GMR to pay Rs 620 cr for 50% in SA coal firm

GMR Infrastructure, the Bangalore-based infrastructure firm, is expected to pay around Rs 620 crore by September 2008 to acquire 50 per cent stake in a coal mining firm in South Africa.

GMR Infrastructure, which is into development of airports, power projects and roads, through its wholly-owned subsidiary GMR Energy on Thursday said that it has picked up 5 per cent stake for Rs 60 crore ($15 million) in Homeland Mining & Energy in South Africa. Homeland Mining is a subsidiary of Homeland Energy Group of Canada.

GMR Infrastructure has further added that they have an option to acquire an additional 45 per cent of this South African firm by September 2008 and the total payout for the 50 per cent stake is $155 million (about Rs 620 crore).

This transaction relates to the projects and properties held within Homeland's South African subsidiary which includes the Kendal Mine, Eloff coal mining project, the Northfield site reclamation project as well as exploration projects in South Africa. According to a statement from GMR, Eloff Project has significant development potential.

GMR Energy is in the process of executing two coal fired power plants with a total generation capacity of 3150 mega watt (MW) in Orissa and Chattisgarh. The Orissa project will have two stations generating 1050 MW each and is expected to generate power from 2012.

The Chattisgarh project of 1050 MW is likely to start generation at a much later stage as the memoranda of understanding (MoUs) have recently been signed.

GMR Energy currently has three power plants operational generating 800 mw, none of which are on coal. In addition to the two thermal projects, GMR Energy is tying up with four more projects across India.

According to a statement from GMR Infrastructure, Homeland Mining holds licence for several coal mining projects in South Africa.

"This acquisition would ensure fuel security for GMR Group's power projects in India and such a transaction also acts as a catalyst in the development of the energy business of the group," the statement added.