Monnet Ispat close to buying coking coal mine in Columbia

The proposed acquisition may cost between Rs 277-416 cr

Monnet Ispat and Energy today said it is in talks to acquire a coking coal mine in Columbia which may cost it anything between $50-75 million (Rs 277-416 crore).

The proposed acquisition, which would be its second overseas buyout after one in Indonesia, is intended at meeting its captive requirement, Monnet Ispat and Energy Chairman and Managing Director Sandeep Jajodia said.

"We are in talks with the company [in Columbia]. Talks are going on, we hope to close the deal in about month's time. This is essentially a coking coal mine which we require for our own captive needs," he said.

"The mine has proven reserves of 25 million tonnes and some indicative reserves, which need to get proven, which can up to another 25-30 million tonnes. So overall, it could end up having a 50 million tonnes capacity," Jajodia added.

When asked about the likely cost of the acquisition, he said, "It's premature. We are still negotiating on the price. It will be about $1-1.5 times of the reserves."

Monnet Ispat and Energy through its subsidiary Monnet Global had bought Sarwa Sembada Karya Bumi for $24 million (about Rs 130 crore) in the Jambi province of Sumatra, Indonesia, last year.

Jajodia said the company was currently "fully exploring" the mine in Indonesia and may take 3-4 months to finish the exploration job.

"When we bought the Indonesian mine, it was partially explored. At that time, the approximate reserve was 65 million tonnes. But, this reserve will go up, may be 2-3 times and the reason for that most of the mine is yet to be explored," he said.

"The exploration is going on. It will take 3-4 months to complete the exploration to firm up total reserves. After that, we will start production. This is mostly for merchant sales," Jajodia said.

However, if Monnet Ispat and Energy plans to set up any power project, the company may look at importing coal for that project, he said.

Jajodia said the company is looking for opportunities in Africa for acquisition.

"We want to invest in any mine in any part of the world. We are looking in some countries in Africa for various minerals, not only coal, but for iron ore and manganese ore, etc," he said.