INDIA BUSINESS WORLD - JANUARY 1^st - JANUARY 15^th - 2008

ANIL DHIRUBHAI AMBANI GROUP (ADAG) IS ENTERING INTO JOINT VENTURE WITH LARGEST LIGNITE MINER OF US

ANIL Dhirubhai Ambani Group (ADAG) is entering into a strategic alliance with the largest lignite miner of the US, North American Coal Corporation (NACC), to ensure fuel supply to its 28,200 mw projects. The strategic tie-up could be in the form of joint venture company (JVC) and the two partners would undertake coal mining activities both in India and abroad.

"The group is looking at a strategic tie-up NACC to get the necessary expertise in the area of mining coal. The strategic association could take shape of a joint venture mining company or could be restricted to contract based mining. Details are being worked out," a source said. It is understood that ADAG has identified the American miner due to its technical superiority and low cost mining operation. The coal strategy would be implemented by Reliance Natural Resources (RNRL), the fuel company of the ADAG stable that plans to manage the fuel requirements for the power plants. The company would also source and produce gas and liquid fuel besides mining of coal. It is understood that NACC would initially support RNRL to develop domestic coal mines for Sasan ultra mega power project (UMPP). Reliance Power has already been assured three captive coal mines for its Sasan project that would require about 16 mt of coal per annum.

"The relationship would be expanded further to overseas market later that is also being tapped by the group to meet the fuel requirements of its upcoming power projects including its second coastal UMPP at Krishnapatnam," the source said.

R-ADAG, which is projecting a requirement of about 25 to 30 million tonnes (mt) of coal from 2010 has already shortlisted eight companies in Indonesia under its overseas fuel supply plan. The acquisition targets include Ener-Corp and Beraucoal which are on the block. It is likely that the company may involve NACC in these projects as well.

NACC, is the top 10 coal producers and largest lignite producer in the US. It is mining about 35 million tonnes per year and has operations in North Dakota, Louisiana, Mississippi and Texas. The company caters to the fuel needs of power companies such as American Electric Power (AEP) CLECO Power, Great River Energy, San Miguel Electric Co-operative and Suez Energy Resources. As a partner to R-ADAG the American company has already agreed to provider technical assistance to mining operations and will be responsible for the evaluation of geological data; mine planing and design; supervision of mining operations; training of RNRL personnel and implementation of international best practises at the mining site.