GMR to buy Indonesian coal mine for $100 million

Bangalore-based GMR Infrastructure, which has interests in power generation, airports, roads and urban infrastructure, is set to acquire a coal mine in Indonesia for close to $100 million (around Rs 490 crore).

The mine is understood to have reserves of 110 million tonnes. This move comes close on the heels of GMR acquiring a 5 per cent stake in a South African mining firm for $15 million. The infrastructure major is further evaluating its option of raising stake in the African mining firm to 50 per cent for $115 million by 2008-end.

Sources in the company indicate that they had initially agreed at a price of $100 million for the Indonesian mine, but are negotiating to bring down the cost by 10-15 per cent due to the current downturn in the global economy. A spokesperson for GMR Energy offered no comment on the deal.

GMR Energy is the operational arm executing the projects and is understood to have lined up various projects with an estimated capacity of 3,300 MW over a period of time.

Currently, the company has a power generation capacity of close to 420 MW – one unit in Tamil Nadu with a capacity of 200 MW and another barge-mounted power plant capable of producing around 220 MW.

The company is on an aggressive fund-raising drive for its various power projects and is understood to have recently raised Rs 450 crore debt from Axis Bank. It is further looking at raising an additional Rs 1,000 crore in the next 12 months.

“The project which we have lined up does not have immediate need for cash. We are evaluating funding options and intend to move at an appropriate time,” an official detailed.

Earlier this year, GMR Infrastructure had planned to take GMR Energy public, but has kept the plan in abeyance due the dismal market conditions.

GMR is also set for financial closure of its 1,050 MW thermal power plant at Kamalanga in Orissa. The project's financial closure is expected by November and the company's equity contribution will be to he tune of Rs 750 crore.

Company sources further indicate that one of its gas-based projects in Vemagiri in Andhra Pradesh with a capacity of 370 MW is idle due to non-availability of gas from the KG Basin and is expected to be operational by February 2009, once the gas starts flowing in.

In addition to India-based power projects, GMR recently bought 50 per cent stake in Intergen NV, a global energy major with operational capacities of 8,086 MW and developmental capacities of more than 4,600 MW for around $900 million.