GVK nears fund tie-up for key mine

Infrastructure major GVK Power and Infrastructure Ltd (GVKPIL) is all set to achieve financial closure for developing one of its key coal mines in India.

The company is developing the mine to secure supplies to its thermal power plant being set up at Goindwal Sahib in Punjab.
Located at Tokisud near Ranchi in Jharkhand, the open-cast mine is expected to cost about Rs 345 crore for complete development.

“We are expecting to achieve financial closure for the project this month itself. The project will be funded through a combination of debt and equity in 80:20 ratio. The entire equity portion would be funded by GVK,” Isaac George, GVK’s group CFO, told DNA.

The mine, with estimated reserves of about 52 million tonnes, is expected to go in for production by April 2012. The company would evacuate about two million tonnes per annum from the mine to feed the Goindwal Sahib thermal power plant.

“The total land required for commencing mining is about 900 acres. We have so far acquired about 490 acres. The remaining land is yet to be acquired. But we will go ahead with the financial closure first and then focus on other issues,” he said.

The company is also in the process of developing yet another coal mine at Seregarha in Jharkhand. This mine was allotted to GVK jointly with ArcelorMittal. With about 44.45% stake in equity of the company floated for developing this mine, GVK is entitled to the reserves of about 67 million tonnes. The development of this mine is estimated to cost about Rs 290 crore.

“Though this is first of the two mines to come to us, there were some issues to be sorted out in this project. We are sorting them out,” George said. Even this mine would feed the Goindwal Sahib project though the supplies from this mine are estimated to remain at about one million tonnes per annum as and when it is readied for production.

The 540 mw Goindwal Sahib project was allotted to GVK by the Punjab government through a competitive bidding process. The thermal power plant is estimated to cost about Rs 3,000 crore and the company recently announced financial closure for the project with a debt component of Rs 2,400 crore and the balance coming in the form of equity entirely funded by GVK.