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The Boikarabelo mine of Resource Generation, the developer of one of South Africa’s richest coal assets, seems to be a big draw among Indian investors. After power utility CESC and steel maker Bhushan Steel, which have earlier struck separate offtake deals with the Australian miner, IL&FS Energy Development Co has now shown interest in investing in the project.

IL&FS Energy has a growing portfolio of investment in India’s energy sector, earlier partnering with ONGC for a 726 MW power project in Tripura, which was recently inaugurated. IL&FS has formed a special purpose vehicle, Valu Investments Pte, in joint venture with entrepreneur Jaimin Vyas for the current bid.

Its quantum of investment in the Boikarabelo mine project, however, has not yet been finalised and depends on the extent the proposed rights issue of Resource Generation devolves. IL&FS Energy, along with two other investors, have committed to pick up to 80% of the rights issue or any shortfall if existing investors don’t measure up.

The Boikarabelo mine has about 6.4 billion tonnes of thermal coal resource in South Africa’s Waterberg coalfield region, which is being developed in two stages at a cost of $530 million. Production would kick off from 2015 at 6 million tonnes a year, which is to be scaled up to 25 mtpa later.

Resource Generation has already sewed up a long-term off-take agreement with CESC for 139 million tonnes over 38 years and with Bhushan Steel for 10 million tonnes for 20 years. CESC, through its subsidiary Integrated Coal Mining, had picked up a 12% stake in the project and also has a long-term pact to explore options to build a power project at the mine site itself.

Other than these Indian companies, Resource Generation has formed a similar pact for 35 years of local off-take with Nobel Group, which has extended $68 million of loan towards the project, apart from picking up a 7.5% stake in the project.

http://www.dnaindia.com/money/1855965/report-il-and-fs-eyes-key-coal-mine-stake-in-south-africa