beyondbrics

India’s hunger for coal is just as insatiable as China’s, and in the race with the Middle Kingdom for foreign acquisitions, it would appear that India is outpacing China.

One acquisitive Indian company to watch is India’s Adani Enterprises, the country’s largest coal importer, which made a $2bn acquisition of Australia’s Abbot Point coal terminal this week. The deal, Adani’s second in Australia, underlines its ambitions to play a role in country’s coal sector. 

Adani enterprises became one of the first developers of private ports in India when the government first allowed the entry of private businesses in the late eighties. The firm, the largest coal importer in India, earned $5.8bn in revenues last year.

Adani’s Abbot Point acquisition is the group’s third abroad. In August last year, it acquired Linc coal mines for $2.6bn in Queensland, and it signed an agreement to develop a $1.7bn port in Indonesia in January of this year. Adani is also developing ports along India’s western coast in Hazira, coal terminals in Goa, and well as on the east in the state of Andhra Pradesh.

Mundra, India’s largest private port, controlled and operated by the group, currently has a capacity of 50m metric tons per annum. The group harbours ambitions to handle four times as much cargo as the Mundra port does today by 2020, the group’s statement detailed.

The Australian coal port in the state of Queensland currently has an operating capacity of 50m metric tons per annum, which can be further increased to 80m. The Adani group told the Times of India newspaper that it has immediate plans to expand the coal terminal to accommodate an increased output of coal from the terminal.

India, although rich in coal doesn’t produce the fossil fuel in sufficient quantities to meet domestic demand because of mining restrictions and strengthening Maoist insurgency in the resource rich eastern states.

The government estimates that the country could face a shortage of almost 50m tonnes by the end of March 2011 as the demand for the fossil fuel rises for electricity production. However, independent analysts warn that this may be a gross underestimation of the country’s demand for coal. The shortage in 2011 could exceed 200m tonnes, they predict.

In the meanwhile, private operators are taking the race overseas, buying not just coal mines, but related infrastructure, to meet the country’s growing coal demand.

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Deal of the day: $331m more to charge up India’s power supply, beyondbrics