Calcutta, April 18: NMDC Ltd is on the verge of completing its due diligence for a thermal-coal mine of the Shree Renuka group in Indonesia.
The Indonesian coal mine, which is likely to be used for trading purposes, will help the company to diversify its business beyond the mining of iron ore.
“Due diligence on the asset owned by Indonesian stock exchange-listed PT Renuka Coalindo Tbk is almost finished and the report is likely to come by the end of the current month,” a senior NMDC official told a news agency.
After evaluating the report, officials of the state-owned company will visit the mine in Jambi province of Sumatra. Based on their feedback, a decision on the acquisition will be taken, the official said.
Shree Renuka Energy, part of the Shree Renuka group, owns the mine through its listed subsidiary PT Renuka Coalindo Tbk.
Spread across 1,000 hectares, the region has coal reserves of about 100 million tonnes. As of March 2013, the company had produced 322,583 tonnes, lower than the 485,920 tonnes produced a year ago.
According to the company’s annual report, production has taken a hit because of lower global demand of coal.
NMDC had been eyeing overseas coal assets for a long time, particularly in places such as Mozambique, the US, Russia, Australia and Canada, which have geologically proven coal reserves.
According to the NMDC official, the acquisition of overseas coal assets is critical to meet the energy requirements of the country, which is looking to plug the gap between coal demand in the country and the available supply through imports.
“NMDC does not need thermal coal at this point of time. The acquisition is mainly for trading purposes and not for internal consumption. India needs a lot of thermal coal. The acquisition is aimed at minimising supply deficit,” the official said.