Coal news and updates

Mahan Coal Block, a joint venture between Hindalco IndustriesBSE -3.85 % and Essar Power, does not feature on the list of 46 coal mines the government requested Supreme Court to not cancel, risking an investment of Rs. 20000 crore made by the companies in Madhya Pradesh. 

 

After Apex Court's ruling last week which termed 218 coal mine allocations between 1993 and 2010 as arbitrary and illegal, the government requested the court to exempt 46 mines where production of coal has already started or is about to start before 2015. 

 

Even though Hindalco's Talabira I mine is on the list, Mahan Coal did not find a mention, according to documents on Coal Ministry's website. 

 

Hindalco, a flagship company of the Aditya Birla Group, is depending on coal lying under Mahan forests to power its aluminium plant. While local protests had already delayed the project, Supreme Court's hearing on the coal mine allocations has further clouded the future of the investment. 

 

If Supreme Court decided to de-allocate Mahan coal and put it up for auction Hindalco's profitability could be severely hurt. Hindalco's spokesperson declined to comment on the story. 

 

Without cheap coal Hindalco will have to continue to import or buy coal from open market, threatening the viability of investments made. As Madhya Pradesh is a land-locked state getting coal from other states have already accelerated transportation costs. Adding to this is interest and depreciation cost which are already hurting Hindalco's profitability. 

 

The Kumar Mangalam Birla-controlled company had a debt of Rs. 63,300 crore as on March 31, 2014 on a consolidated level. 

 

Hindalco's shares have fallen 4% since SC's verdict last week. It is trading at Rs. 174.10 apiece on Wednesday on BSE. 

 

Jindal Steel and Power's Utkal B1 mine also did not find a mention in government's list, putting a question mark on the Angul steel and power project in Odisha. JSPL was not immediately available for a comment. Its shares have fallen 18% in the last 10 days and are trading are Rs. 237 per share. 

 

 

Source: ET