Monnet group acquires Indonesian coal firm for $24 million

Monnet Ispat & Energy Limited (MIEL), India's second-largest coal-based sponge iron producer and an integrated steel player, has completed the acquisition of an Indonesian coal company for $24 million in Jambi province in Sumatra.

The acquisition, made through its 100-per cent owned subsidiary, Monnet Global Ltd (MGL), gives it access of one of the largest thermal coal mines spread over 25,000 hectares.

At present, just 1,500 hectares have been explored and the company has established 65 million tonnes of coal reserves in the mine. It expects the reserves to go up substantially after completing exploration of the total land area.

MGL is one of the few Indian companies to have got a coal contract of works (CCOW) in Indonesia. This had been awarded by the Indonesian government to PT Sarwa Sembada Karya Bumi, Sumatra, which was acquired by MGL.

''The acquisition is of strategic importance for the group as the logistic of the mine is excellent,'' said Sandeep Jajodia, executive vice-chairman and managing director, Monnet group. ''And being located in Sumatra, the shipping cost and low transit time to India will make the coal very cost-effective. It will also provide, low-cost fuel for our planned coast-based power projects.''

The group plans to mine more coal than required for its captive needs, selling it in the open market and ensuring a long-term source of revenue. ''The worldwide coal markets are expected to do very well in the coming years and especially India and China would remain strong buyers,'' adds Jajodia.