India?s NMDC may buy stake in Indonesian coal mine

India?s state-owned NMDC Limited is considering a stake in an Indonesian thermal coal mine owned by IDX-listed Renuka Coalindo Tbk, an acquisition aimed at expanding the profile of the minerals producer that has been focused mainly on iron ore and coking coal, The Economic Times reported.

Confirming the development, two directors of NMDC told The Economic Times on the condition of anonymity that the company was evaluating Renuka Coalindo, listed on the Indonesian stock exchange, which operates a 1.2 mt coal mine in the Jambi province of Sumatra. The company is a subsidiary of Renuka Energy Resource Holdings, an associate of Renuka Sugars, with mineral concessions in Columbia and Brazil as well.

NMDC, India's leading iron ore miner, has so far been known to be scouting for iron ore, coking coal and potash assets in the interest of the country's raw material security since India is deficient in the latter two minerals.

Renuka Coalindo acquired the Jambi Prima Coal mine in November, 2011. It has been impacted by a "tough 2012-13", according to the company's annual report. "The fall in demand from China has resulted in significant drop of commodity prices across the board; thermal coal in fact has been one of the worst performers. The challenging macro environment has turned most of the companies into red including ours," the report says.

Unlike many of its peers in the region, though, Renuka Coalindo cut costs, established reserves and remained operational. Jambi Prima Coal has reserves of 92mt and its operational capacity can be scaled up to 4-5mt, according to officials. (*)