By Stewart Bailey,Bloomberg
Johannesburg: Indian power companies may buy as much as 20 million tons of coal from South Africa and Mozambique from 2009 as new plants opens on the country’s coast, Osho Energy Ltd. said.
Osho’s South African unit has written requests from Indian buyers seeking that quantity of coal, said Tushar Agrawal, a director of the Johannesburg-based business.
“We’re looking in South Africa and Mozambique for the entire requirement,” Agrawal said today in an interview from Johannesburg. “These power stations will start adding up from 2009 onward.”
India is building as many as seven new 4,000-megawatt plants, each requiring as much as 12 million tons of coal a year, after the economy grew at an 8% pace over the past three years. Tata Power Co. and other companies are buying stakes in overseas coal mines to guarantee supplies while South African coal producers are looking for new export markets.
India coal imports probably rose 12% to 46.62 million tons in the year ended 31 March, according to mines ministry estimates. The nation, one of the world’s five biggest buyers of the fuel, uses coal to fuel half its 128,000 megawatts of generating capacity.
Osho won’t compete with European buyers for southern Africa’s best grades of coal, mined by companies including BHP Billiton Ltd., and will focus instead on buying lower-quality production from smaller producers.
Like Tata Power, which agreed on 31 March to pay $1.3 billion for a 30% stake in two coal mines in Indonesia, Osho and its customers may buy stakes of between 5% and 20% in mines from which they source coal, Agrawal said.
The company has already held talks with “small-scale” mining companies and coal explorers in South Africa and Mozambique, Agrawal said, without giving details.
The South African producers, many of which have yet to develop their operations, can use purchase contracts with Osho to help secure loans for their projects, Agrawal said.
South Africa’s coal producers shipped 68.5 million tons of coal last year from Richards Bay Coal Terminal, the world’s largest coal-export terminal. The port is being expanded to handle 91 million tons from 2009, from its current capacity of 72 million tons.
Matola port, in neighbouring Mozambique, shipped 1.6 million tons last year of coal and magnetite, a type of iron ore.
Osho designs power distribution systems.