May 31 (Bloomberg) -- Hindalco Industries Ltd. and Reliance Power Ltd. rose in Mumbai trading after a panel of ministers recommended approval of their coal mines to India’s cabinet.
Reliance Power rose 2 percent, the most in a week, to 92.35 rupees at 10:28 a.m. local time. Hindalco gained 3.6 percent to 118.55 rupees, the largest jump in almost two months. Essar Energy Plc., which is a partner with Hindalco in one of the mines, surged 22 percent yesterday in London. The cabinet will take a final decision on the matter, coal secretary Alok Perti told reporters yesterday in New Delhi.
The panel’s recommendation is a step toward ensuring coal supplies for power plants being built by the companies as Asia’s second-fastest growing major economy seeks to cut blackouts. A committee appointed by the environment ministry earlier recommended conditional approval for the blocks, which are located in forest areas.
“The group of ministers’ decision is an indication that the government is finally getting its act together on coal,” said Niraj Shah, an analyst at Fortune Equity Brokers India Ltd. in Mumbai. “The clearances will certainly expedite commissioning of the power and aluminum projects.”
The Chhatrasal block is one of three that will supply coal for a 3,960-megawatt project at Sasan being built by Reliance Power, controlled by billionaire Anil Ambani. The Mahan block, allotted to Essar Energy and Hindalco, will be the source of fuel for generation plants with a combined capacity of 1,950 megawatts. Hindalco will use the electricity generated for its planned 359,000 tons a year aluminum smelter.
Environmental restrictions in India have led to delays in projects, leading to shortages of commodities, including coal and iron ore. The country’s annual coal output may rise 28 percent to 715 million tons in the next five years, lagging behind a 41 percent increase in demand to 981 million tons, according to Planning Commission estimates.
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