Feb. 27 (Bloomberg) -- Coal India Ltd., the world’s biggest producer of the fuel, sought bids for overseas mine purchases to counter a shortage of local supplies to power producers.
Investment banks, mine owners willing to sell stakes or their representatives should place initial offers, Coal India said today in an advertisement in the Mint newspaper, without giving price or timing details. The Kolkata-based company is examining seven stake sale proposals from Indonesia and Australia, two people familiar with the matter said on Feb. 10.
Coal India, which fires more than half of India’s power generation capacity, faces government pressure to ensure uninterrupted supplies to utilities and cut blackouts that may reduce economic growth to the slowest in a decade. The company’s bid to raise output at home has been stymied by delays in land purchases, slow environment approvals and frequent labor unrest.
“Considering the challenges Coal India faces in India, it’s logical to seek supplies overseas,” said Rahul Jain, an analyst with CIMB Securities India Pvt. in Mumbai. “The company has a lot of cash and it may be a good way to use that money.”
Coal India shares rose as much as 1.3 percent to 318.65 rupees, the most in two weeks. The stock has declined 3.9 percent in the past year, compared with a 6.1 percent gain in the benchmark Sensitive Index.
The company has started exploration at two mining areas in Mozambique’s Tete province and has sought bids for additional drilling in the area, according to a document on the company’s website. The company plans to award the contract by March, the two people said.
India’s annual thermal coal demand is expected to climb 43 percent to 730 million tons by 2017, while supplies from local mines may increase 38 percent to 565 million tons, the Planning Commission’s energy adviser I.A. Khan said on Feb. 18.
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