The Tata Power Company Limited (“Tata Power”), India’s largest private power utility, announced today that it has signed definitive agreements to purchase 30% equity stakes (the “Purchase”) in two major Indonesian thermal coal producers, PT Kaltim Prima Coal (“KPC”) and PT Arutmin Indonesia (“Arutmin”) (together the “Coal Companies”), and a related trading company owned by PT Bumi Resources Tbk (“Bumi”). As part of the Purchase, Tata Power has signed an Off take Agreement with KPC which entitles it to purchase about 10 million tones of coal per annum.

The Coal Companies are together among the top three largest exporting thermal coal mines in the world. They have excellent coal export infrastructure and are strategically well placed to act as a source of supply for increasing regional demand. Together, KPC and Arutmin produced approximately 53.5 MT of coal in 2006 with over 95 % sold into the export market. Fast growing regional demand for thermal coal coupled with supply constraints in certain exporting countries has led to higher coal prices.  The Coal Companies are world class assets and have enjoyed robust financial performance recently given rising production volumes and the increases in coal prices. 

This Purchase supports Tata Power’s upcoming power projects on the West Coast of India comprising 7,000 MW to be developed over the next 5 years.  These projects will require approximately 21 million tones of imported coal which Tata Power intends to secure through a combination of purchasing equity stakes in coal mines as well as entering off take contracts.

Source:

The Tata Power Company Limited (“Tata Power”)