Coal India Ltd seeking to invest overseas in coal mines

Coal India Thursday announced it is keen on securing foreign mining investments in a bid to meet the rising energy demand in India. According to an Indian governmental official, Coal India ltd, the biggest global producer of coal, said the company might utilize a proposed sovereign fund for the purchase of mines overseas, with the aim of supplying about 8% of its domestic output in the country to meet the ever burgeoning demand for energy.


According to Indian government estimates, the country might import around 50 million metric tonnes of coal in 2017 to boost domestic capacity that is currently expected to top 647 million tonnes. This was revealed Thursday in an interview with a secretary to the Indian coal ministry, Alok Perti. According to Perti, the government’s planned projected coal requirements come amid concerns over the country’s energy security given the increasing gap between demand and supply.


He further added that it therefore was vital to secure coal supplies given the fact that India is competing with countries such as China for energy assets. Coal India Ltd is a state owned entity and with the planned investments, it joins others such as the Indian Oil Ministry’s in a bid to seek funds from the country’s reserved $277 billion in foreign exchange reserves for energy investments.


The country’s biggest competitor for coal, China, is estimated to have about $2.4 trillion of reserves and about $300 billion sovereign fund. The two Asian countries have fast growing major economies thus the rash to secure future energy resource needs for sustained growth. China has so far spent outspent India on overseas energy investments, with estimates placing its spending at four times that of India on such investments in 2009.


Pundits believe India’s continued acquisition of offshore energy assets and supporting government owned companies with similar investments with a financial backing is a proper approach. The pundits believe that, for India’s economic growth to continue uninterrupted, the country must push forward with additional investments in overseas energy assets to ensure it does not suffer shortages in future.


Coal India Ltd had recently announced a planned initial share offer this year, and further said it was considering proposals from three companies, two of which are owned by US based Peabody Energy Corp. and one Australian company. If it goes ahead with the investments, the company may spend an estimated $1.7 billion for the investment in the three acquisitions.


9 July 2010.