's radar.

The company will also aim to acquire more than just a minority stake in overseas assets, he said. "If somebody is interpreting that (minority stake) also as securing energy, I'm afraid that is a totally disastrous definition of energy security."

(Editing by Jane Baird)

FILED UNDER:

Reuters Showcase

Markets Weekahead

Markets Weekahead

Column - Caution advised in a trader’s market  Full Article 

Reuters Poll

Reuters Poll

RBI seen holding rates steady on Tuesday, minority of analysts expect cut  Full Article 

GDP Revised

GDP Revised

Economic growth revised up by almost 50 percent  Full Article 

Australian Open

Australian Open

Hingis wins Australian Open mixed doubles title with Paes   Full Article 

Houston's Daughter

Houston's Daughter

Bobbi Kristina Brown revived after found unresponsive in tub  Full Article 

India Art Fair

India Art Fair

Art fair turns India's capital into art hub.  Full Article 

Movie Review

Movie Review

"Rahasya" is an ode to Agatha Christie.  Full Article 

Review: Hawaizaada

Review: Hawaizaada

Movie Review: Hawaizaada  Full Article | Related Story 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage