Bloomberg News

Coal India Gains on Assurance of Mine Approvals: Mumbai Mover

February 18, 2012

Feb. 17 (Bloomberg) -- Coal India Ltd., the world’s largest miner of the fuel, rose the most in three weeks after the government said it will expedite mine approvals to help increase production and meet demand from power producers.

The shares rose as much as 3.9 percent to 332.60 rupees, the most since Jan. 25, and traded at 332 rupees as of 10:41 a.m. in Mumbai. The shares have risen 10 percent this year, compared with a 19 percent gain in the key Sensitive Index.

Coal India, facing a decline in output because of delays in land acquisitions and environmental approvals, was assured by Prime Minister Manmohan Singh that the clearances will be expedited, Coal Secretary Alok Perti said yesterday in an interview. The government has ordered the company to sign supply accords for power projects due to be completed by March 2015 and import the fuel to overcome local output bottlenecks.

“For Coal India, there can be nothing as good as getting quicker mining approvals,” said Deven Choksey, managing director at K.R. Choksey Shares & Securities Pvt. in Mumbai. “That’s the only way the company can realize its potential and meet demand.”

The company will sign supply contracts starting next month, Perti said. The government’s decision came after Anil Ambani, chairman of Reliance Power Ltd., and Gautam Adani, chairman of Adani Power Ltd., joined Tata Power Co. Chairman Ratan Tata last month in urging Prime Minister Manmohan Singh to help ease fuel shortages.

Reliance Power, Tata Power and Lanco Infratech Ltd. rose for the third straight day since the government’s Feb. 15 order. The BSE Power Index has gained 9.7 percent during the time, the most since May 2009. Lanco led gains today, rising as much as 24 percent to 25.10 rupees.

Coal India will pay a fine if supplies fall short of commitments to supply. The penalty clause should inspire the company to raise performance, Perti said. The mining company hasn’t signed fuel agreements since April 2009, after saying it could provide only 50 percent of the requirements of power plants.

--Editors: Indranil Ghosh, John Chacko

To contact the reporter on this story: Rajesh Kumar Singh in New Delhi at rsingh133@bloomberg.net

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net


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