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Essar gets final approval for Indonesian coal mine

Projects

Essar Energy has received final ‘Pinjam Pakai’ forest approval for its Aries coal mine in Indonesia. This is the final approval needed ahead of commencement of mine development activities.

Essar Energy acquired a 100 per cent interest in the Aries coal mine in April 2010 for US$118 million. The mining area comprises around 5,000 hectares located in the West Kutai region of East Kalimantan. A Joint Ore Reserves Committee (JORC) compliant resource assessment estimates that the block contains around 64 million tonnes of mineable reserves with an annual potential production of 4 million tonnes of coal with an average gross calorific value of 5,400 to 5,500 Kcal/kg. This is sufficient to provide a dedicated fuel supply to the Salaya I, 1,200 MW coal-fired power plant located in Gujarat, India.

The company has already commenced the construction of supporting road and port infrastructure and it is expected that first coal will be available within 9-12 months of this announcement.

Until coal from the Aries coal mine becomes available, fuel for the Salaya I power project is being supplied under a fixed price coal contract with Essar Shipping and Logistics Limited, Cyprus. Unit 1 of Salaya I (600 MW), has already entered commercial operations, and unit 2 (also 600MW) is near to completion.

Naresh Nayyar, chief executive officer of Essar Energy, said: "With this approval, we can now accelerate development at the Aries coal mine to provide fuel for our Salaya I power plant. This is a major step forward in our strategy of providing full fuel security for all of our power generation assets, thereby eliminating price and delivery risks."

Essar Energy has access to over 500 million tonnes of coal resources across seven coal blocks in India and overseas. This coal is sufficient to provide fuel to 5,250 MW of Essar Energy’s power generation capacity.

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