Madhu Koneru MEC Coal Power Projects

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Indonesian co keen on trading coal for equity in
power projects

• Mr. Madhu Koneru,
• Executive Vice Chairman,
• MEC Coal

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Indonesian co keen on trading coal for equity in
power projects

• Middle East Coal (MEC), a joint venture between
  Trimex Group and the UAE Government-owned RAK
  Minerals and Metals Investment, has initiated
  talks with these players to swap equity for coal.
  The company assures coal supply at 35-40 a
  tonnes for 15 years. Currently, coal prices are
  around 50-55 a tonnes.
• MEC is developing a coal mine at East Kalimantan
  in Indonesia with proven reserves of two billion
  tonnes at an investment of 1 billion.
• Mr Madhu Koneru, Executive Vice-Chairman, MEC,
  said production would begin with two million
  tonnes by the middle of next year and would be
  ramped up to 15 million tonnes by November 2011.

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Indonesian co keen on trading coal for equity in
power projects

• We have floated a tender of 1 billion to
  develop a coal jetty and rail link of 130 km to
  transport the coal from the mine. With such huge
  investments, we thought of forward integration by
  joining hands with the promoters of large power
  projects, he added.
• The company wants to sell 70 per cent of its
  production to India and the balance to China.
• On an average, about 17 million tonnes of coal
  are needed for a generation capacity of 5,000 MW.
  Coal accounts for about 60-70 per cent of the
  power production cost in India for producers
  dependent on imports.
• Though companies such as Reliance Power, Tata
  Power and Adani Power have their own mines in
  Indonesia, MEC is confident of convincing Indian
  companies as the price it is offering is quite
  attractive.

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Indonesian co keen on trading coal for equity in
power projects

• It has managed to offer a lower price compared to
  others as the rail link being developed will
  result in savings of about 50 per cent of
  transportation costs.
• The company is targeting new power projects as
  existing companies use coal with calorific value
  of 6300 KCal while MEC will produce coal with
  calorific value of 5300 KCal. The stripping ratio
  of MEC mines is 11 (mud to coal), while for most
  mines it is 81, said Mr Koneru.
• MEC has also signed an agreement with Nalco which
  plans to set up a one million tonne alumina
  smelter at the coal mine site in Indonesia. Nalco
  will hold 74 per cent stake in the project while
  MEL will have 26 per cent equity to provide
  assured coal supplies. The company is in the
  process of negotiating the price, he said.