Adani to spend $6.9 bn to develop Oz coal acquisition
19 Oct 2010
Adani Enterprises will invest $6.9 billion in developing its recently acquired Australian coal mines, the Ahmedabad-based company said in a statement on Monday.
"Adani is committed to invest $6.9 billion (Rs30,500 crore) in Australia for developing mine, rail and port project in its Galilee Basin coal mine in Queensland, Australia to produce up to 60 million tonnes of coal a year at its peak," it said.
The acquisition is one of the largest coal mine deals by an Indian group. The company bought the coal mine in August for about Rs12,600 crore in a cash and royalty to pull through Australia's largest coal mine deal.
As part of the buyout deal, the group has paid Rs2,100 crore in cash and is to make additional payment of about Rs10,500 crore over the next 20 years in royalties to former owner Linc Energy on the estimated 7.8 billion tonnes of coal reserves.
Speaking at the inauguration of the Brisbane office of the Rs45,000 crore group, chairman Gautam Adani reiterated that his company is committed to investing $6.9 billion in developing the mine, rail and port project for its Galilee Basin coal mine.
Adani said the occasion marked an important milestone in achieving the company's goal of mining 200 million tonnes (mt) per annum coal, generating 20,000 MW of electricity, and moving 200 million tonnes cargo through Adani's ports by 2020.
''This investment represents the largest Indian investment in Australia and is an important benchmark in low rank thermal coal assets that have been ignored because of inadequate logistics,'' Adani said.
The Adani group already operates a coal mine in Bunyu Island in Indonesia which would start supplying 6 mt coal from this year, which can be ramped up to 10 mt. The mine was acquired three years ago.
The company has plans to set up a 3,300 mw power project in Mundra in Gujarat and another 2,640 mw project at Dahej. This is in addition to the 4,620 MW power project that it is currently working on in Mundra. The imported coal is expected to help run these facilities.
Adani is a trader of coal in the international markets as well, and so far has been importing coal from China and Indonesia for this trade. Acquisition of coal assets is expected to give a leg-up to this business as well.
Queensland premier Anna Bligh, who was chief guest at the inauguration, said at its peak production the Galilee tenement would be the largest operating coal mine in Australia.
"We are targeting first coal by the end of 2014 and a production of between 50 and 60 MMTPA to be achieved by 2022," Adani said. "This investment represents the largest ever Indian investment in Australia.''
The company was accorded preferred proponent status by the Queensland government for developing the Dudgeon Point terminal in Macay, which gives the Adani Group the right to develop a coal terminal with an annual capacity of 30-60 million tonnes.
Sources earlier said the group was in talks with Coal India Ltd (CIL) to take on board the state-owned company as a partner for developing the Australian mines.
In its efforts to secure more coal deposits overseas, Adani Enterprises also entered into a $1.65 billion deal with the Indonesian government and its mining company PT Bukit Asam for setting up rail and port infrastructure there and get exclusive rights to source coal to India.